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☒
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ANNUAL 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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Title of each class
|
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Trading Symbol
|
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
|
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HURN
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NASDAQ Global Select Market
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Large Accelerated Filer
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☒
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Accelerated Filer
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☐
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Non-accelerated Filer
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☐
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Smaller Reporting
Company
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☐
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Emerging Growth Company
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☐
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Page
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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ITEM 1.
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BUSINESS.
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•
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Healthcare
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•
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Business Advisory
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•
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Education
|
ITEM 1A.
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RISK FACTORS.
|
•
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fluctuations in U.S. and global economies;
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•
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the U.S. or global financial markets and the availability, costs, and terms of credit;
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•
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changes in laws and regulations; and
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•
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other economic factors and general business conditions.
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•
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the number and size of client engagements;
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•
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the timing of the commencement, completion and termination of engagements, which in many cases is unpredictable;
|
•
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our ability to transition our consultants efficiently from completed engagements to new engagements;
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•
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the hiring of additional consultants because there is generally a transition period for new consultants that results in a temporary drop in our utilization rate;
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•
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unanticipated changes in the scope of client engagements;
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•
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our ability to forecast demand for our services and thereby maintain an appropriate level of consultants; and
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•
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conditions affecting the industries in which we practice as well as general economic conditions.
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•
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our clients’ perception of our ability to add value through our services;
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•
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the market demand for the services we provide;
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•
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an increase in the number of engagements in the government sector, which are subject to federal contracting regulations;
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•
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introduction of new services by us or our competitors;
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•
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our competition and the pricing policies of our competitors; and
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•
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current economic conditions.
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•
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our inability to estimate demand for the new service offerings;
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•
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competition from more established market participants;
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•
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exposure to new legal and operational risks;
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•
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a lack of market understanding;
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•
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unanticipated expenses to recruit and hire qualified consultants and to market our new service offerings; and
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•
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unanticipated challenges with service delivery.
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•
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the timing and volume of client invoices processed and payments received, which may affect the fees payable to us under certain of our engagements;
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•
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client decisions regarding renewal or termination of their contracts;
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•
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the amount and timing of costs related to the development or acquisition of technologies or businesses; and
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•
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unforeseen legal expenses, including litigation and other settlement gains or losses.
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•
|
compliance with additional U.S. regulations and those of other nations applicable to international operations;
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•
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cultural and language differences;
|
•
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employment laws, including immigration laws affecting the mobility of employees, and rules and related social and cultural factors;
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•
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losses related to start-up costs, lack of revenue, higher costs due to low utilization, and delays in purchase decisions by prospective clients;
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•
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currency fluctuations between the U.S. dollar and foreign currencies;
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•
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restrictions on the repatriation of earnings;
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•
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potentially adverse tax consequences and limitations on our ability to utilize losses generated in our foreign operations;
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•
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different regulatory requirements and other barriers to conducting business;
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•
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different or less stable political and economic environments;
|
•
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greater personal security risks for employees traveling to or located in unstable locations; and
|
•
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civil disturbances or other catastrophic events.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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ITEM 3.
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LEGAL PROCEEDINGS.
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ITEM 4.
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MINE SAFETY DISCLOSURES.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
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)
|
||||||
October 1, 2019 – October 31, 2019
|
|
2,026
|
|
|
$
|
60.64
|
|
|
—
|
|
|
$
|
35,143,546
|
|
November 1, 2019 – November 30, 2019
|
|
89,263
|
|
|
$
|
66.63
|
|
|
89,263
|
|
|
$
|
29,193,168
|
|
December 1, 2019 – December 31, 2019
|
|
121,964
|
|
|
$
|
68.21
|
|
|
121,174
|
|
|
$
|
20,924,416
|
|
Total
|
|
213,253
|
|
|
$
|
67.48
|
|
|
210,437
|
|
|
|
(1)
|
The number of shares repurchased included 2,026 shares in October 2019 and 790 shares in December 2019 to satisfy employee tax withholding requirements. No shares were repurchased in November 2019 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the Share Repurchase Program.
|
(2)
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As of the end of the period.
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ITEM 6.
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SELECTED FINANCIAL DATA.
|
Consolidated Statements of Operations
(in thousands, except per share data):
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Revenues and reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
876,757
|
|
|
$
|
795,125
|
|
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
Reimbursable expenses
|
|
88,717
|
|
|
82,874
|
|
|
75,175
|
|
|
71,712
|
|
|
70,013
|
|
|||||
Total revenues and reimbursable expenses
|
|
965,474
|
|
|
877,999
|
|
|
807,745
|
|
|
797,984
|
|
|
769,023
|
|
|||||
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses) (1):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct costs
|
|
575,602
|
|
|
521,537
|
|
|
454,806
|
|
|
437,556
|
|
|
401,915
|
|
|||||
Amortization of intangible assets and software development costs
|
|
5,375
|
|
|
4,247
|
|
|
10,932
|
|
|
15,140
|
|
|
16,788
|
|
|||||
Reimbursable expenses
|
|
88,696
|
|
|
82,923
|
|
|
75,436
|
|
|
71,749
|
|
|
69,932
|
|
|||||
Total direct costs and reimbursable expenses
|
|
669,673
|
|
|
608,707
|
|
|
541,174
|
|
|
524,445
|
|
|
488,635
|
|
|||||
Operating expenses and other losses (gains), net:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
203,071
|
|
|
180,983
|
|
|
175,364
|
|
|
160,204
|
|
|
157,902
|
|
|||||
Restructuring charges
|
|
1,855
|
|
|
3,657
|
|
|
6,246
|
|
|
9,592
|
|
|
3,329
|
|
|||||
Litigation and other losses (gains), net
|
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||||
Depreciation and amortization (1)
|
|
28,365
|
|
|
34,575
|
|
|
38,213
|
|
|
31,499
|
|
|
25,135
|
|
|||||
Goodwill impairment charges
|
|
—
|
|
|
—
|
|
|
253,093
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses and other losses (gains), net
|
|
232,095
|
|
|
217,196
|
|
|
474,027
|
|
|
199,305
|
|
|
176,890
|
|
|||||
Operating income (loss)
|
|
63,706
|
|
|
52,096
|
|
|
(207,456
|
)
|
|
74,234
|
|
|
103,498
|
|
|||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net of interest income
|
|
(15,648
|
)
|
|
(19,013
|
)
|
|
(18,613
|
)
|
|
(16,274
|
)
|
|
(18,136
|
)
|
|||||
Other income (expense), net
|
|
4,433
|
|
|
(7,862
|
)
|
|
3,565
|
|
|
1,197
|
|
|
(1,797
|
)
|
|||||
Total other expense, net
|
|
(11,215
|
)
|
|
(26,875
|
)
|
|
(15,048
|
)
|
|
(15,077
|
)
|
|
(19,933
|
)
|
|||||
Income (loss) from continuing operations before taxes
|
|
52,491
|
|
|
25,221
|
|
|
(222,504
|
)
|
|
59,157
|
|
|
83,565
|
|
|||||
Income tax expense (benefit)
|
|
10,512
|
|
|
11,277
|
|
|
(51,999
|
)
|
|
19,677
|
|
|
21,670
|
|
|||||
Net income (loss) from continuing operations
|
|
41,979
|
|
|
13,944
|
|
|
(170,505
|
)
|
|
39,480
|
|
|
61,895
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
|
(236
|
)
|
|
(298
|
)
|
|
388
|
|
|
(1,863
|
)
|
|
(2,843
|
)
|
|||||
Net income (loss)
|
|
$
|
41,743
|
|
|
$
|
13,646
|
|
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
Consolidated Statements of Operations
(in thousands, except per share data):
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Net earnings (loss) per basic share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
|
$
|
1.91
|
|
|
$
|
0.64
|
|
|
$
|
(7.95
|
)
|
|
$
|
1.87
|
|
|
$
|
2.80
|
|
Income (loss) from discontinued operations, net of tax
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|
(0.09
|
)
|
|
(0.13
|
)
|
|||||
Net income (loss)
|
|
$
|
1.90
|
|
|
$
|
0.63
|
|
|
$
|
(7.93
|
)
|
|
$
|
1.78
|
|
|
$
|
2.67
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
|
$
|
1.87
|
|
|
$
|
0.63
|
|
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
Income (loss) from discontinued operations, net of tax
|
|
(0.02
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|
(0.08
|
)
|
|
(0.13
|
)
|
|||||
Net income (loss)
|
|
$
|
1.85
|
|
|
$
|
0.62
|
|
|
$
|
(7.93
|
)
|
|
$
|
1.76
|
|
|
$
|
2.61
|
|
Weighted average shares used in calculating net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
21,993
|
|
|
21,706
|
|
|
21,439
|
|
|
21,084
|
|
|
22,136
|
|
|||||
Diluted
|
|
22,507
|
|
|
22,058
|
|
|
21,439
|
|
|
21,424
|
|
|
22,600
|
|
Consolidated Balance Sheet Data
(in thousands):
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Cash and cash equivalents
|
|
$
|
11,604
|
|
|
$
|
33,107
|
|
|
$
|
16,909
|
|
|
$
|
17,027
|
|
|
$
|
58,437
|
|
Working capital (2)
|
|
$
|
20,192
|
|
|
$
|
(185,374
|
)
|
|
$
|
51,828
|
|
|
$
|
44,314
|
|
|
$
|
96,966
|
|
Total assets
|
|
$
|
1,104,271
|
|
|
$
|
1,049,532
|
|
|
$
|
1,036,928
|
|
|
$
|
1,153,215
|
|
|
$
|
1,159,543
|
|
Long-term debt, net of current portion (2)
|
|
$
|
208,324
|
|
|
$
|
53,853
|
|
|
$
|
342,507
|
|
|
$
|
292,065
|
|
|
$
|
307,376
|
|
Total stockholders’ equity (3)
|
|
$
|
585,465
|
|
|
$
|
540,624
|
|
|
$
|
503,316
|
|
|
$
|
648,033
|
|
|
$
|
652,325
|
|
(1)
|
Intangible asset amortization relating to customer contracts, certain client relationships, and software and amortization of software development costs are presented as a component of total direct costs. Depreciation and intangible assets amortization not classified as direct costs are presented as a component of operating expenses.
|
(2)
|
Our Convertible Notes with a principal amount of $250.0 million were classified as short-term debt on our consolidated balance sheet at December 31, 2018 as they had a maturity date of October 1, 2019. Upon maturity, we refinanced the outstanding notes with the borrowing capacity available under our revolving credit facility, which is classified as long-term debt on our consolidated balance sheet. Refer to the "Liquidity and Capital Resources" section under Part II—Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for more information on our outstanding borrowings.
|
(3)
|
We have not declared or paid dividends on our common stock in the periods presented above. See Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends."
