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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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01-0666114
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification Number)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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Huron Consulting Group Inc.
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2017 |
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December 31,
2016 |
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Assets
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
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8,660
|
|
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$
|
17,027
|
|
Receivables from clients, net
|
94,025
|
|
|
94,246
|
|
||
Unbilled services, net
|
65,432
|
|
|
51,290
|
|
||
Income tax receivable
|
4,018
|
|
|
4,211
|
|
||
Prepaid expenses and other current assets
|
15,106
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|
|
13,308
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|
||
Total current assets
|
187,241
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|
|
180,082
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|
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Property and equipment, net
|
47,075
|
|
|
32,434
|
|
||
Deferred income taxes, net
|
15,159
|
|
|
—
|
|
||
Long-term investment
|
31,937
|
|
|
34,675
|
|
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Other non-current assets
|
26,149
|
|
|
24,814
|
|
||
Intangible assets, net
|
80,861
|
|
|
81,348
|
|
||
Goodwill
|
689,375
|
|
|
799,862
|
|
||
Total assets
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$
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1,077,797
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$
|
1,153,215
|
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Liabilities and stockholders’ equity
|
|
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|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
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10,259
|
|
|
$
|
7,273
|
|
Accrued expenses and other current liabilities
|
22,846
|
|
|
19,788
|
|
||
Accrued payroll and related benefits
|
62,451
|
|
|
82,669
|
|
||
Accrued contingent consideration for business acquisitions
|
7,743
|
|
|
1,985
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|
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Deferred revenues
|
25,495
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|
|
24,053
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|
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Total current liabilities
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128,794
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135,768
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|
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Non-current liabilities:
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|
|
|
||||
Deferred compensation and other liabilities
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20,336
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|
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24,171
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|
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Accrued contingent consideration for business acquisitions, net of current portion
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14,726
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|
|
6,842
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|
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Long-term debt, net of current portion
|
374,328
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|
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292,065
|
|
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Deferred lease incentives
|
15,236
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|
|
10,703
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|
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Deferred income taxes, net
|
—
|
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35,633
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|
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Total non-current liabilities
|
424,626
|
|
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369,414
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|
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Commitments and contingencies
|
|
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Stockholders’ equity
|
|
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|
||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,560,468 and 24,126,118 shares issued at September 30, 2017 and December 31, 2016, respectively
|
241
|
|
|
235
|
|
||
Treasury stock, at cost, 2,428,971 and 2,408,343 shares at September 30, 2017 and December 31, 2016, respectively
|
(121,395
|
)
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(113,195
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)
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||
Additional paid-in capital
|
431,211
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|
|
405,895
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|
||
Retained earnings
|
210,543
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|
|
351,483
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|
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Accumulated other comprehensive income
|
3,777
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|
|
3,615
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|
||
Total stockholders’ equity
|
524,377
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|
648,033
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|
||
Total liabilities and stockholders’ equity
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$
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1,077,797
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|
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$
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1,153,215
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2017
|
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2016
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2017
|
|
2016
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||||||||
Revenues and reimbursable expenses:
|
|
|
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||||||||
Revenues
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$
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176,376
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$
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183,400
|
|
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$
|
546,643
|
|
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$
|
548,148
|
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Reimbursable expenses
|
17,982
|
|
|
19,093
|
|
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55,862
|
|
|
54,636
|
|
||||
Total revenues and reimbursable expenses
|
194,358
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202,493
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|
|
602,505
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602,784
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|
||||
Direct costs and reimbursable expenses
(exclusive of depreciation and amortization shown in operating expenses):
|
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||||||||
Direct costs
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113,775
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|
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108,354
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|
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343,185
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|
|
323,310
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|
||||
Amortization of intangible assets and software development costs
|
2,657
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|
4,052
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|
8,388
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|
|
11,278
|
|
||||
Reimbursable expenses
|
18,079
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|
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18,956
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|
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55,901
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|
|
54,747
|
|
||||
Total direct costs and reimbursable expenses
|
134,511
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131,362
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407,474
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389,335
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|
||||
Operating expenses and other losses (gains), net:
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||||||||
Selling, general and administrative expenses
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41,576
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38,256
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132,137
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|
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119,937
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|
||||
Restructuring charges
|
1,347
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|
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1,049
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5,295
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|
|
4,129
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|
||||
Other losses (gains), net
|
880
|
|
|
494
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|
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(222
|
)
|
|
494
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|
||||
Depreciation and amortization
|
9,946
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|
8,092
|
|
|
28,549
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|
|
23,064
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|
||||
Goodwill impairment charge
|
—
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—
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209,600
|
|
|
—
|
|
||||
Total operating expenses and other losses (gains), net
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53,749
|
|
|
47,891
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|
|
375,359
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|
147,624
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|
||||
Operating income (loss)
|
6,098
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|
23,240
|
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(180,328
|
)
|
|
65,825
|
|
||||
Other income (expense), net:
|
|
|
|
|
|
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||||||||
Interest expense, net of interest income
|
(4,880
|
)
|
|
(4,176
|
)
|
|
(13,811
|
)
|
|
(12,270
|
)
|
||||
Other income, net
|
930
|
|
|
489
|
|
|
3,204
|
|
|
1,236
|
|
||||
Total other expense, net
|
(3,950
|
)
|
|
(3,687
|
)
|
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(10,607
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)
|
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(11,034
|
)
|
||||
Income (loss) from continuing operations before income tax expense
|
2,148
|
|
|
19,553
|
|
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(190,935
|
)
|
|
54,791
|
|
||||
Income tax expense (benefit)
|
(1,984
|
)
|
|
7,265
|
|
|
(49,740
|
)
|
|
19,498
|
|
||||
Net income (loss) from continuing operations
|
4,132
|
|
|
12,288
|
|
|
(141,195
|
)
|
|
35,293
|
|
||||
Income (loss) from discontinued operations, net of tax
|
238
|
|
|
4
|
|
|
690
|
|
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(1,830
|
)
|
||||
Net income (loss)
|
$
|
4,370
|
|
|
$
|
12,292
|
|
|
$
|
(140,505
|
)
|
|
$
|
33,463
|
|
Net earnings (loss) per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.19
|
|
|
$
|
0.58
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.67
|
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
(0.08
|
)
|
||||
Net income (loss)
|
$
|
0.20
|
|
|
$
|
0.58
|
|
|
$
|
(6.56
|
)
|
|
$
|
1.59
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.19
|
|
|
$
|
0.57
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.65
|
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
(0.09
|
)
|
||||
Net income (loss)
|
$
|
0.20
|
|
|
$
|
0.57
|
|
|
$
|
(6.56
|
)
|
|
$
|
1.56
|
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
21,505
|
|
|
21,076
|
|
|
21,413
|
|
|
21,084
|
|
||||
Diluted
|
21,622
|
|
|
21,445
|
|
|
21,413
|
|
|
21,427
|
|
||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
4,370
|
|
|
$
|
12,292
|
|
|
$
|
(140,505
|
)
|
|
$
|
33,463
|
|
Foreign currency translation adjustments, net of tax
|
609
|
|
|
50
|
|
|
1,835
|
|
|
52
|
|
||||
Unrealized loss on investment, net of tax
|
(2,200
|
)
|
|
(2,038
|
)
|
|
(1,669
|
)
|
|
(1,163
|
)
|
||||
Unrealized gain (loss) on cash flow hedging instruments, net of tax
|
23
|
|
|
121
|
|
|
(4
|
)
|
|
(27
|
)
|
||||
Other comprehensive income (loss)
|
(1,568
|
)
|
|
(1,867
|
)
|
|
162
|
|
|
(1,138
|
)
|
||||
Comprehensive income (loss)
|
$
|
2,802
|
|
|
$
|
10,425
|
|
|
$
|
(140,343
|
)
|
|
$
|
32,325
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated Other
Comprehensive
Income
|
|
Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2016
|
23,478,016
|
|
|
$
|
235
|
|
|
(2,420,913
|
)
|
|
$
|
(113,195
|
)
|
|
$
|
405,895
|
|
|
$
|
351,483
|
|
|
$
|
3,615
|
|
|
$
|
648,033
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
(140,505
|
)
|
|
162
|
|
|
(140,343
|
)
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
367,278
|
|
|
4
|
|
|
(56,315
|
)
|
|
(3,750
|
)
|
|
3,746
|
|
|
|
|
|
|
—
|
|
||||||||
Business acquisition
|
221,558
|
|
|
2
|
|
|
|
|
|
|
9,558
|
|
|
|
|
|
|
9,560
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
11,577
|
|
|
|
|
|
|
11,577
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(102,179
|
)
|
|
(4,450
|
)
|
|
|
|
|
|
|
|
(4,450
|
)
|
|||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
|
|
|
|
|
|
|
|
435
|
|
|
(435
|
)
|
|
|
|
—
|
|
|||||||||||
Balance at September 30, 2017
|
24,066,852
|
|
|
$
|
241
|
|
|
(2,579,407
|
)
|
|
$
|
(121,395
|
)
|
|
$
|
431,211
|
|
|
$
|
210,543
|
|
|
$
|
3,777
|
|
|
$
|
524,377
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(140,505
|
)
|
|
$
|
33,463
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37,881
|
|
|
34,344
|
|
||
Share-based compensation
|
11,711
|
|
|
13,145
|
|
||
Amortization of debt discount and issuance costs
|
7,604
|
|
|
7,171
|
|
||
Goodwill impairment charge
|
209,600
|
|
|
—
|
|
||
Allowances for doubtful accounts and unbilled services
|
3,812
|
|
|
7,107
|
|
||
Deferred income taxes
|
(51,062
|
)
|
|
4,980
|
|
||
Gain on sale of business
|
(931
|
)
|
|
—
|
|
||
Change in fair value of contingent consideration liabilities
|
(222
|
)
|
|
494
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
(Increase) decrease in receivables from clients
|
9,025
|
|
|
9,442
|
|
||
(Increase) decrease in unbilled services
|
(12,251
|
)
|
|
(21,492
|
)
|
||
(Increase) decrease in current income tax receivable / payable, net
|
(32
|
)
|
|
(3,039
|
)
|
||
(Increase) decrease in other assets
|
(1,802
|
)
|
|
12,669
|
|
||
Increase (decrease) in accounts payable and accrued liabilities
|
1,850
|
|
|
(2,860
|
)
|
||
Increase (decrease) in accrued payroll and related benefits
|
(21,928
|
)
|
|
(17,707
|
)
|
||
Increase (decrease) in deferred revenues
|
(318
|
)
|
|
2,028
|
|
||
Net cash provided by operating activities
|
52,432
|
|
|
79,745
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment, net
|
(20,139
|
)
|
|
(9,372
|
)
|
||
Investment in life insurance policies
|
(1,826
|
)
|
|
(1,890
|
)
|
||