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Segment and Consolidated Operating Results (in thousands):
|
|
|
|
|
|
||||||
Healthcare:
|
|
|
|
|
|
||||||
Revenues
|
$
|
399,221
|
|
|
$
|
364,763
|
|
|
$
|
356,909
|
|
Operating income
|
$
|
125,724
|
|
|
$
|
108,060
|
|
|
$
|
118,761
|
|
Segment operating income as a percentage of segment revenues
|
31.5
|
%
|
|
29.6
|
%
|
|
33.3
|
%
|
|||
Business Advisory:
|
|
|
|
|
|
||||||
Revenues
|
$
|
252,508
|
|
|
$
|
236,185
|
|
|
$
|
207,753
|
|
Operating income
|
$
|
49,695
|
|
|
$
|
50,625
|
|
|
$
|
46,600
|
|
Segment operating income as a percentage of segment revenues
|
19.7
|
%
|
|
21.4
|
%
|
|
22.4
|
%
|
|||
Education:
|
|
|
|
|
|
||||||
Revenues
|
$
|
225,028
|
|
|
$
|
194,177
|
|
|
$
|
167,908
|
|
Operating income
|
$
|
55,741
|
|
|
$
|
48,243
|
|
|
$
|
40,318
|
|
Segment operating income as a percentage of segment revenues
|
24.8
|
%
|
|
24.8
|
%
|
|
24.0
|
%
|
|||
Total Company:
|
|
|
|
|
|
||||||
Revenues
|
$
|
876,757
|
|
|
$
|
795,125
|
|
|
$
|
732,570
|
|
Reimbursable expenses
|
88,717
|
|
|
82,874
|
|
|
75,175
|
|
|||
Total revenues and reimbursable expenses
|
$
|
965,474
|
|
|
$
|
877,999
|
|
|
$
|
807,745
|
|
Statements of Operations reconciliation:
|
|
|
|
|
|
||||||
Segment operating income
|
$
|
231,160
|
|
|
$
|
206,928
|
|
|
$
|
205,679
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
||||||
Other operating expenses
|
140,285
|
|
|
122,276
|
|
|
120,718
|
|
|||
Litigation and other losses (gains), net
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|||
Depreciation and amortization
|
28,365
|
|
|
34,575
|
|
|
38,213
|
|
|||
Goodwill impairment charges (1)
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Total operating income (loss)
|
63,706
|
|
|
52,096
|
|
|
(207,456
|
)
|
|||
Other expense, net
|
11,215
|
|
|
26,875
|
|
|
15,048
|
|
|||
Income (loss) from continuing operations before taxes
|
52,491
|
|
|
25,221
|
|
|
(222,504
|
)
|
|||
Income tax expense (benefit)
|
10,512
|
|
|
11,277
|
|
|
(51,999
|
)
|
|||
Net income (loss) from continuing operations
|
$
|
41,979
|
|
|
$
|
13,944
|
|
|
$
|
(170,505
|
)
|
Earnings (loss) per share from continuing operations
|
|
|
|
|
|
||||||
Basic
|
$
|
1.91
|
|
|
$
|
0.64
|
|
|
$
|
(7.95
|
)
|
Diluted
|
$
|
1.87
|
|
|
$
|
0.63
|
|
|
$
|
(7.95
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Other Operating Data:
|
|
|
|
|
|
||||||
Number of full-time billable consultants (at period end) (2):
|
|
|
|
|
|
||||||
Healthcare
|
890
|
|
|
813
|
|
|
778
|
|
|||
Business Advisory
|
930
|
|
|
813
|
|
|
809
|
|
|||
Education
|
756
|
|
|
621
|
|
|
549
|
|
|||
Total
|
2,576
|
|
|
2,247
|
|
|
2,136
|
|
|||
Average number of full-time billable consultants (for the period) (2):
|
|
|
|
|
|
||||||
Healthcare
|
849
|
|
|
807
|
|
|
796
|
|
|||
Business Advisory
|
892
|
|
|
769
|
|
|
740
|
|
|||
Education
|
686
|
|
|
589
|
|
|
509
|
|
|||
Total
|
2,427
|
|
|
2,165
|
|
|
2,045
|
|
|||
Full-time billable consultant utilization rate (3):
|
|
|
|
|
|
||||||
Healthcare
|
79.4
|
%
|
|
81.7
|
%
|
|
78.4
|
%
|
|||
Business Advisory
|
72.5
|
%
|
|
73.8
|
%
|
|
71.5
|
%
|
|||
Education
|
76.8
|
%
|
|
76.6
|
%
|
|
72.8
|
%
|
|||
Total
|
76.1
|
%
|
|
77.5
|
%
|
|
74.5
|
%
|
|||
Full-time billable consultant average billing rate per hour (4):
|
|
|
|
|
|
||||||
Healthcare
|
$
|
231
|
|
|
$
|
209
|
|
|
$
|
206
|
|
Business Advisory (5)
|
$
|
201
|
|
|
$
|
215
|
|
|
$
|
205
|
|
Education
|
$
|
199
|
|
|
$
|
202
|
|
|
$
|
213
|
|
Total (5)
|
$
|
211
|
|
|
$
|
209
|
|
|
$
|
207
|
|
Revenue per full-time billable consultant (in thousands):
|
|
|
|
|
|
||||||
Healthcare
|
$
|
331
|
|
|
$
|
307
|
|
|
$
|
295
|
|
Business Advisory
|
$
|
273
|
|
|
$
|
293
|
|
|
$
|
268
|
|
Education
|
$
|
285
|
|
|
$
|
289
|
|
|
$
|
291
|
|
Total
|
$
|
297
|
|
|
$
|
297
|
|
|
$
|
284
|
|
Average number of full-time equivalents (for the period) (6):
|
|
|
|
|
|
||||||
Healthcare
|
244
|
|
|
219
|
|
|
213
|
|
|||
Business Advisory
|
14
|
|
|
22
|
|
|
20
|
|
|||
Education
|
47
|
|
|
39
|
|
|
35
|
|
|||
Total
|
305
|
|
|
280
|
|
|
268
|
|
|||
Revenue per full-time equivalent (in thousands):
|
|
|
|
|
|
||||||
Healthcare
|
$
|
485
|
|
|
$
|
536
|
|
|
$
|
576
|
|
Business Advisory
|
$
|
655
|
|
|
$
|
484
|
|
|
$
|
464
|
|
Education
|
$
|
617
|
|
|
$
|
601
|
|
|
$
|
564
|
|
Total
|
$
|
513
|
|
|
$
|
541
|
|
|
$
|
566
|
|
(1)
|
The non-cash goodwill impairment charges are 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)
|
The Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $228, $246, and $233 for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(6)
|
Consists of coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to our clients.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
$
|
876,757
|
|
|
$
|
795,125
|
|
|
$
|
732,570
|
|
Net income (loss) from continuing operations
|
$
|
41,979
|
|
|
$
|
13,944
|
|
|
$
|
(170,505
|
)
|
Add back:
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
10,512
|
|
|
11,277
|
|
|
(51,999
|
)
|
|||
Interest expense, net of interest income
|
15,648
|
|
|
19,013
|
|
|
18,613
|
|
|||
Depreciation and amortization
|
33,740
|
|
|
38,822
|
|
|
49,145
|
|
|||
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)
|
101,879
|
|
|
83,056
|
|
|
(154,746
|
)
|
|||
Add back:
|
|
|
|
|
|
||||||
Restructuring charges
|
1,855
|
|
|
3,657
|
|
|
6,246
|
|
|||
Litigation and other losses (gains), net
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|||
Transaction-related expenses
|
2,680
|
|
|
—
|
|
|
—
|
|
|||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Other non-operating expense (income), net
|
—
|
|
|
5,807
|
|
|
(696
|
)
|
|||
Foreign currency transaction losses (gains), net
|
160
|
|
|
475
|
|
|
(434
|
)
|
|||
Adjusted EBITDA
|
$
|
105,378
|
|
|
$
|
90,976
|
|
|
$
|
104,574
|
|
Adjusted EBITDA as a percentage of revenues
|
12.0
|
%
|
|
11.4
|
%
|
|
14.3
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss) from continuing operations
|
$
|
41,979
|
|
|
$
|
13,944
|
|
|
$
|
(170,505
|
)
|
Weighted average shares - diluted
|
22,507
|
|
|
22,058
|
|
|
21,439
|
|
|||
Diluted earnings (loss) per share from continuing operations
|
$
|
1.87
|
|
|
$
|
0.63
|
|
|
$
|
(7.95
|
)
|
Add back:
|
|
|
|
|
|
||||||
Amortization of intangible assets
|
17,793
|
|
|
23,955
|
|
|
35,027
|
|
|||
Restructuring charges
|
1,855
|
|
|
3,657
|
|
|
6,246
|
|
|||
Litigation and other losses (gains), net
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|||
Transaction-related expenses
|
2,680
|
|
|
—
|
|
|
—
|
|
|||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Non-cash interest on convertible notes
|
6,436
|
|
|
8,232
|
|
|
7,851
|
|
|||
Other non-operating expense (income), net
|
—
|
|
|
5,807
|
|
|
(696
|
)
|
|||
Tax effect of adjustments
|
(7,200
|
)
|
|
(9,487
|
)
|
|
(91,557
|
)
|
|||
Tax expense related to the enactment of Tax Cuts and Jobs Act of 2017
|
—
|
|
|
1,749
|
|
|
8,762
|
|
|||
Tax benefit related to "check-the-box" election
|
(736
|
)
|
|
—
|
|
|
(2,728
|
)
|
|||
Total adjustments, net of tax
|
19,632
|
|
|
31,894
|
|
|
217,109
|
|
|||
Adjusted net income from continuing operations
|
$
|
61,611
|
|
|
$
|
45,838
|
|
|
$
|
46,604
|
|
Adjusted weighted average shares - diluted
|
22,507
|
|
|
22,058
|
|
|
21,627
|
|
|||
Adjusted diluted earnings per share from continuing operations
|
$
|
2.74
|
|
|
$
|
2.08
|
|
|
$
|
2.15
|
|
Cash Flows (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||
Net cash provided by operating activities
|
|
$
|
132,220
|
|
|
$
|
101,658
|
|
|
$
|
99,795
|
|
Net cash used in investing activities
|
|
(35,002
|
)
|
|
(18,562
|
)
|
|
(128,948
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
(118,836
|
)
|
|
(66,690
|
)
|
|
28,821
|
|
|||
Effect of exchange rate changes on cash
|
|
115
|
|
|
(208
|
)
|
|
214
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(21,503
|
)
|
|
$
|
16,198
|
|
|
$
|
(118
|
)
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
Thereafter
|
||||||||||
Long-term bank borrowings—principal and interest (1)
|
$
|
234,037
|
|
|
$
|
6,113
|
|
|
$
|
12,226
|
|
|
$
|
215,698
|
|
|
$
|
—
|
|
Promissory note—principal and interest (2)
|
4,276
|
|
|
661
|
|
|
1,308
|
|
|
2,307
|
|
|
—
|
|
|||||
Operating lease obligations (3)
|
90,887
|
|
|
9,772
|
|
|
23,541
|
|
|
22,363
|
|
|
35,211
|
|
|||||
Purchase obligations (4)
|
29,593
|
|
|
15,504
|
|
|
9,869
|
|
|
4,220
|
|
|
—
|
|
|||||
Deferred compensation (5)
|
27,544
|
|
|
|
|
|
|
|
|
|
|||||||||
Uncertain tax positions (6)
|
78
|
|
|
|
|
|
|
|
|
|
|||||||||
Total contractual obligations
|
$
|
386,415
|
|
|
$
|
32,050
|
|
|
$
|
46,944
|
|
|
$
|
244,588
|
|
|
$
|
35,211
|
|
(1)
|
The interest payments on long-term bank borrowings are estimated based on the principal amount outstanding and the interest rate in effect as of December 31, 2019. Actual future interest payments will differ due to changes in our borrowings outstanding and the interest rate on those borrowings, as the interest rate varies based on the fluctuations in the variable base rates and the spread we pay over those base rates pursuant to the Amended Credit Agreement. Refer to “Liquidity and Capital Resources” and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for more information on our outstanding borrowings.