Distributions from life insurance policies
|
2,889
|
|
|
—
|
|
||
Purchases of businesses, net of cash acquired
|
(106,915
|
)
|
|
(69,133
|
)
|
||
Capitalization of internally developed software costs
|
(938
|
)
|
|
(838
|
)
|
||
Proceeds from note receivable
|
177
|
|
|
—
|
|
||
Proceeds from sale of business
|
1,499
|
|
|
—
|
|
||
Net cash used in investing activities
|
(125,253
|
)
|
|
(81,233
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
—
|
|
|
123
|
|
||
Shares redeemed for employee tax withholdings
|
(4,450
|
)
|
|
(4,837
|
)
|
||
Share repurchases
|
—
|
|
|
(55,265
|
)
|
||
Proceeds from borrowings under credit facility
|
241,000
|
|
|
168,000
|
|
||
Repayments of debt
|
(170,082
|
)
|
|
(156,000
|
)
|
||
Payments for debt issuance costs
|
(395
|
)
|
|
—
|
|
||
Payments of contingent consideration liabilities
|
(1,811
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
64,262
|
|
|
(47,979
|
)
|
||
Effect of exchange rate changes on cash
|
192
|
|
|
133
|
|
||
Net decrease in cash and cash equivalents
|
(8,367
|
)
|
|
(49,334
|
)
|
||
Cash and cash equivalents at beginning of the period
|
17,027
|
|
|
58,437
|
|
||
Cash and cash equivalents at end of the period
|
$
|
8,660
|
|
|
$
|
9,103
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Property and equipment expenditures included in accounts payable and accrued expenses
|
$
|
4,049
|
|
|
$
|
2,928
|
|
Promissory note assumed for purchase of property and equipment
|
$
|
5,113
|
|
|
$
|
—
|
|
Contingent consideration related to business acquisitions
|
$
|
15,489
|
|
|
$
|
8,754
|
|
Common stock issued related to a business acquisition
|
$
|
9,560
|
|
|
$
|
—
|
|
|
March 1, 2017
|
||
Assets acquired:
|
|
||
Accounts receivable
|
$
|
7,752
|
|
Unbilled services
|
1,881
|
|
|
Prepaid expenses and other current assets
|
468
|
|
|
Property and equipment
|
419
|
|
|
Intangible assets
|
18,015
|
|
|
Liabilities assumed:
|
|
||
Accounts payable
|
531
|
|
|
Accrued expenses and other current liabilities
|
916
|
|
|
Accrued payroll and related benefits
|
883
|
|
|
Deferred revenues
|
30
|
|
|
Total identifiable net assets
|
26,175
|
|
|
Goodwill
|
87,432
|
|
|
Total purchase price
|
$
|
113,607
|
|
|
Fair Value
|
|
Useful Life in
Years
|
||
Customer relationships
|
$
|
9,500
|
|
|
6
|
Trade name
|
6,000
|
|
|
6
|
|
Customer contracts
|
1,000
|
|
|
1
|
|
Non-compete agreements
|
1,300
|
|
|
5
|
|
Favorable lease contract
|
215
|
|
|
1
|
|
Total intangible assets subject to amortization
|
$
|
18,015
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
$
|
176,376
|
|
|
$
|
194,968
|
|
|
$
|
555,768
|
|
|
$
|
578,924
|
|
Net income (loss) from continuing operations
|
$
|
4,170
|
|
|
$
|
14,184
|
|
|
$
|
(137,922
|
)
|
|
$
|
36,558
|
|
Net income (loss) from continuing operations per share - basic
|
$
|
0.19
|
|
|
$
|
0.67
|
|
|
$
|
(6.43
|
)
|
|
$
|
1.72
|
|
Net income (loss) from continuing operations per share - diluted
|
$
|
0.19
|
|
|
$
|
0.65
|
|
|
$
|
(6.43
|
)
|
|
$
|
1.69
|
|
|
Healthcare
|
|
Education
|
|
Business
Advisory
|
|
Total
|
||||||||
Balance as of December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
636,802
|
|
|
$
|
102,906
|
|
|
$
|
203,137
|
|
|
$
|
942,845
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(142,983
|
)
|
|
(142,983
|
)
|
||||
Goodwill, net as of December 31, 2016
|
636,802
|
|
|
102,906
|
|
|
60,154
|
|
|
799,862
|
|
||||
Goodwill recorded in connection with business acquisitions
(1)
|
7
|
|
|
10,252
|
|
|
88,286
|
|
|
98,545
|
|
||||
Goodwill impairment charge
|
(209,600
|
)
|
|
—
|
|
|
—
|
|
|
(209,600
|
)
|
||||
Goodwill reallocation
|
—
|
|
|
(10,794
|
)
|
|
10,794
|
|
|
—
|
|
||||
Goodwill allocated to disposal of business
(2)
|
—
|
|
|
—
|
|
|
(568
|
)
|
|
(568
|
)
|
||||
Foreign currency translation
|
—
|
|
|
466
|
|
|
670
|
|
|
1,136
|
|
||||
Goodwill, net as of September 30, 2017
|
$
|
427,209
|
|
|
$
|
102,830
|
|
|
$
|
159,336
|
|
|
$
|
689,375
|
|
(1)
|
Refer to Note 5 "Acquisitions" for additional information on the goodwill recorded in connection with business acquisitions.
|
(2)
|
On June 16, 2017, we sold our Life Sciences Compliance and Operations practice ("Life Sciences C&O") to a third-party, and allocated a portion of goodwill within the Life Sciences reporting unit to the disposed business based on the relative fair values of Life Sciences C&O and the remaining reporting unit. The allocated goodwill of
$0.6 million
was written off and included in the gain on sale of Life Sciences C&O. The sale of Life Sciences C&O did not meet the criteria for reporting separately as discontinued operations. In connection with the sale, we recorded a
$0.9 million
gain which is included in other income, net in our consolidated statements of operations.
|
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||||||||||
|
Useful
Life in
Years
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
4 to 13
|
|
$
|
106,174
|
|
|
$
|
47,325
|
|
|
$
|
89,279
|
|
|
$
|
34,827
|
|
Trade names
|
2 to 6
|
|
29,016
|
|
|
17,065
|
|
|
22,930
|
|
|
11,652
|
|
||||
Customer contracts
|
1 to 4
|
|
27,554
|
|
|
25,919
|
|
|
26,497
|
|
|
21,295
|
|
||||
Technology and software
|
3 to 5
|
|
9,340
|
|
|
4,490
|
|
|
8,970
|
|
|
2,667
|
|
||||
Non-competition agreements
|
1 to 5
|
|
5,295
|
|
|
2,482
|
|
|
3,685
|
|
|
1,697
|
|
||||
Publishing content
|
3
|
|
3,300
|
|
|
2,888
|
|
|
3,300
|
|
|
2,062
|
|
||||
Favorable lease contract
|
3
|
|
720
|
|
|
369
|
|
|
720
|
|
|
203
|
|
||||
In-process technology
|
Indefinite
|
|
—
|
|
|
—
|
|
|
370
|
|
|
—
|
|
||||
Total
|
|
|
$
|
181,399
|
|
|
$
|
100,538
|
|
|
$
|
155,751
|
|
|
$
|
74,403
|
|
Year Ending December 31,
|
|
Estimated Amortization Expense
|
||
2017
|
|
$
|
34,966
|
|
2018
|
|
$
|
23,936
|
|
2019
|
|
$
|
17,279
|
|
2020
|
|
$
|
12,116
|
|
2021
|
|
$
|
8,070
|
|
2022
|
|
$
|
6,092
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) from continuing operations
|
$
|
4,132
|
|
|
$
|
12,288
|
|
|
$
|
(141,195
|
)
|
|
$
|
35,293
|
|
Income (loss) from discontinued operations, net of tax
|
238
|
|
|
4
|
|
|
690
|
|
|
(1,830
|
)
|
||||
Net income (loss)
|
$
|
4,370
|
|
|
$
|
12,292
|
|
|
$
|
(140,505
|
)
|
|
$
|
33,463
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
21,505
|
|
|
21,076
|
|
|
21,413
|
|
|
21,084
|
|
||||
Weighted average common stock equivalents
|
117
|
|
|
369
|
|
|
—
|
|
|
343
|
|
||||
Weighted average common shares outstanding – diluted
|
21,622
|
|
|
21,445
|
|
|
21,413
|
|
|
21,427
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.19
|
|
|
$
|
0.58
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.67
|
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
(0.08
|
)
|
||||
Net income (loss)
|
$
|
0.20
|
|
|
$
|
0.58
|
|
|
$
|
(6.56
|
)
|
|
$
|
1.59
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.19
|
|
|
$
|
0.57
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.65
|
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
(0.09
|
)
|
||||
Net income (loss)
|
$
|
0.20
|
|
|
$
|
0.57
|
|
|
$
|
(6.56
|
)
|
|
$
|
1.56
|
|
|
As of September 30,
|
||||
|
2017
|
|
2016
|
||
Unvested restricted stock awards
|
627
|
|
|
5
|
|
Outstanding common stock options
|
194
|
|
|
—
|
|
Convertible senior notes
|
3,129
|
|
|
3,129
|
|
Warrants related to the issuance of convertible senior notes
|
3,129
|
|
|
3,129
|
|
Total anti-dilutive securities
|
7,079
|
|
|
6,263
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
1.25% convertible senior notes due 2019
|
$
|
230,834
|
|
|
$
|
224,065
|
|
Senior secured credit facility
|
139,000
|
|
|
68,000
|
|
||
Promissory note due 2024
|
4,991
|
|
|
—
|
|
||
Total long-term debt
|
$
|
374,825
|
|
|
$
|
292,065
|
|
Current maturities of debt
(1)
|
(497
|
)
|
|
—
|
|
||
Long-term debt, net of current portion
|
$
|
374,328
|
|
|
$
|
292,065
|
|
(1)
|
The current maturities of debt are included as a component of accrued expenses and other current liabilities on our consolidated balance sheets.