|
(2)
|
The interest payments on the promissory note are estimated based on the principal amount outstanding, scheduled principal payments, and the interest rate in effect as of December 31, 2019. Actual future interest payments may differ due to changes in the principal amount outstanding and the interest rate on that principal amount, as the interest rate varies based on the fluctuations in the one-month LIBOR rate. Refer to “Liquidity and Capital Resources” and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for more information on the promissory note.
|
(3)
|
We lease our facilities under operating lease arrangements expiring on various dates through 2029, with various renewal options. We lease office facilities under non-cancelable operating leases that include fixed or minimum payments plus, in some cases, scheduled base rent increases over the term of the lease. Refer to Note 5 “Leases” within the notes to our consolidated financial statements for more information on our operating lease obligations.
|
(4)
|
Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations do not include agreements that are cancelable without penalty.
|
(5)
|
Included in deferred compensation and other liabilities on our consolidated balance sheet as of December 31, 2019 is a $27.5 million obligation for deferred compensation. The specific payment dates for the deferred compensation are unknown; therefore, the related balances have not been reflected in the “Payments Due by Period” section of the table. This deferred compensation liability is funded by corresponding deferred compensation plan assets. Refer to Note 15 “Employee Benefit and Deferred Compensation Plans” within the notes to our consolidated financial statements for more information on our deferred compensation plan.
|
(6)
|
Our liabilities for uncertain tax positions are classified as non-current and includes the accrual of potential payment of interest and penalties. We are unable to reasonably estimate the timing of future payments as it depends on examinations by taxing authorities; as such, the related balance has not been reflected in the “Payments Due by Period” section of the table.
|
|
Discount rate increased by 100 bps
|
Long-term growth rate decreased by 100 bps
|
||||
Strategy and Innovation:
|
|
|
||||
Decrease in fair value
|
$
|
(5,600
|
)
|
$
|
(3,600
|
)
|
Percentage by which fair value exceeds carrying value
|
35
|
%
|
37
|
%
|
Reporting Unit
|
|
Carrying Value
of Goodwill
|
||
Healthcare
|
|
$
|
428,729
|
|
Education
|
|
103,889
|
|
|
Business Advisory
|
|
16,094
|
|
|
Strategy and Innovation
|
|
87,410
|
|
|
Life Sciences
|
|
10,558
|
|
|
Enterprise Solutions and Analytics
|
|
—
|
|
|
Total
|
|
$
|
646,680
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
(i)
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
(ii)
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
(iii)
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Plan Category
|
Number of Shares
to be Issued Upon
Exercise of
Outstanding Options
|
|
Weighted Average
Exercise Price of
Outstanding Options
|
|
Number of Shares
Remaining Available
for Future Issuance
(excluding shares in
1st column)
|
||||
Equity compensation plans approved by shareholders:
|
|
|
|
|
|
||||
2004 Omnibus Stock Plan (1)
|
74,608
|
|
|
$
|
29.74
|
|
|
—
|
|
2012 Omnibus Incentive Plan (2)
|
31,785
|
|
|
$
|
39.19
|
|
|
1,073,349
|
|
Stock Ownership Participation Program (3)
|
—
|
|
|
$
|
—
|
|
|
33,497
|
|
Equity compensation plans not approved by shareholders
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
106,393
|
|
|
$
|
32.57
|
|
|
1,106,846
|
|
(1)
|
Our 2004 Omnibus Stock Plan was approved by the existing shareholders prior to our initial public offering. Upon adoption of the 2012 Omnibus Incentive Plan, we terminated the 2004 Omnibus Stock Plan with respect to future awards and no further awards will be granted under this plan.
|
(2)
|
Our 2012 Omnibus Incentive Plan was approved by our shareholders at our annual meeting held on May 1, 2012. Subsequent to the initial approval and through December 31, 2019, our shareholders have approved amendments to the 2012 Omnibus Incentive Plan to increase the number of shares reserved for issuance by 2,254,000, in the aggregate.
|
(3)
|
Our Stock Ownership Participation Program was approved by our shareholders at our annual meeting held on May 1, 2015.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
1.
|
Financial Statements—Our independent registered public accounting firm’s report and our Consolidated Financial Statements are listed below and begin on page F-1 of this Form 10-K.
|
2.
|
Financial Statement Schedules—The financial statement schedules required by this item are included in the Consolidated Financial Statements and accompanying notes.
|
3.
|
Exhibit Index
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
3.1
|
|
|
10-K
|
12/31/2004
|
3.1
|
2/16/2005
|
|
3.2
|
|
|
8-K
|
|
3.1
|
10/28/2015
|
|
4.1
|
|
|
S-1
(File No. 333-
115434)
|
|
4.1
|
10/5/2004
|
|
4.2
|
X
|
|
|
|
|
|
|
4.3
|
|
|
8-K
|
|
4.1
|
9/16/2014
|
|
10.1
|
|
|
S-1
(File No. 333-
115434)
|
|
10.1
|
10/5/2004
|
|
10.2*
|
|
|
S-8
|
|
10.1
|
5/5/2010
|
|
10.3*
|
|
|
10-K
|
12/31/2008
|
10.12
|
2/24/2009
|
|
10.4*
|
|
|
8-K
|
|
10.1
|
1/6/2017
|
|
10.5*
|
|
|
8-K
|
|
10.2
|
1/6/2017
|
|
10.6*
|
|
|
8-K
|
|
10.3
|
1/6/2017
|
|
10.7*
|
|
|
8-K
|
|
10.4
|
1/6/2017
|
|
10.8*
|
|
|
8-K
|
|
10.1
|
9/16/2019
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
10.9
|
|
|
10-K
|
12/31/2012
|
10.17
|
2/21/2013
|
|
10.10
|
|
|
10-K
|
12/31/2012
|
10.18
|
2/21/2013
|
|
10.11
|
|
|
10-K
|
12/31/2012
|
10.19
|
2/21/2013
|
|
10.12
|
|
|
8-K
|
|
10.1
|
1/4/2013
|
|
10.13†
|
X
|
|
|
|
|
|
|
10.14
|
|
|
8-K
|
|
10.1
|
10/16/2019
|
|
10.15*
|
|
|
10-K
|
12/31/2012
|
10.20
|
2/21/2013
|
|
10.16
|
|
|
8-K
|
|
10.2
|
9/5/2014
|
|
10.17
|
|
|
8-K
|
|
10.3
|
9/5/2014
|
|
10.18
|
|
|
8-K
|
|
10.4
|
9/5/2014
|
|
10.19
|
|
|
8-K
|
|
10.5
|
9/5/2014
|
|
10.20
|
|
|
8-K
|
|
10.1
|
9/16/2014
|
|
10.21
|
|
|
8-K
|
|
10.2
|
9/16/2014
|
|
10.22
|
|
|
8-K
|
|
10.3
|
9/16/2014
|
|
10.23
|
|
|
8-K
|
|
10.4
|
9/16/2014
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
10.24*
|
|
|
10-K
|
12/31/2014
|
10.31
|
2/24/2015
|
|
10.25*
|
|
|
10-K
|
12/31/2014
|
10.32
|
2/24/2015
|
|
10.26*
|
|
|
10-K
|
12/31/2014
|
10.33
|
2/24/2015
|
|
10.27*
|
|
|
10-K
|
12/31/2014
|
10.34
|
2/24/2015
|
|
10.28
|
|
|
8-K
|
|
10.1
|
4/2/2015
|
|
10.29
|
|
|
8-K
|
|
10.2
|
4/2/2015
|
|
10.30
|
|
|
8-K
|
|
10.3
|
4/2/2015
|
|
10.31*
|
|
|
DEF 14A
|
|
Appendix A
|
3/20/2015
|
|
10.32*
|
|
|
|
DEF 14A
|
|
Appendix A
|
3/27/2017
|
10.33*
|
|
|
DEF 14A
|
|
Appendix A
|
3/22/2019
|
|
10.34*
|
X
|
|
|
|
|
|
|
10.35
|
|
|
|
8-K
|
|
10.1
|
3/6/2017
|
10.36
|
|
|
10-Q
|
9/30/2017
|
10.1
|
11/1/2017
|
|
10.37
|
|
|
8-K
|
|
10.1
|
3/29/2018
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
10.38
|
|
|
8-K
|
|
10.1
|
10/3/2019
|
|
21.1
|
X
|
|
|
|
|
|
|
23.1
|
X
|
|
|
|
|
|
|
31.1
|
X
|
|
|
|
|
|
|
31.2
|
X
|
|
|
|
|
|
|
32.1
|
|
X
|
|
|
|
|
|
32.2
|
|
X
|
|
|
|
|
|
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.
|
X
|
|
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
X
|
|
|
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|
|
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|
|
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|
|
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|
|
|
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
X
|
|
|
|
|
|
*
|
Indicates the exhibit is a management contract or compensatory plan or arrangement.
|
†
|
Pursuant to Regulation S-K 601(b)(10)(iv), certain exhibits to this Exhibit have been omitted. The Company agrees to furnish supplementally to the Securities and Exchange Commission, upon its request, a copy of any or all omitted exhibits.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Huron Consulting Group Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JAMES H. ROTH
|
|
Chief Executive Officer and Director
|
|
2/25/2020
|
James H. Roth
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JAMES H. ROTH
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
2/25/2020
|
James H. Roth
|
|
|
||
|
|
|
||
/s/ JOHN F. MCCARTNEY
|
|
Non-Executive Chairman of the Board
|
|
2/25/2020
|
John F. McCartney
|
|
|
||
|
|
|
||
/s/ GEORGE E. MASSARO
|
|
Vice Chairman of the Board
|
|
2/25/2020
|
George E. Massaro
|
|
|
||
|
|
|
||
/s/ JOHN D. KELLY
|
|
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
2/25/2020
|
John D. Kelly
|
|
|
||
|
|
|
||
/s/ ELLEN P. WONG
|
|
Chief Accounting Officer (Principal Accounting Officer)
|
|
2/25/2020
|
Ellen P. Wong
|
|
|
||
|
|
|
||
/s/ H. EUGENE LOCKHART
|
|
Director
|
|
2/25/2020
|
H. Eugene Lockhart
|
|
|
||
|
|
|
||
/s/ HUGH E. SAWYER
|
|
Director
|
|
2/25/2020
|
Hugh E. Sawyer
|
|
|
||
|
|
|
|
|
/s/ EKTA SINGH-BUSHELL
|
|
Director
|
|
2/25/2020
|
Ekta Singh-Bushell
|
|
|
||
|
|
|
||
/s/ DEBRA ZUMWALT
|
|
Director
|
|
2/25/2020
|
Debra Zumwalt
|
|
|
|
|
Page
|
F-2
|
|
Consolidated Balance Sheets at December 31, 2019 and 2018
|
F-3
|
Consolidated Statements of Operations and Other Comprehensive Income (Loss) for the years ended December 31, 2019, 2018, and 2017
|
F-4
|
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018, and 2017
|
F-5
|
F-6
|
|
F-7
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,604
|
|
|
$
|
33,107
|
|
Receivables from clients, net
|
116,571
|
|
|
109,677
|
|
||
Unbilled services, net
|
79,937
|
|
|
69,613
|
|
||
Income tax receivable
|
2,376
|
|
|
6,612
|
|
||
Prepaid expenses and other current assets
|
14,248
|
|
|
13,922
|
|
||
Total current assets
|
224,736
|
|
|
232,931
|
|
||
Property and equipment, net
|
38,413
|
|
|
40,374
|
|
||
Deferred income taxes, net
|
1,145
|
|
|
2,153
|
|
||
Long-term investments
|
54,541
|
|
|
50,429
|
|
||
Operating lease right-of-use assets
|
54,954
|
|
|
—
|
|
||
Other non-current assets
|
52,177
|
|
|
30,525
|
|
||
Intangible assets, net
|
31,625
|
|
|
47,857
|
|
||
Goodwill
|
646,680
|
|
|
645,263
|
|
||
Total assets
|
$
|
1,104,271
|
|
|
$
|
1,049,532
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,944
|
|
|
$
|
10,020
|
|
Accrued expenses and other current liabilities
|
18,554
|
|
|
17,207
|
|
||
Accrued payroll and related benefits
|
141,605
|
|
|
109,825
|
|
||
Accrued contingent consideration for business acquisitions
|
—
|
|
|
9,991
|
|
||
Current maturities of long-term debt
|
529
|
|
|
243,132
|
|
||
Current maturities of operating lease liabilities
|
7,469
|
|
|
—
|
|
||
Deferred revenues
|
28,443
|
|
|
28,130
|
|
||
Total current liabilities
|
204,544
|
|
|
418,305
|
|
||
Non-current liabilities:
|
|
|
|
||||
Deferred compensation and other liabilities
|
28,635
|
|
|
20,875
|
|
||
Accrued contingent consideration for business acquisitions, net of current portion
|
—
|
|
|
1,450
|
|
||
Long-term debt, net of current portion
|
208,324
|
|
|
53,853
|
|
||
Operating lease liabilities, net of current portion
|
69,233
|
|
|
—
|
|
||
Deferred lease incentives
|
—
|
|
|
13,693
|
|
||
Deferred income taxes, net
|
8,070
|
|
|
732
|
|
||
Total non-current liabilities
|
314,262
|
|
|
90,603
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,144,764 and 25,114,739 shares issued at December 31, 2019 and December 31, 2018, respectively
|
247
|
|
|
244
|
|
||
Treasury stock, at cost, 2,425,430 and 2,568,288 shares at December 31, 2019 and December 31, 2018, respectively
|
(128,348
|
)
|
|
(124,794
|
)
|
||
Additional paid-in capital
|
460,781
|
|
|
452,573
|
|
||
Retained earnings
|
237,849
|
|
|
196,106
|
|
||
Accumulated other comprehensive income
|
14,936
|
|
|
16,495
|
|
||
Total stockholders’ equity
|
585,465
|
|
|
540,624
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,104,271
|
|
|
$
|
1,049,532
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues and reimbursable expenses:
|
|
|
|
|
|
||||||
Revenues
|
$
|
876,757
|
|
|
$
|
795,125
|
|
|
$
|
732,570
|
|
Reimbursable expenses
|
88,717
|
|
|
82,874
|
|
|
75,175
|
|
|||
Total revenues and reimbursable expenses
|
965,474
|
|
|
877,999
|
|
|
807,745
|
|
|||
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
|
|
|
|
|
|
||||||
Direct costs
|
575,602
|
|
|
521,537
|
|
|
454,806
|
|
|||
Amortization of intangible assets and software development costs
|
5,375
|
|
|
4,247
|
|
|
10,932
|
|
|||
Reimbursable expenses
|
88,696
|
|
|
82,923
|
|
|
75,436
|
|
|||
Total direct costs and reimbursable expenses
|
669,673
|
|
|
608,707
|
|
|
541,174
|
|
|||
Operating expenses and other losses (gains), net:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
203,071
|
|
|
180,983
|
|
|
175,364
|
|
|||
Restructuring charges
|
1,855
|
|
|
3,657
|
|
|
6,246
|
|
|||
Litigation and other losses (gains), net
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|||
Depreciation and amortization
|
28,365
|
|
|
34,575
|
|
|
38,213
|
|
|||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Total operating expenses and other losses (gains), net
|
232,095
|
|
|
217,196
|
|
|
474,027
|
|
|||
Operating income (loss)
|
63,706
|
|
|
52,096
|
|
|
(207,456
|
)
|
|||
Other income (expense), net:
|
|
|
|
|
|
||||||
Interest expense, net of interest income
|
(15,648
|
)
|
|
(19,013
|
)
|
|
(18,613
|
)
|
|||
Other income (expense), net
|
4,433
|
|
|
(7,862
|
)
|
|
3,565
|
|
|||
Total other expense, net
|
(11,215
|
)
|
|
(26,875
|
)
|
|
(15,048
|
)
|
|||
Income (loss) from continuing operations before taxes
|
52,491
|
|
|
25,221
|
|
|
(222,504
|
)
|
|||
Income tax expense (benefit)
|
10,512
|
|
|
11,277
|
|
|
(51,999
|
)
|
|||
Net income (loss) from continuing operations
|
41,979
|
|
|
13,944
|
|
|
(170,505
|
)
|
|||
Income (loss) from discontinued operations, net of tax
|
(236
|
)
|
|
(298
|
)
|
|
388
|
|
|||
Net income (loss)
|
$
|
41,743
|
|
|
$
|
13,646
|
|
|
$
|
(170,117
|
)
|
Net earnings (loss) per basic share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.91
|
|
|
$
|
0.64
|
|
|
$
|
(7.95
|
)
|
Income (loss) from discontinued operations, net of tax
|
(0.01
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|||
Net income (loss)
|
$
|
1.90
|
|
|
$
|
0.63
|
|
|
$
|
(7.93
|
)
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.87
|
|
|
$
|
0.63
|
|
|
$
|
(7.95
|
)
|
Income (loss) from discontinued operations, net of tax
|
(0.02
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|||
Net income (loss)
|
$
|
1.85
|
|
|
$
|
0.62
|
|
|
$
|
(7.93
|
)
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
||||||
Basic
|
21,993
|
|
|
21,706
|
|
|
21,439
|
|
|||
Diluted
|
22,507
|
|
|
22,058
|
|
|
21,439
|
|
|||
Comprehensive income (loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
41,743
|
|
|
$
|
13,646
|
|
|
$
|
(170,117
|
)
|
Foreign currency translation adjustments, net of tax
|
99
|
|
|
(1,814
|
)
|
|
1,602
|
|
|||
Unrealized gain (loss) on investment, net of tax
|
(702
|
)
|
|
7,772
|
|
|
4,724
|
|
|||
Unrealized gain (loss) on cash flow hedging instruments, net of tax
|
(956
|
)
|
|
167
|
|
|
429
|
|
|||
Other comprehensive income (loss)
|
(1,559
|
)
|
|
6,125
|
|
|
6,755
|
|
|||
Comprehensive income (loss)
|
$
|
40,184
|
|
|
$
|
19,771
|
|
|
$
|
(163,362
|
)
|
|
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
|
|
|
|
|
|
|
|
|
|
|
(170,117
|
)
|
|
6,755
|
|
|
(163,362
|
)
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
399,248
|
|
|
4
|
|
|
(58,211
|
)
|
|
(3,953
|
)
|
|
3,949
|
|
|
|
|
|
|
—
|
|
||||||||
Business acquisition
|
221,558
|
|
|
2
|
|
|
|
|
|
|
9,558
|
|
|
|
|
|
|
9,560
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
14,419
|
|
|
|
|
|
|
14,419
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(112,011
|
)
|
|
(4,846
|
)
|
|
|
|
|
|
|
|
(4,846
|
)
|
|||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
|
|
|
|
|
|
|
|
435
|
|
|
(435
|
)
|
|
|
|
—
|
|
|||||||||||
Cumulative-effect adjustment from adoption of ASU 2018-02
|
|
|
|
|
|
|
|
|
|
|
(488
|
)
|
|
|
|
(488
|
)
|
||||||||||||
Balance at December 31, 2017
|
24,098,822
|
|
|
$
|
241
|
|
|
(2,591,135
|
)
|
|
$
|
(121,994
|
)
|
|
$
|
434,256
|
|
|
$
|
180,443
|
|
|
$
|
10,370
|
|
|
$
|
503,316
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
13,646
|
|
|
6,125
|
|
|
19,771
|
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
279,430
|
|
|
3
|
|
|
5,986
|
|
|
387
|
|
|
(390
|
)
|
|
|
|
|
|
—
|
|
||||||||