|
•
|
during any calendar quarter (and only during such calendar quarter) commencing after December 31, 2014 if, for each of at least
20
trading days (whether or not consecutive) during the
30
consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock for such trading day is equal to or greater than
130%
of the applicable conversion price on such trading day;
|
•
|
during the
five
consecutive business day period immediately following any
five
consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which, for each trading day of the measurement period, the “trading price” (as defined in the Indenture) per
$1,000
principal amount of the Convertible Notes for such trading day was less than
98%
of the product of the last reported sale price of the Company’s common stock for such trading day and the applicable conversion rate on such trading day; or
|
•
|
upon the occurrence of specified corporate transactions described in the Indenture.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Liability component:
|
|
|
|
||||
Proceeds
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Less: debt discount, net of amortization
|
(16,666
|
)
|
|
(22,520
|
)
|
||
Less: debt issuance costs, net of amortization
|
(2,500
|
)
|
|
(3,415
|
)
|
||
Net carrying amount
|
$
|
230,834
|
|
|
$
|
224,065
|
|
Equity component
(1)
|
$
|
39,287
|
|
|
$
|
39,287
|
|
|
(1)
|
Included in additional paid-in capital on the consolidated balance sheet.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Contractual interest coupon
|
$
|
781
|
|
|
$
|
781
|
|
|
$
|
2,344
|
|
|
$
|
2,344
|
|
Amortization of debt discount
|
1,974
|
|
|
1,883
|
|
|
5,853
|
|
|
5,582
|
|
||||
Amortization of debt issuance costs
|
306
|
|
|
302
|
|
|
915
|
|
|
900
|
|
||||
Total interest expense
|
$
|
3,061
|
|
|
$
|
2,966
|
|
|
$
|
9,112
|
|
|
$
|
8,826
|
|
•
|
Convertible Note Hedge Transactions
. In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions whereby the Company has call options to purchase a total of approximately
3.1 million
shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the Convertible Notes in full, at a price of approximately
$79.89
, which corresponds to the initial conversion price of the Convertible Notes, subject to customary anti-dilution adjustments substantially similar to those in the Convertible Notes. The convertible note hedge transactions are exercisable upon conversion of the Convertible Notes and will expire in 2019 if not earlier exercised. We paid an aggregate amount of
$42.1 million
for the convertible note hedge transactions, which was recorded as additional paid-in capital on the consolidated balance sheets. The convertible note hedge transactions are separate transactions and are not part of the terms of the Convertible Notes.
|
•
|
Warrants.
In connection with the issuance of the Convertible Notes, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately
3.1 million
shares of the Company’s common stock at a strike price of approximately
$97.12
. The warrants will expire incrementally on 100 different dates from January 6, 2020 to May 28, 2020 and are exercisable at each such expiry date. If the average market value per share of our common stock for the reporting period exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share. We received aggregate proceeds of
$23.6 million
from the sale of the warrants, which was recorded as additional paid-in capital on the consolidated balance sheets. The warrants are separate transactions and are not part of the terms of the Convertible Notes or the convertible note hedge transactions.
|
|
Employee Costs
|
|
Office Space Reductions
|
|
Other
|
|
Total
|
||||||||
Balance as of December 31, 2016
|
$
|
5,182
|
|
|
$
|
5,773
|
|
|
$
|
24
|
|
|
$
|
10,979
|
|
Additions
(1)
|
2,889
|
|
|
2,445
|
|
|
110
|
|
|
5,444
|
|
||||
Payments
|
(7,226
|
)
|
|
(2,047
|
)
|
|
5
|
|
|
(9,268
|
)
|
||||
Adjustments
(1)
|
(117
|
)
|
|
(1,087
|
)
|
|
(78
|
)
|
|
(1,282
|
)
|
||||
Non-cash items
|
(46
|
)
|
|
(119
|
)
|
|
(61
|
)
|
|
(226
|
)
|
||||
Balance as of September 30, 2017
|
$
|
682
|
|
|
$
|
4,965
|
|
|
$
|
—
|
|
|
$
|
5,647
|
|
(1)
|
Additions and adjustments for the
nine
months ended
September 30, 2017
include a restructuring gain of
$1.1 million
related to updated lease assumptions for vacated office spaces directly related to discontinued operations. Refer to Note 4 "Discontinued Operations" for additional information on our discontinued operations.