Exercise of stock options
|
40,000
|
|
|
—
|
|
|
|
|
|
|
937
|
|
|
|
|
|
|
937
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
17,770
|
|
|
|
|
|
|
17,770
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(86,813
|
)
|
|
(3,187
|
)
|
|
|
|
|
|
|
|
(3,187
|
)
|
|||||||||||
Cumulative-effect adjustment from adoption of ASU 2014-09
|
|
|
|
|
|
|
|
|
|
|
2,017
|
|
|
|
|
2,017
|
|
||||||||||||
Balance at December 31, 2018
|
24,418,252
|
|
|
$
|
244
|
|
|
(2,671,962
|
)
|
|
$
|
(124,794
|
)
|
|
$
|
452,573
|
|
|
$
|
196,106
|
|
|
$
|
16,495
|
|
|
$
|
540,624
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
41,743
|
|
|
(1,559
|
)
|
|
40,184
|
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
347,589
|
|
|
4
|
|
|
20,171
|
|
|
1,828
|
|
|
(1,832
|
)
|
|
|
|
|
|
—
|
|
||||||||
Exercise of stock options
|
47,904
|
|
|
1
|
|
|
|
|
|
|
1,243
|
|
|
|
|
|
|
1,244
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
22,854
|
|
|
|
|
|
|
22,854
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(111,511
|
)
|
|
(5,382
|
)
|
|
|
|
|
|
|
|
(5,382
|
)
|
|||||||||||
Other capital contributions
|
|
|
|
|
|
|
|
|
160
|
|
|
|
|
|
|
160
|
|
||||||||||||
Share repurchases
|
(210,437
|
)
|
|
(2
|
)
|
|
|
|
|
|
(14,217
|
)
|
|
|
|
|
|
(14,219
|
)
|
||||||||||
Balance at December 31, 2019
|
24,603,308
|
|
|
$
|
247
|
|
|
(2,763,302
|
)
|
|
$
|
(128,348
|
)
|
|
$
|
460,781
|
|
|
$
|
237,849
|
|
|
$
|
14,936
|
|
|
$
|
585,465
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
41,743
|
|
|
$
|
13,646
|
|
|
$
|
(170,117
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
34,405
|
|
|
39,311
|
|
|
50,089
|
|
|||
Non-cash lease expense
|
8,397
|
|
|
—
|
|
|
—
|
|
|||
Share-based compensation
|
24,213
|
|
|
18,818
|
|
|
14,838
|
|
|||
Amortization of debt discount and issuance costs
|
8,264
|
|
|
10,313
|
|
|
10,203
|
|
|||
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Allowances for doubtful accounts and unbilled services
|
250
|
|
|
657
|
|
|
3,217
|
|
|||
Deferred income taxes
|
8,795
|
|
|
10,717
|
|
|
(53,753
|
)
|
|||
Loss (gain) on sale of businesses
|
—
|
|
|
5,807
|
|
|
(931
|
)
|
|||
Change in fair value of contingent consideration liabilities
|
(1,506
|
)
|
|
381
|
|
|
1,111
|
|
|||
Other, net
|
16
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of acquisitions and divestiture:
|
|
|
|
|
|
||||||
(Increase) decrease in receivables from clients
|
(10,123
|
)
|
|
(10,509
|
)
|
|
1,650
|
|
|||
(Increase) decrease in unbilled services
|
(10,269
|
)
|
|
(11,094
|
)
|
|
(4,332
|
)
|
|||
(Increase) decrease in current income tax receivable / payable, net
|
4,442
|
|
|
(2,607
|
)
|
|
210
|
|
|||
(Increase) decrease in other assets
|
(144
|
)
|
|
(1,361
|
)
|
|
(366
|
)
|
|||
Increase (decrease) in accounts payable and accrued liabilities
|
(6,884
|
)
|
|
(8,212
|
)
|
|
3,732
|
|
|||
Increase (decrease) in accrued payroll and related benefits
|
30,339
|
|
|
35,481
|
|
|
(10,966
|
)
|
|||
Increase (decrease) in deferred revenues
|
282
|
|
|
310
|
|
|
2,117
|
|
|||
Net cash provided by operating activities
|
132,220
|
|
|
101,658
|
|
|
99,795
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment, net
|
(13,240
|
)
|
|
(8,936
|
)
|
|
(24,402
|
)
|
|||
Investment in life insurance policies
|
(4,703
|
)
|
|
(2,037
|
)
|
|
(1,826
|
)
|
|||
Distributions from life insurance policies
|
—
|
|
|
—
|
|
|
2,889
|
|
|||
Purchases of businesses, net of cash acquired
|
(2,500
|
)
|
|
(215
|
)
|
|
(106,915
|
)
|
|||
Purchase of investment securities
|
(5,000
|
)
|
|
—
|
|
|
—
|
|
|||
Capitalization of internally developed software
|
(10,312
|
)
|
|
(6,069
|
)
|
|
(1,370
|
)
|
|||
Proceeds from note receivable
|
—
|
|
|
1,040
|
|
|
1,177
|
|
|||
Proceeds from sale of property and equipment
|
753
|
|
|
—
|
|
|
—
|
|
|||
Divestitures of businesses, net of cash sold
|
—
|
|
|
(2,345
|
)
|
|
1,499
|
|
|||
Net cash used in investing activities
|
(35,002
|
)
|
|
(18,562
|
)
|
|
(128,948
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercises of stock options
|
1,244
|
|
|
937
|
|
|
—
|
|
|||
Shares redeemed for employee tax withholdings
|
(5,382
|
)
|
|
(3,187
|
)
|
|
(4,846
|
)
|
|||
Share repurchases
|
(12,985
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from bank borrowings
|
347,000
|
|
|
204,300
|
|
|
277,500
|
|
|||
Repayments of bank borrowings
|
(192,515
|
)
|
|
(259,801
|
)
|
|
(240,745
|
)
|
|||
Repayment of convertible notes
|
(250,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payments for debt issuance costs
|
(1,524
|
)
|
|
(1,385
|
)
|
|
(408
|
)
|
|||
Payments for contingent consideration liabilities
|
(4,674
|
)
|
|
(7,554
|
)
|
|
(2,680
|
)
|
|||
Net cash provided by (used in) financing activities
|
(118,836
|
)
|
|
(66,690
|
)
|
|
28,821
|
|
|||
Effect of exchange rate changes on cash
|
115
|
|
|
(208
|
)
|
|
214
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(21,503
|
)
|
|
16,198
|
|
|
(118
|
)
|
|||
Cash and cash equivalents at beginning of the period
|
33,107
|
|
|
16,909
|
|
|
17,027
|
|
|||
Cash and cash equivalents at end of the period
|
$
|
11,604
|
|
|
$
|
33,107
|
|
|
$
|
16,909
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Property and equipment expenditures and capitalized software included in accounts payable and accrued expenses
|
$
|
2,600
|
|
|
$
|
2,358
|
|
|
$
|
1,567
|
|
Promissory note assumed for purchase of property and equipment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,113
|
|
Contingent consideration related to business acquisitions
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
15,489
|
|
Common stock issued related to business acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,560
|
|
Share repurchases included in accounts payable
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
7,971
|
|
|
$
|
8,887
|
|
|
$
|
9,068
|
|
Income taxes
|
$
|
1,429
|
|
|
$
|
3,349
|
|
|
$
|
5,399
|
|
|
As of
December 31, 2018
|
|
ASC 842
Adjustment
|
|
As of
January 1, 2019
|
||||||
Assets
|
|
|
|
|
|
||||||
Operating lease right-of-use assets
|
$
|
—
|
|
|
$
|
56,463
|
|
|
$
|
56,463
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities
|
$
|
17,207
|
|
|
$
|
(2,557
|
)
|
|
$
|
14,650
|
|
Current maturities of operating lease liabilities
|
$
|
—
|
|
|
$
|
10,537
|
|
|
$
|
10,537
|
|
Deferred compensation and other liabilities
|
$
|
20,875
|
|
|
$
|
(536
|
)
|
|
$
|
20,339
|
|
Deferred lease incentives
|
$
|
13,693
|
|
|
$
|
(13,693
|
)
|
|
$
|
—
|
|
Operating lease liabilities, net of current portion
|
$
|
—
|
|
|
$
|
62,712
|
|
|
$
|
62,712
|
|
Fair value of consideration transferred
|
March 1, 2017
|
||
Cash
|
$
|
90,725
|
|
Common stock
|
9,560
|
|
|
Contingent consideration liability
|
12,050
|
|
|
Net working capital adjustment
|
1,272
|
|
|
Total consideration transferred
|
$
|
113,607
|
|
|
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
|
894
|
|
|
Accrued payroll and related benefits
|
883
|
|
|
Deferred revenues
|
30
|
|
|
Total identifiable net assets
|
26,197
|
|
|
Goodwill
|
87,410
|
|
|
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
|
|
|
|
|
Year Ended
December 31, 2017 |
||
Revenues
|
$
|
741,695
|
|
Net income (loss) from continuing operations
|
$
|
(167,346
|
)
|
Net income (loss) from continuing operations per share - basic
|
$
|
(7.79
|
)
|
Net income (loss) from continuing operations per share - diluted
|
$
|
(7.79
|
)
|
|
|
Healthcare
|
|
Business
Advisory
|
|
Education
|
|
Total
|
||||||||
Balance as of December 31, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
$
|
636,810
|
|
|
$
|
302,187
|
|
|
$
|
102,829
|
|
|
$
|
1,041,826
|
|
Accumulated impairment losses
|
|
(208,081
|
)
|
|
(187,995
|
)
|
|
—
|
|
|
(396,076
|
)
|
||||
Goodwill, net as of December 31, 2017
|
|
$
|
428,729
|
|
|
$
|
114,192
|
|
|
$
|
102,829
|
|
|
$
|
645,750
|
|
Goodwill recorded in connection with a business combination
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
||||
Foreign currency translation
|
|
—
|
|
|
(673
|
)
|
|
—
|
|
|
(673
|
)
|
||||
Balance as of December 31, 2018:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
636,810
|
|
|
301,700
|
|
|
102,829
|
|
|
1,041,339
|
|
||||
Accumulated impairment losses
|
|
(208,081
|
)
|
|
(187,995
|
)
|
|
—
|
|
|
(396,076
|
)
|
||||
Goodwill, net as of December 31, 2018
|
|
$
|
428,729
|
|
|
$
|
113,705
|
|
|
$
|
102,829
|
|
|
$
|
645,263
|
|
Goodwill recorded in connection with a business combination (1)
|
|
—
|
|
|
—
|
|
|
1,060
|
|
|
1,060
|
|
||||
Foreign currency translation
|
|
—
|
|
|
357
|
|
|
—
|
|
|
357
|
|
||||
Balance as of December 31, 2019:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
636,810
|
|
|
302,057
|
|
|
103,889
|
|
|
1,042,756
|
|
||||
Accumulated impairment losses
|
|
(208,081
|
)
|
|
(187,995
|
)
|
|
—
|
|
|
(396,076
|
)
|
||||
Goodwill, net as of December 31, 2019:
|
|
$
|
428,729
|
|
|
$
|
114,062
|
|
|
$
|
103,889
|
|
|
$
|
646,680
|
|
(1)
|
On September 30, 2019, we completed the acquisition of a business in our Education segment. The results of operations of the acquired business is included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition. This acquisition is not significant to our consolidated financial statements.
|
|
|
|
As of December 31,
|
||||||||||||||
|
|
|
2019
|
|
2018
|
||||||||||||
|
Useful Life
in Years
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
3 to 13
|
|
$
|
87,577
|
|
|
$
|
61,882
|
|
|
$
|
98,235
|
|
|
$
|
60,462
|
|
Trade names
|
5 to 6
|
|
28,930
|
|
|
25,894
|
|
|
28,930
|
|
|
23,181
|
|
||||
Technology and software
|
3 to 5
|
|
5,694
|
|
|
4,321
|
|
|
5,694
|
|
|
2,842
|
|
||||
Non-competition agreements
|
5
|
|
2,220
|
|
|
1,447
|
|
|
3,650
|
|
|
2,241
|
|
||||
Customer contracts
|
2
|
|
800
|
|
|
52
|
|
|
—
|
|
|
—
|
|
||||
Favorable lease contract
|
3
|
|
—
|
|
|
—
|
|
|
720
|
|
|
646
|
|
||||
Total
|
|
|
$
|
125,221
|
|
|
$
|
93,596
|
|
|
$
|
137,229
|
|
|
$
|
89,372
|
|
Year Ending December 31,
|
|
Estimated
Amortization Expense
|
||
2020
|
|
$
|
12,638
|
|
2021
|
|
$
|
8,379
|
|
2022
|
|
$
|
6,111
|
|
2023
|
|
$
|
3,512
|
|
2024
|
|
$
|
741
|
|
Balance Sheet
|
|
December 31, 2019
|
||
Operating lease right-of-use assets
|
|
$
|
54,954
|
|
|
|
|
||
Current maturities of operating lease liabilities
|
|
$
|
7,469
|
|
Operating lease liabilities, net of current portion
|
|
69,233
|
|
|
Total lease liabilities
|
|
$
|
76,702
|
|
Lease Cost
|
|
Year Ended
December 31, 2019 |
||
Operating lease cost
|
|
$
|
11,883
|
|
Short-term leases (1)
|
|
322
|
|
|
Variable lease costs
|
|
3,656
|
|
|
Sublease income
|
|
(2,638
|
)
|
|
Net lease cost (2)(3)(4)
|
|
$
|
13,223
|
|
(1)
|
Includes variable lease costs related to short-term leases.
|
(2)
|
Net lease cost includes $0.4 million for the year ended December 31, 2019, recorded as restructuring charges as they relate to vacated office spaces. See Note 11 "Restructuring Charges" for additional information on our vacated office spaces.
|
(3)
|
Net lease cost includes $0.3 million for the year ended December 31, 2019, related to vacated office spaces directly related to discontinued operations.
|
(4)
|
Rent expense, including operating expenses, real estate taxes and insurance, recorded under ASC 840 for the years ended December 31, 2018 and 2017 was $15.1 million and $14.3 million, respectively.
|
Future Lease Payments
|
|
December 31,
2019 |
||
2020
|
|
$
|
9,772
|
|
2021
|
|
12,039
|
|
|
2022
|
|
11,502
|
|
|
2023
|
|
11,470
|
|
|
2024
|
|
10,893
|
|
|
Thereafter
|
|
35,211
|
|
|
Total operating lease payments
|
|
$
|
90,887
|
|
Less: imputed interest
|
|
(14,185
|
)
|
|
Present value of operating lease liabilities
|
|
$
|
76,702
|
|
Lease Payments
|
|
December 31,
2018 (1)
|
||
2019
|
|
$
|
13,701
|
|
2020
|
|
12,724
|
|
|
2021
|
|
11,590
|
|
|
2022
|
|
10,766
|
|
|
2023
|
|
10,707
|
|
|
Thereafter
|
|
27,033
|
|
|
Total
|
|
$
|
86,521
|
|
(1)
|
As of December 31, 2018, the expected total future minimum sublease income to be received was $10.2 million.
|
Other Information
|
|
Year Ended
December 31, 2019 |
||
Cash paid for operating lease liabilities
|
|
$
|
13,902
|
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
|
|
$
|
12,842
|
|
|
|
|
||
Weighted average remaining lease term - operating leases
|
|
7.7 years
|
|
|
Weighted average discount rate - operating leases
|
|
4.3
|
%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Computers, related equipment, and software
|
$
|
50,251
|
|
|
$
|
53,116
|
|
Leasehold improvements
|
44,323
|
|
|
45,052
|
|
||
Furniture and fixtures
|
16,273
|
|
|
17,408
|
|
||
Aircraft
|
7,667
|
|
|
7,541
|
|
||
Assets under construction
|
250
|
|
|
250
|
|
||
Property and equipment
|
118,764
|
|
|
123,367
|
|
||
Accumulated depreciation and amortization
|
(80,351
|
)
|
|
(82,993
|
)
|
||
Property and equipment, net
|
$
|
38,413
|
|
|
$
|
40,374
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
1.25% convertible senior notes due 2019
|
$
|
—
|
|
|
$
|
242,617
|
|
Senior secured credit facility
|
205,000
|
|
|
50,000
|
|
||
Promissory note due 2024
|
3,853
|
|
|
4,368
|
|
||
Total long-term debt
|
$
|
208,853
|
|
|
$
|
296,985
|
|
Current maturities of long-term debt
|
(529
|
)
|
|
(243,132
|
)
|
||
Long-term debt, net of current portion
|
$
|
208,324
|
|
|
$
|
53,853
|
|
|
|
As of December 31, 2018
|
||
Liability component:
|
|
|
||
Proceeds
|
|
$
|
250,000
|
|
Less: debt discount, net of amortization
|
|
(6,436
|
)
|
|
Less: debt issuance costs, net of amortization
|
|
(947
|
)
|
|
Net carrying amount
|
|
$
|
242,617
|
|
Equity component (1)
|
|
$
|
39,287
|
|
(1)
|
Included in additional paid-in capital on the consolidated balance sheet.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Contractual interest coupon
|
$
|
2,344
|
|
|
$
|
3,125
|
|
|
$
|
3,125
|
|
Amortization of debt discount
|
6,436
|
|
|
8,232
|
|
|
7,851
|
|
|||
Amortization of debt issuance costs
|
947
|
|
|
1,245
|
|
|
1,224
|
|
|||
Total interest expense
|
$
|
9,727
|
|
|
$
|
12,602
|
|
|
$
|
12,200
|
|
•
|
Convertible Note Hedge Transactions. In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions whereby the Company had 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 corresponded 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 were exercisable upon conversion of the Convertible Notes and expired in the third quarter of 2019. 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 sheet. The convertible note hedge transactions were separate transactions and were 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
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss) from continuing operations
|
$
|
41,979
|
|
|
$
|
13,944
|
|
|
$
|
(170,505
|
)
|
Income (loss) from discontinued operations, net of tax
|
(236
|
)
|
|
(298
|
)
|
|
388
|
|
|||
Net income (loss)
|
$
|
41,743
|
|
|
$
|
13,646
|
|
|
$
|
(170,117
|
)
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding—basic
|
21,993
|
|
|
21,706
|
|
|
21,439
|
|
|||
Weighted average common stock equivalents
|
514
|
|
|
352
|
|
|
—
|
|
|||
Weighted average common shares outstanding—diluted
|
22,507
|
|
|
22,058
|
|
|
21,439
|
|
|||
|
|
|
|
|
|
||||||
Net earnings (loss) per basic share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.91
|
|
|
$
|
0.64
|
|
|
$
|
(7.95
|
)
|
Income (loss) from discontinued operations, net of tax
|
(0.01
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|||
Net income (loss)
|
$
|
1.90
|
|
|
$
|
0.63
|
|
|
$
|
(7.93
|
)
|
|
|
|
|
|
|
||||||
Net earnings (loss) per diluted share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.87
|
|
|
$
|
0.63
|
|
|
$
|
(7.95
|
)
|
Income (loss) from discontinued operations, net of tax
|
(0.02
|
)
|
|
(0.01
|
)
|
|
0.02
|
|
|||
Net income (loss)
|
$
|
1.85
|
|
|
$
|
0.62
|
|
|
$
|
(7.93
|
)
|
|
As of December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Unvested restricted stock awards
|
—
|
|
|
—
|
|
|
636
|
|
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
|
|
|
3,129
|
|
Total anti-dilutive securities
|
3,129
|
|
|
6,258
|
|
|
7,088
|
|
|
Employee Costs
|
|
Office Space Reductions
|
|
Other
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
$
|
1,267
|
|
|
$
|
4,247
|
|
|
$
|
—
|
|
|
$
|
5,514
|
|
Additions (1) (2)
|
2,102
|
|
|
677
|
|
|
191
|
|
|
2,970
|
|
||||
Payments
|
(2,879
|
)
|
|
(3,284
|
)
|
|
(191
|
)
|
|
(6,354
|
)
|
||||
Adjustments (1) (2)
|
(47
|
)
|
|
828
|
|
|
—
|
|
|
781
|
|
||||
Balance as of December 31, 2018
|
443
|
|
|
2,468
|
|
|
—
|
|
|
2,911
|
|
||||
Adoption of ASC 842 (3)
|
—
|
|
|
(1,119
|
)
|
|
—
|
|
|
(1,119
|
)
|
||||
Balance as of January 1, 2019
|
443
|
|
|
1,349
|
|
|
—
|
|
|
1,792
|
|
||||
Additions (2)
|
636
|
|
|
9
|
|
|
—
|
|
|
645
|
|
||||
Payments
|
(995
|
)
|
|
(383
|
)
|
|
—
|
|
|
(1,378
|
)
|
||||
Adjustments (2)
|
(16
|
)
|
|
(884
|
)
|
|
—
|
|
|
(900
|
)
|
||||
Balance as of December 31, 2019
|
$
|
68
|
|
|
$
|
91
|
|
|
$
|
—
|
|
|
$
|
159
|
|
(1)
|
Additions and adjustments for the years ended December 31, 2019 and 2018 include restructuring charges of $0.1 million and $0.4 million, respectively related to office exit costs for vacated offices spaces directly related to discontinued operations.