|
|
|
Fair Value (Derivative Asset and Liability)
|
||||||
Balance Sheet Location
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Other non-current assets
|
|
$
|
141
|
|
|
$
|
—
|
|
Accrued expenses
|
|
$
|
200
|
|
|
$
|
54
|
|
Level 1 Inputs
|
|
Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
|
|
|
Level 2 Inputs
|
|
Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
Level 3 Inputs
|
|
Unobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Promissory note
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,311
|
|
|
$
|
2,311
|
|
Convertible debt investment
|
—
|
|
|
—
|
|
|
31,937
|
|
|
31,937
|
|
||||
Deferred compensation assets
|
—
|
|
|
17,170
|
|
|
—
|
|
|
17,170
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
17,170
|
|
|
$
|
34,248
|
|
|
$
|
51,418
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Contingent consideration for business acquisitions
|
—
|
|
|
—
|
|
|
22,469
|
|
|
22,469
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
22,469
|
|
|
$
|
22,528
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Promissory note
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,325
|
|
|
$
|
2,325
|
|
Convertible debt investment
|
—
|
|
|
—
|
|
|
34,675
|
|
|
34,675
|
|
||||
Deferred compensation assets
|
—
|
|
|
16,408
|
|
|
—
|
|
|
16,408
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
16,408
|
|
|
$
|
37,000
|
|
|
$
|
53,408
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
54
|
|
Contingent consideration for business acquisitions
|
—
|
|
|
—
|
|
|
8,827
|
|
|
8,827
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
8,827
|
|
|
$
|
8,881
|
|
|
|
Promissory Note
|
||
Balance as of December 31, 2016
|
|
$
|
2,325
|
|
Interest payments received
|
|
(140
|
)
|
|
Principal payment received
|
|
(177
|
)
|
|
Change in fair value of promissory note
|
|
303
|
|
|
Balance as of September 30, 2017
|
|
$
|
2,311
|
|
|
|
Convertible Debt Investment
|
||
Balance as of December 31, 2016
|
|
$
|
34,675
|
|
Change in fair value of convertible debt investment
|
|
(2,738
|
)
|
|
Balance as of September 30, 2017
|
|
$
|
31,937
|
|
|
|
Contingent Consideration for Business Acquisitions
|
||
Balance as of December 31, 2016
|
|
$
|
8,827
|
|
Acquisitions
|
|
15,489
|
|
|
Payments
|
|
(1,938
|
)
|
|
Remeasurement of contingent consideration for business acquisitions
|
|
(222
|
)
|
|
Unrealized loss due to foreign currency translation
|
|
313
|
|
|
Balance as of September 30, 2017
|
|
$
|
22,469
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount |
|
Estimated
Fair Value |
||||||||
1.25% convertible senior notes due 2019
|
$
|
230,834
|
|
|
$
|
233,595
|
|
|
$
|
224,065
|
|
|
$
|
245,018
|
|
|
Three Months Ended
September 30, 2017 |
|
Three Months Ended
September 30, 2016 |
||||||||||||||||||||
|
Before
Taxes |
|
Tax
(Expense) Benefit |
|
Net of
Taxes |
|
Before
Taxes |
|
Tax
(Expense) Benefit |
|
Net of
Taxes |
||||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation adjustments
|
$
|
609
|
|
|
$
|
—
|
|
|
$
|
609
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Unrealized loss on investment
|
$
|
(3,609
|
)
|
|
$
|
1,409
|
|
|
$
|
(2,200
|
)
|
|
$
|
(3,329
|
)
|
|
$
|
1,291
|
|
|
$
|
(2,038
|
)
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in fair value
|
$
|
41
|
|
|
$
|
(16
|
)
|
|
$
|
25
|
|
|
$
|
96
|
|
|
$
|
(35
|
)
|
|
$
|
61
|
|
Reclassification adjustments into earnings
|
(3
|
)
|
|
1
|
|
|
(2
|
)
|
|
101
|
|
|
(41
|
)
|
|
60
|
|
||||||
Net unrealized gain
|
$
|
38
|
|
|
$
|
(15
|
)
|
|
$
|
23
|
|
|
$
|
197
|
|
|
$
|
(76
|
)
|
|
$
|
121
|
|
Other comprehensive income (loss)
|
$
|
(2,962
|
)
|
|
$
|
1,394
|
|
|
$
|
(1,568
|
)
|
|
$
|
(3,082
|
)
|
|
$
|
1,215
|
|
|
$
|
(1,867
|
)
|
|
Nine Months Ended
September 30, 2017 |
|
Nine Months Ended
September 30, 2016 |
||||||||||||||||||||
|
Before
Taxes
|
|
Tax
(Expense)
Benefit
|
|
Net of
Taxes
|
|
Before
Taxes
|
|
Tax
(Expense)
Benefit
|
|
Net of
Taxes
|
||||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation adjustments
|
$
|
1,835
|
|
|
$
|
—
|
|
|
$
|
1,835
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
52
|
|
Unrealized loss on investment
|
$
|
(2,738
|
)
|
|
$
|
1,069
|
|
|
$
|
(1,669
|
)
|
|
$
|
(1,899
|
)
|
|
$
|
736
|
|
|
$
|
(1,163
|
)
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in fair value
|
$
|
(41
|
)
|
|
$
|
16
|
|
|
$
|
(25
|
)
|
|
$
|
(367
|
)
|
|
$
|
146
|
|
|
$
|
(221
|
)
|
Reclassification adjustments into earnings
|
36
|
|
|
(15
|
)
|
|
21
|
|
|
323
|
|
|
(129
|
)
|
|
194
|
|
||||||
Net unrealized loss
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
(44
|
)
|
|
$
|
17
|
|
|
$
|
(27
|
)
|
Other comprehensive income (loss)
|
$
|
(908
|
)
|
|
$
|
1,070
|
|
|
$
|
162
|
|
|
$
|
(1,891
|
)
|
|
$
|
753
|
|
|
$
|
(1,138
|
)
|
|
Foreign Currency
Translation
|
|
Available-for-Sale Investment
|
|
Cash Flow Hedges
|
|
Total
|
||||||||
Balance, December 31, 2016
|
$
|
(453
|
)
|
|
$
|
4,088
|
|
|
$
|
(20
|
)
|
|
$
|
3,615
|
|
Current period change
|
1,835
|
|
|
(1,669
|
)
|
|
(4
|
)
|
|
162
|
|
||||
Balance, September 30, 2017
|
$
|
1,382
|
|
|
$
|
2,419
|
|
|
$
|
(24
|
)
|
|
$
|
3,777
|
|
•
|
Healthcare
|
•
|
Education
|
•
|
Business Advisory