|
(2)
|
Additions and adjustments exclude non-cash items related to vacated office spaces, such as lease impairment charges and accelerated depreciation on fixed assets, which are recorded as restructuring charges on our consolidated statements of operations.
|
(3)
|
Upon adoption of ASC 842 on January 1, 2019, we reclassified the restructuring charge liabilities, which represented the present value of remaining lease payments, net of estimated sublease income, for vacated office spaces from restructuring charge liabilities to operating lease right-of-use assets. See Note 2 "Summary of Significant Accounting Polices" for additional information on the impact of adoption.
|
|
Fair Value (Derivative Asset and Liability)
As of December 31,
|
||||||
Balance Sheet Location
|
2019
|
|
2018
|
||||
Prepaid expenses and other current assets
|
$
|
—
|
|
|
$
|
302
|
|
Other non-current assets
|
$
|
—
|
|
|
$
|
451
|
|
Accrued expenses
|
$
|
159
|
|
|
$
|
—
|
|
Deferred compensation and other liabilities
|
$
|
387
|
|
|
$
|
—
|
|
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
|
||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Convertible debt investment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
49,542
|
|
|
$
|
49,542
|
|
Deferred compensation assets
|
—
|
|
|
27,445
|
|
|
—
|
|
|
27,445
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
27,445
|
|
|
$
|
49,542
|
|
|
$
|
76,987
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
546
|
|
|
$
|
—
|
|
|
$
|
546
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
546
|
|
|
$
|
—
|
|
|
$
|
546
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
753
|
|
|
$
|
—
|
|
|
$
|
753
|
|
Convertible debt investment
|
—
|
|
|
—
|
|
|
50,429
|
|
|
50,429
|
|
||||
Deferred compensation assets
|
—
|
|
|
18,205
|
|
|
—
|
|
|
18,205
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
18,958
|
|
|
$
|
50,429
|
|
|
$
|
69,387
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration for business acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,441
|
|
|
$
|
11,441
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,441
|
|
|
$
|
11,441
|
|
|
|
Convertible Debt Investment
|
||
Balance as of December 31, 2017
|
|
$
|
39,904
|
|
Change in fair value of convertible debt investment
|
|
10,525
|
|
|
Balance as of December 31, 2018
|
|
50,429
|
|
|
Change in fair value of convertible debt investment
|
|
(887
|
)
|
|
Balance as of December 31, 2019
|
|
$
|
49,542
|
|
|
|
Contingent Consideration for Business Acquisitions
|
||
Balance as of December 31, 2017
|
|
$
|
22,828
|
|
Acquisitions
|
|
212
|
|
|
Payments
|
|
(11,974
|
)
|
|
Remeasurement of contingent consideration for business acquisitions
|
|
381
|
|
|
Unrealized gain due to foreign currency translation
|
|
(6
|
)
|
|
Balance as of December 31, 2018
|
|
11,441
|
|
|
Payments
|
|
(10,041
|
)
|
|
Remeasurement of contingent consideration for business acquisitions
|
|
(1,506
|
)
|
|
Unrealized loss due to foreign currency translation
|
|
106
|
|
|
Balance as of December 31, 2019
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||
|
Carrying
Amount |
|
Estimated
Fair Value |
||||
1.25% convertible senior notes due 2019
|
$
|
242,617
|
|
|
$
|
242,940
|
|
|
Foreign
Currency
Translation
|
|
Available-for-
Sale
Investments
|
|
Cash Flow
Hedges (1)
|
|
Total
|
||||||||
Balance as of December 31, 2016
|
$
|
(453
|
)
|
|
$
|
4,088
|
|
|
$
|
(20
|
)
|
|
$
|
3,615
|
|
Foreign currency translation adjustment, net of tax of $0
|
1,602
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
||||
Unrealized gain on investments:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $(998)
|
—
|
|
|
4,231
|
|
|
—
|
|
|
4,231
|
|
||||
Reclassification adjustment into retained earnings (2)
|
—
|
|
|
493
|
|
|
—
|
|
|
493
|
|
||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $(106)
|
—
|
|
|
—
|
|
|
366
|
|
|
366
|
|
||||
Reclassification adjustment into earnings, net of tax of $(46)
|
—
|
|
|
—
|
|
|
69
|
|
|
69
|
|
||||
Reclassification adjustment into retained earnings (2)
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Balance as of December 31, 2017
|
1,149
|
|
|
8,812
|
|
|
409
|
|
|
10,370
|
|
||||
Foreign currency translation adjustment, net of tax of $0
|
(1,814
|
)
|
|
—
|
|
|
—
|
|
|
(1,814
|
)
|
||||
Unrealized gain on investments:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $(2,753)
|
—
|
|
|
7,772
|
|
|
—
|
|
|
7,772
|
|
||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $(63)
|
—
|
|
|
—
|
|
|
197
|
|
|
197
|
|
||||
Reclassification adjustment into earnings, net of tax of $(10)
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(30
|
)
|
||||
Balance as of December 31, 2018
|
(665
|
)
|
|
16,584
|
|
|
576
|
|
|
16,495
|
|
||||
Foreign currency translation adjustment, net of tax of $0
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
||||
Unrealized gain (loss) on investments:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $185
|
—
|
|
|
(702
|
)
|
|
—
|
|
|
(702
|
)
|
||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $295
|
—
|
|
|
—
|
|
|
(819
|
)
|
|
(819
|
)
|
||||
Reclassification adjustment into earnings, net of tax of $48
|
—
|
|
|
—
|
|
|
(137
|
)
|
|
(137
|
)
|
||||
Balance as of December 31, 2019
|
$
|
(566
|
)
|
|
$
|
15,882
|
|
|
$
|
(380
|
)
|
|
$
|
14,936
|
|
(1)
|
The before tax amounts reclassified from accumulated other comprehensive income (loss) related to our cash flow hedges are recorded to interest expense, net of interest income.
|
(2)
|
Upon adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, we reclassified $0.5 million of stranded tax effects, which resulted from the enactment of the 2017 Tax Reform, from accumulated other comprehensive income to retained earnings.
|
|
Number of Shares
|
|
Weighted
Average
Grant Date
Fair Value
(in dollars)
|
|||||||||
|
2012 Omnibus Incentive Plan
|
|
Stock Ownership Participation Program
|
|
Total
|
|
||||||
Nonvested restricted stock at December 31, 2018
|
747
|
|
|
11
|
|
|
758
|
|
|
$
|
43.08
|
|
Granted
|
341
|
|
|
12
|
|
|
353
|
|
|
$
|
48.57
|
|
Vested
|
(284
|
)
|
|
(10
|
)
|
|
(294
|
)
|
|
$
|
46.25
|
|
Forfeited
|
(30
|
)
|
|
(1
|
)
|
|
(31
|
)
|
|
$
|
45.24
|
|
Nonvested restricted stock at December 31, 2019
|
774
|
|
|
12
|
|
|
786
|
|
|
$
|
44.27
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
(in dollars)
|
|||
Nonvested performance-based stock at December 31, 2018
|
436
|
|
|
$
|
36.81
|
|
Granted (1)
|
281
|
|
|
$
|
47.93
|
|
Vested
|
(73
|
)
|
|
$
|
40.69
|
|
Forfeited (2)
|
(144
|
)
|
|
$
|
36.06
|
|
Nonvested performance-based stock at December 31, 2019 (3)
|
500
|
|
|
$
|
42.72
|
|
(1)
|
Shares granted in 2019 are presented at the stated target, which represents the base number of shares that could be earned. Actual shares earned may be below or, for certain grants, above the target based on the achievement of specific financial goals.
|
(2)
|
Forfeited shares include shares forfeited as a result of not meeting the performance criteria of the award as well as shares forfeited upon termination.
|
(3)
|
Of the 500,000 nonvested performance-based shares outstanding as of December 31, 2019, 403,794 shares were unearned and subject to achievement of specific financial goals. Once earned, the awards will be subject to time-based vesting according to the terms of the award. Based on 2019 financial results, approximately 110,936 of the 403,794 unearned shares will be forfeited in the first quarter of 2020.