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Healthcare:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
79,582
|
|
|
$
|
103,425
|
|
|
$
|
261,261
|
|
|
$
|
323,531
|
|
Operating income
|
$
|
25,778
|
|
|
$
|
38,824
|
|
|
$
|
83,580
|
|
|
$
|
119,229
|
|
Segment operating income as a percentage of segment revenues
|
32.4
|
%
|
|
37.5
|
%
|
|
32.0
|
%
|
|
36.9
|
%
|
||||
Education:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
41,422
|
|
|
$
|
38,621
|
|
|
$
|
127,629
|
|
|
$
|
111,816
|
|
Operating income
|
$
|
7,762
|
|
|
$
|
10,896
|
|
|
$
|
31,772
|
|
|
$
|
31,474
|
|
Segment operating income as a percentage of segment revenues
|
18.7
|
%
|
|
28.2
|
%
|
|
24.9
|
%
|
|
28.1
|
%
|
||||
Business Advisory:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
55,372
|
|
|
$
|
41,354
|
|
|
$
|
157,753
|
|
|
$
|
112,801
|
|
Operating income
|
$
|
12,832
|
|
|
$
|
8,608
|
|
|
$
|
34,890
|
|
|
$
|
23,275
|
|
Segment operating income as a percentage of segment revenues
|
23.2
|
%
|
|
20.8
|
%
|
|
22.1
|
%
|
|
20.6
|
%
|
||||
Total Company:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
176,376
|
|
|
$
|
183,400
|
|
|
$
|
546,643
|
|
|
$
|
548,148
|
|
Reimbursable expenses
|
17,982
|
|
|
19,093
|
|
|
55,862
|
|
|
54,636
|
|
||||
Total revenues and reimbursable expenses
|
$
|
194,358
|
|
|
$
|
202,493
|
|
|
$
|
602,505
|
|
|
$
|
602,784
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
$
|
46,372
|
|
|
$
|
58,328
|
|
|
$
|
150,242
|
|
|
$
|
173,978
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
|
|
||||||||
Other operating expenses
|
29,448
|
|
|
26,502
|
|
|
92,643
|
|
|
84,595
|
|
||||
Other losses (gains), net
|
880
|
|
|
494
|
|
|
(222
|
)
|
|
494
|
|
||||
Depreciation and amortization
|
9,946
|
|
|
8,092
|
|
|
28,549
|
|
|
23,064
|
|
||||
Goodwill impairment charge
(1)
|
—
|
|
|
—
|
|
|
209,600
|
|
|
—
|
|
||||
Other expense, net
|
3,950
|
|
|
3,687
|
|
|
10,607
|
|
|
11,034
|
|
||||
Income (loss) from continuing operations before income tax expense
|
$
|
2,148
|
|
|
$
|
19,553
|
|
|
$
|
(190,935
|
)
|
|
$
|
54,791
|
|
(1)
|
The goodwill impairment charge is not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Education
|
•
|
Business Advisory
|
Segment and Consolidated Operating Results
(in thousands, except per share amounts):
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Healthcare:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
79,582
|
|
|
$
|
103,425
|
|
|
$
|
261,261
|
|
|
$
|
323,531
|
|
Operating income
|
|
$
|
25,778
|
|
|
$
|
38,824
|
|
|
$
|
83,580
|
|
|
$
|
119,229
|
|
Segment operating income as a percentage of segment revenues
|
|
32.4
|
%
|
|
37.5
|
%
|
|
32.0
|
%
|
|
36.9
|
%
|
||||
Education:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
41,422
|
|
|
$
|
38,621
|
|
|
$
|
127,629
|
|
|
$
|
111,816
|
|
Operating income
|
|
$
|
7,762
|
|
|
$
|
10,896
|
|
|
$
|
31,772
|
|
|
$
|
31,474
|
|
Segment operating income as a percentage of segment revenues
|
|
18.7
|
%
|
|
28.2
|
%
|
|
24.9
|
%
|
|
28.1
|
%
|
||||
Business Advisory:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
55,372
|
|
|
$
|
41,354
|
|
|
$
|
157,753
|
|
|
$
|
112,801
|
|
Operating income
|
|
$
|
12,832
|
|
|
$
|
8,608
|
|
|
$
|
34,890
|
|
|
$
|
23,275
|
|
Segment operating income as a percentage of segment revenues
|
|
23.2
|
%
|
|
20.8
|
%
|
|
22.1
|
%
|
|
20.6
|
%
|
||||
Total Company:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
176,376
|
|
|
$
|
183,400
|
|
|
$
|
546,643
|
|
|
$
|
548,148
|
|
Reimbursable expenses
|
|
17,982
|
|
|
19,093
|
|
|
55,862
|
|
|
54,636
|
|
||||
Total revenues and reimbursable expenses
|
|
$
|
194,358
|
|
|
$
|
202,493
|
|
|
$
|
602,505
|
|
|
$
|
602,784
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income
|
|
$
|
46,372
|
|
|
$
|
58,328
|
|
|
$
|
150,242
|
|
|
$
|
173,978
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
|
|
|
||||||||
Other operating expenses
|
|
29,448
|
|
|
26,502
|
|
|
92,643
|
|
|
84,595
|
|
||||
Other losses (gains), net
|
|
880
|
|
|
494
|
|
|
(222
|
)
|
|
494
|
|
||||
Depreciation and amortization
|
|
9,946
|
|
|
8,092
|
|
|
28,549
|
|
|
23,064
|
|
||||
Goodwill impairment charge
(1)
|
|
—
|
|
|
—
|
|
|
209,600
|
|
|
—
|
|
||||
Total operating income (loss)
|
|
6,098
|
|
|
23,240
|
|
|
(180,328
|
)
|
|
65,825
|
|
||||
Other expense, net
|
|
(3,950
|
)
|
|
(3,687
|
)
|
|
(10,607
|
)
|
|
(11,034
|
)
|
||||
Income (loss) from continuing operations before income tax expense
|
|
2,148
|
|
|
19,553
|
|
|
(190,935
|
)
|
|
54,791
|
|
||||
Income tax expense (benefit)
|
|
(1,984
|
)
|
|
7,265
|
|
|
(49,740
|
)
|
|
19,498
|
|
||||
Net income (loss) from continuing operations
|
|
$
|
4,132
|
|
|
$
|
12,288
|
|
|
$
|
(141,195
|
)
|
|
$
|
35,293
|
|
Earnings (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.19
|
|
|
$
|
0.58
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.67
|
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
0.57
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.65
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
Other Operating Data:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Number of full-time billable consultants (at period end)
(2)
:
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
761
|
|
|
1,010
|
|
|
761
|
|
|
1,010
|
|
||||
Education
|
|
536
|
|
|
466
|
|
|
536
|
|
|
466
|
|
||||
Business Advisory
|
|
830
|
|
|
545
|
|
|
830
|
|
|
545
|
|
||||
Total
|
|
2,127
|
|
|
2,021
|
|
|
2,127
|
|
|
2,021
|
|
||||
Average number of full-time billable consultants (for the period)
(2)
:
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
741
|
|
|
984
|
|
|
805
|
|
|
1,005
|
|
||||
Education
|
|
527
|
|
|
447
|
|
|
497
|
|
|
425
|
|
||||
Business Advisory
|
|
779
|
|
|
530
|
|
|
710
|
|
|
465
|
|
||||
Total
|
|
2,047
|
|
|
1,961
|
|
|
2,012
|
|
|
1,895
|
|
||||
Full-time billable consultant utilization rate
(3)
:
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
80.3
|
%
|
|
77.0
|
%
|
|
76.6
|
%
|
|
78.6
|
%
|
||||
Education
|
|
70.9
|
%
|
|
68.0
|
%
|
|
73.6
|
%
|
|
71.2
|
%
|
||||
Business Advisory
|
|
72.9
|
%
|
|
73.5
|
%
|
|
73.4
|
%
|
|
72.4
|
%
|
||||
Total
|
|
75.0
|
%
|
|
73.9
|
%
|
|
74.7
|
%
|
|
75.3
|
%
|
||||
Full-time billable consultant average billing rate per hour
(4)
:
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
$
|
190
|
|
|
$
|
203
|
|
|
$
|
200
|
|
|
$
|
209
|
|
Education
|
|
$
|
210
|
|
|
$
|
220
|
|
|
$
|
215
|
|
|
$
|
217
|
|
Business Advisory
|
|
$
|
197
|
|
|
$
|
203
|
|
|
$
|
195
|
|
|
$
|
216
|
|
Total
|
|
$
|
197
|
|
|
$
|
207
|
|
|
$
|
202
|
|
|
$
|
212
|
|
Revenue per full-time billable consultant (in thousands):
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
$
|
69
|
|
|
$
|
73
|
|
|
$
|
211
|
|
|
$
|
231
|
|
Education
|
|
$
|
69
|
|
|
$
|
72
|
|
|
$
|
226
|
|
|
$
|
224
|
|
Business Advisory
|
|
$
|
67
|
|
|
$
|
72
|
|
|
$
|
212
|
|
|
$
|
229
|
|
Total
|
|
$
|
68
|
|
|
$
|
72
|
|
|
$
|
215
|
|
|
$
|
229
|
|
Average number of full-time equivalents (for the period)
(5)
:
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
214
|
|
|
204
|
|
|
215
|
|
|
201
|
|
||||
Education
|
|
35
|
|
|
40
|
|
|
36
|
|
|
37
|
|
||||
Business Advisory
|
|
26
|
|
|
25
|
|
|
21
|
|
|
19
|
|
||||
Total
|
|
275
|
|
|
269
|
|
|
272
|
|
|
257
|
|
||||
Revenue per full-time equivalent (in thousands):
|
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
|
$
|
134
|
|
|
$
|
156
|
|
|
$
|
427
|
|
|
$
|
456
|
|
Education
|
|
$
|
138
|
|
|
$
|
158
|
|
|
$
|
419
|
|
|
$
|
436
|
|
Business Advisory
|
|
$
|
108
|
|
|
$
|
126
|
|
|
$
|
342
|
|
|
$
|
335
|
|
Total
|
|
$
|
132
|
|
|
$
|
154
|
|
|
$
|
420
|
|
|
$
|
444
|
|
(1)
|
The non-cash goodwill impairment charge is not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.
|
(2)
|
Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked.
|
(3)
|
Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.
|
(4)
|
Average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.
|
(5)
|
Consists of cultural transformation consultants within our Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
$
|
176,376
|
|
|
$
|
183,400
|
|
|
$
|
546,643
|
|
|
$
|
548,148
|
|
Net income (loss) from continuing operations
|
$
|
4,132
|
|
|
$
|
12,288
|
|
|
$
|
(141,195
|
)
|
|
$
|
35,293
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income tax expense (benefit)
|
(1,984
|
)
|
|
7,265
|
|
|
(49,740
|
)
|
|
19,498
|
|
||||
Interest expense, net of interest income
|
4,880
|
|
|
4,176
|
|
|
13,811
|
|
|
12,270
|
|
||||
Depreciation and amortization
|
12,603
|
|
|
12,144
|
|
|
36,937
|
|
|
34,342
|
|
||||
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)
|
19,631
|
|
|
35,873
|
|
|
(140,187
|
)
|
|
101,403
|
|
||||
Add back:
|
|
|
|
|
|
|
|
||||||||
Restructuring charges
|
1,347
|
|
|
1,049
|
|
|
5,295
|
|
|
4,129
|
|
||||
Other losses (gains), net
|
880
|
|
|
494
|
|
|
(222
|
)
|
|
494
|
|
||||
Goodwill impairment charge
|
—
|
|
|
—
|
|
|
209,600
|
|
|
—
|
|
||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
(931
|
)
|
|
—
|
|
||||
Foreign currency transaction losses (gains), net
|
(385
|
)
|
|
84
|
|
|
(449
|
)
|
|
(270
|
)
|
||||
Adjusted EBITDA
|
$
|
21,473
|
|
|
$
|
37,500
|
|
|
$
|
73,106
|
|
|
$
|
105,756
|
|
Adjusted EBITDA as a percentage of revenues
|
12.2
|
%
|
|
20.4
|
%
|
|
13.4
|
%
|
|
19.3
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) from continuing operations
|
$
|
4,132
|
|
|
$
|
12,288
|
|
|
$
|
(141,195
|
)
|
|
$
|
35,293
|
|
Weighted average shares - diluted
|
21,622
|
|
|
21,445
|
|
|
21,413
|
|
|
21,427
|
|
||||
Diluted earnings (loss) per share from continuing operations
|
$
|
0.19
|
|
|
$
|
0.57
|
|
|
$
|
(6.59
|
)
|
|
$
|
1.65
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Amortization of intangible assets
|
8,834
|
|
|
8,771
|
|
|
26,432
|
|
|
24,369
|
|
||||
Restructuring charges
|
1,347
|
|
|
1,049
|
|
|
5,295
|
|
|
4,129
|
|
||||
Other losses (gains), net
|
880
|
|
|
494
|
|
|
(222
|
)
|
|
494
|
|
||||
Goodwill impairment charge
|
—
|
|
|
—
|
|
|
209,600
|
|
|
—
|
|
||||
Non-cash interest on convertible notes
|
1,974
|
|
|
1,883
|
|
|
5,853
|
|
|
5,582
|
|
||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
(931
|
)
|
|
—
|
|
||||
Tax effect
|
(5,100
|
)
|
|
(4,794
|
)
|
|
(70,362
|
)
|
|
(13,588
|
)
|
||||
Tax benefit related to "check-the-box" election
|
(2,748
|
)
|
|
—
|
|
|
(2,748
|
)
|
|
—
|
|
||||
Total adjustments, net of tax
|
5,187
|
|
|
7,403
|
|
|
172,917
|
|
|
20,986
|
|
||||
Adjusted net income from continuing operations
|
$
|
9,319
|
|
|
$
|
19,691
|
|
|
$
|
31,722
|
|
|
$
|
56,279
|
|
Adjusted weighted average shares - diluted
|
21,622
|
|
|
21,445
|
|
|
21,585
|
|
|
21,427
|
|
||||
Adjusted diluted earnings per share from continuing operations
|
$
|
0.43
|
|
|
$
|
0.92
|
|
|
$
|
1.47
|
|
|
$
|
2.63
|
|
|
|
Nine Months Ended
September 30, |
||||||
Cash Flows (in thousands):
|
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
|
$
|
52,432
|
|
|
$
|
79,745
|
|
Net cash used in investing activities
|
|
(125,253
|
)
|
|
(81,233
|
)
|
||
Net cash provided by (used in) financing activities
|
|
64,262
|
|
|
(47,979
|
)
|
||
Effect of exchange rate changes on cash
|
|
192
|
|
|
133
|
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(8,367
|
)
|
|
$
|
(49,334
|
)
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Contingent consideration
|
$
|
22,469
|
|
|
$
|
7,743
|
|
|
$
|
13,126
|
|
|
$
|
1,600
|
|
|
$
|
—
|
|
Promissory note—principal and interest
|
$
|
5,682
|
|
|
$
|
650
|
|
|
$
|
1,293
|
|
|
$
|
1,283
|
|
|
$
|
2,456
|
|
Reporting Unit
|
|
Carrying Value
of Goodwill
|
||
Healthcare
|
|
$
|
427,209
|
|
Education
|
|
102,830
|
|
|
Business Advisory
|
|
16,094
|
|
|
Enterprise Solutions and Analytics
|
|
45,119
|
|
|
Strategy and Innovation
|
|
87,432
|
|
|
Life Sciences
|
|
10,691
|
|
|
Total
|
|
$
|
689,375
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 4.
|
CONTROLS AND PROCEDURES.
|
ITEM 1.
|
LEGAL PROCEEDINGS.
|
ITEM 1A.
|
RISK FACTORS.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Dollar Value of Shares
that may yet be
Purchased under the
Plans or Programs
(2)
|
||||||
July 1, 2017 - July 31, 2017
|
|
3,194
|
|
|
$
|
43.08
|
|
|
—
|
|
|
$
|
35,143,546
|
|
August 1, 2017 - August 31, 2017
|
|
796
|
|
|
$
|
35.47
|
|
|
—
|
|
|
$
|
35,143,546
|
|
September 1, 2017 - September 30, 2017
|
|
808
|
|
|
$
|
30.95
|
|
|
—
|
|
|
$
|
35,143,546
|
|
Total
|
|
4,798
|
|
|
$
|
39.78
|
|
|
—
|
|
|
|
(1)
|
The number of shares repurchased for each period represents shares to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the Share Repurchase Program.
|
(2)
|
As of the end of the period.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
ITEM 5.
|
OTHER INFORMATION.
|
ITEM 6.
|
EXHIBITS.
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
herewith
|
|
Furnished
herewith
|
|
Form
|
|
Period
Ending
|
|
Exhibit
|
|
Filing
Date
|
10.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huron Consulting Group Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
November 1, 2017
|
|
|
/
S
/ J
OHN
D. K
ELLY
|
|
|
|
|
John D. Kelly
|
|
|
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|
BORROWER:
|
HURON CONSULTING GROUP INC.,
a Delaware corporation
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
GUARANTORS:
|
HURON CONSULTING GROUP HOLDINGS LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON CONSULTING SERVICES LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON MANAGEMENT SERVICES LLC,
formerly known as WELLSPRING MANAGEMENT SERVICES LLC, a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON DEMAND LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON TECHNOLOGIES INC.,
a Delaware corporation
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
STUDER HOLDINGS, INC.,
a Delaware corporation
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
THE STUDER GROUP, L.L.C.,
a Florida limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
INNOSIGHT HOLDINGS, LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
INNOSIGHT INTERNATIONAL, LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
INNOSIGHT CONSULTING, LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON AVIATION ONE LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
|
HURON AVIATION TWO LLC,
a Delaware limited liability company
By:
/s/ JOHN KELLY
Name: John Kelly
Title: EVP, CFO and Treasurer
|
ADMINISTRATIVE
AGENT:
|
BANK OF AMERICA, N.A.,
as Administrative Agent and Collateral Agent
By:
/s/ KYLE D. HARDING
Name: Kyle D. Harding
Title: Assistant Vice President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Huron Consulting Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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|
November 1, 2017
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By:
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|
/S/ JAMES H. ROTH
|
|
|
|
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|
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James H. Roth
|
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|
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|
President and Chief Executive Officer
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1.
|
I have reviewed this Quarterly Report on Form 10-Q of Huron Consulting Group Inc.;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
|
November 1, 2017
|
|
By:
|
|
/S/ JOHN D. KELLY
|
|
|
|
|
|
|
John D. Kelly
|
|
|
|
|
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
Date:
|
|
November 1, 2017
|
|
By:
|
|
/
S
/ J
AMES
H. R
OTH
|
|
|
|
|
|
|
James H. Roth
|
|
|
|
|
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
Date:
|
|
November 1, 2017
|
|
By:
|
|
/
S
/ J
OHN
D. K
ELLY
|
|
|
|
|
|
|
John D. Kelly
|
|
|
|
|
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|