|
|
Number
of
Options
(in thousands)
|
|
Weighted
Average
Exercise
Price
(in dollars)
|
|
Weighted
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at December 31, 2018
|
154
|
|
|
$
|
30.52
|
|
|
2.5
|
|
$
|
3.2
|
|
Granted
|
—
|
|
|
|
|
|
|
|
||||
Exercised
|
(48
|
)
|
|
$
|
25.97
|
|
|
|
|
$
|
1.6
|
|
Forfeited or expired
|
—
|
|
|
|
|
|
|
|
||||
Outstanding at December 31, 2019 (1)
|
106
|
|
|
$
|
32.57
|
|
|
1.9
|
|
$
|
3.8
|
|
Exercisable at December 31, 2019
|
106
|
|
|
$
|
32.57
|
|
|
1.9
|
|
$
|
3.8
|
|
(1)
|
Of the 106,000 outstanding options, approximately 74,000 were granted under the 2004 Omnibus Stock Plan, and the remaining 32,000 options were granted under the 2012 Omnibus Incentive Plan.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
125
|
|
|
$
|
(1,611
|
)
|
|
$
|
(635
|
)
|
State
|
2,014
|
|
|
286
|
|
|
545
|
|
|||
Foreign
|
(422
|
)
|
|
1,885
|
|
|
2,040
|
|
|||
Total current
|
1,717
|
|
|
560
|
|
|
1,950
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
7,467
|
|
|
9,742
|
|
|
(46,103
|
)
|
|||
State
|
1,610
|
|
|
2,008
|
|
|
(6,576
|
)
|
|||
Foreign
|
(282
|
)
|
|
(1,033
|
)
|
|
(1,270
|
)
|
|||
Total deferred
|
8,795
|
|
|
10,717
|
|
|
(53,949
|
)
|
|||
Income tax expense for continuing operations
|
$
|
10,512
|
|
|
$
|
11,277
|
|
|
$
|
(51,999
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
53,898
|
|
|
$
|
17,025
|
|
|
$
|
(221,137
|
)
|
Foreign
|
(1,407
|
)
|
|
8,196
|
|
|
(1,367
|
)
|
|||
Total
|
$
|
52,491
|
|
|
$
|
25,221
|
|
|
$
|
(222,504
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Percent of pretax income from continuing operations:
|
|
|
|
|
|
|||
At U.S. statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
6.1
|
|
|
7.2
|
|
|
2.7
|
|
Disallowed executive compensation
|
2.0
|
|
|
2.5
|
|
|
—
|
|
Meals and entertainment
|
1.6
|
|
|
2.0
|
|
|
(0.3
|
)
|
Tax credits
|
(3.1
|
)
|
|
(1.4
|
)
|
|
0.2
|
|
Valuation allowance
|
(2.9
|
)
|
|
6.9
|
|
|
(0.2
|
)
|
Realized investment (gains) losses
|
(1.8
|
)
|
|
1.3
|
|
|
0.4
|
|
Net tax benefit related to “check-the-box” election
|
(1.4
|
)
|
|
—
|
|
|
1.2
|
|
Stock-based compensation
|
(1.1
|
)
|
|
4.9
|
|
|
(0.8
|
)
|
Foreign source income
|
(0.5
|
)
|
|
(1.7
|
)
|
|
0.1
|
|
Change in fair value of contingent consideration liabilities
|
—
|
|
|
2.4
|
|
|
—
|
|
Global intangible low-taxed income
|
—
|
|
|
2.1
|
|
|
—
|
|
Transition tax on accumulated foreign earnings, net of credits
|
—
|
|
|
0.8
|
|
|
(0.3
|
)
|
U.S. federal rate change
|
—
|
|
|
(2.3
|
)
|
|
(3.4
|
)
|
Goodwill impairment charges
|
—
|
|
|
—
|
|
|
(10.2
|
)
|
Other
|
0.1
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
Effective income tax rate for continuing operations
|
20.0
|
%
|
|
44.7
|
%
|
|
23.4
|
%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Operating lease liabilities
|
$
|
20,541
|
|
|
$
|
—
|
|
Accrued payroll and other liabilities
|
12,289
|
|
|
6,737
|
|
||
Share-based compensation
|
6,970
|
|
|
6,150
|
|
||
Tax credits
|
465
|
|
|
3,548
|
|
||
Net operating loss carryforwards
|
280
|
|
|
2,247
|
|
||
Deferred lease incentives
|
—
|
|
|
4,100
|
|
||
Restructuring charge liability
|
—
|
|
|
639
|
|
||
Other
|
1,451
|
|
|
1,466
|
|
||
Total deferred tax assets
|
41,996
|
|
|
24,887
|
|
||
Valuation allowance
|
(1,016
|
)
|
|
(3,143
|
)
|
||
Net deferred tax assets
|
40,980
|
|
|
21,744
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangibles and goodwill
|
(16,421
|
)
|
|
(6,665
|
)
|
||
Operating lease right-of-use assets
|
(14,675
|
)
|
|
—
|
|
||
Convertible debt investment
|
(5,608
|
)
|
|
(5,934
|
)
|
||
Software development costs
|
(4,496
|
)
|
|
(1,655
|
)
|
||
Property and equipment
|
(4,039
|
)
|
|
(3,604
|
)
|
||
Prepaid expenses
|
(2,183
|
)
|
|
(1,794
|
)
|
||
Other
|
(483
|
)
|
|
(671
|
)
|
||
Total deferred tax liabilities
|
(47,905
|
)
|
|
(20,323
|
)
|
||
Net deferred tax asset (liability) for continuing operations
|
$
|
(6,925
|
)
|
|
$
|
1,421
|
|
|
|
Unrecognized Tax Benefits
|
||
Balance at January 1, 2017
|
|
$
|
3,340
|
|
Decrease due to lapse of statute of limitations
|
|
(2,410
|
)
|
|
Decrease based on tax positions related to prior years
|
|
(117
|
)
|
|
Balance at December 31, 2017
|
|
813
|
|
|
Additions based on tax positions related to prior years
|
|
115
|
|
|
Decrease due to lapse of statute of limitations
|
|
(28
|
)
|
|
Balance at December 31, 2018
|
|
900
|
|
|
Decrease due to settlements of prior year tax positions
|
|
(115
|
)
|
|
Decrease due to lapse of statute of limitations
|
|
(735
|
)
|
|
Balance at December 31, 2019
|
|
$
|
50
|
|
•
|
Healthcare
|
•
|
Business Advisory
|
•
|
Education
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Healthcare:
|
|
|
|
|
|
||||||
Revenues
|
$
|
399,221
|
|
|
$
|
364,763
|
|
|
$
|
356,909
|
|
Operating income
|
$
|
125,724
|
|
|
$
|
108,060
|
|
|
$
|
118,761
|
|
Segment operating income as a percentage of segment revenues
|
31.5
|
%
|
|
29.6
|
%
|
|
33.3
|
%
|
|||
Business Advisory:
|
|
|
|
|
|
||||||
Revenues
|
$
|
252,508
|
|
|
$
|
236,185
|
|
|
$
|
207,753
|
|
Operating income
|
$
|
49,695
|
|
|
$
|
50,625
|
|
|
$
|
46,600
|
|
Segment operating income as a percentage of segment revenues
|
19.7
|
%
|
|
21.4
|
%
|
|
22.4
|
%
|
|||
Education:
|
|
|
|
|
|
||||||
Revenues
|
$
|
225,028
|
|
|
$
|
194,177
|
|
|
$
|
167,908
|
|
Operating income
|
$
|
55,741
|
|
|
$
|
48,243
|
|
|
$
|
40,318
|
|
Segment operating income as a percentage of segment revenues
|
24.8
|
%
|
|
24.8
|
%
|
|
24.0
|
%
|
|||
Total Company:
|
|
|
|
|
|
||||||
Revenues
|
$
|
876,757
|
|
|
$
|
795,125
|
|
|
$
|
732,570
|
|
Reimbursable expenses
|
88,717
|
|
|
82,874
|
|
|
75,175
|
|
|||
Total revenues and reimbursable expenses
|
$
|
965,474
|
|
|
$
|
877,999
|
|
|
$
|
807,745
|
|
|
|
|
|
|
|
||||||
Segment operating income
|
$
|
231,160
|
|
|
$
|
206,928
|
|
|
$
|
205,679
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
||||||
Other operating expenses
|
140,285
|
|
|
122,276
|
|
|
120,718
|
|
|||
Litigation and other losses (gains), net
|
(1,196
|
)
|
|
(2,019
|
)
|
|
1,111
|
|
|||
Depreciation and amortization
|
28,365
|
|
|
34,575
|
|
|
38,213
|
|
|||
Goodwill impairment charges (1)
|
—
|
|
|
—
|
|
|
253,093
|
|
|||
Other expense, net
|
11,215
|
|
|
26,875
|
|
|
15,048
|
|
|||
Income (loss) from continuing operations before taxes
|
$
|
52,491
|
|
|
$
|
25,221
|
|
|
$
|
(222,504
|
)
|
(1)
|
The goodwill impairment charges are 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.
|
|
|
As of December 31,
|
||||||||||
Segment Assets:
|
|
2019
|
|
2018
|
|
2017
|
||||||
Healthcare
|
|
$
|
73,019
|
|
|
$
|
65,133
|
|
|
$
|
70,097
|
|
Business Advisory
|
|
59,315
|
|
|
59,017
|
|
|
58,217
|
|
|||
Education
|
|
38,881
|
|
|
26,990
|
|
|
31,367
|
|
|||
Unallocated assets (1)
|
|
933,056
|
|
|
898,392
|
|
|
877,247
|
|
|||
Total assets
|
|
$
|
1,104,271
|
|
|
$
|
1,049,532
|
|
|
$
|
1,036,928
|
|
(1)
|
Unallocated assets include goodwill and intangible assets and our long-term investments, as management does not evaluate these items at the segment level when assessing segment performance or allocating resources. Refer to Note 4 “Goodwill and Intangible Assets" and Note 13 "Fair Value of Financial Instruments" for further information on these assets.
|
|
Year Ended December 31, 2019
|
||||||||||||||
|
Healthcare
|
|
Business Advisory
|
|
Education
|
|
Total
|
||||||||
Billing Arrangements
|
|
|
|
|
|
|
|
||||||||
Fixed-fee
|
$
|
249,479
|
|
|
$
|
100,635
|
|
|
$
|
51,826
|
|
|
$
|
401,940
|
|
Time and expense
|
55,204
|
|
|
139,610
|
|
|
154,893
|
|
|
349,707
|
|
||||
Performance-based
|
71,051
|
|
|
6,856
|
|
|
—
|
|
|
77,907
|
|
||||
Software support, maintenance and subscriptions
|
23,487
|
|
|
5,407
|
|
|
18,309
|
|
|
47,203
|
|
||||
Total
|
$
|
399,221
|
|
|
$
|
252,508
|
|
|
$
|
225,028
|
|
|
$
|
876,757
|
|
|
|
|
|
|
|
|
|
||||||||
Employee Type (1)
|
|
|
|
|
|
|
|
||||||||
Revenue generated by full-time billable consultants
|
$
|
280,915
|
|
|
$
|
243,350
|
|
|
$
|
195,844
|
|
|
$
|
720,109
|
|
Revenue generated by full-time equivalents
|
118,306
|
|
|
9,158
|
|
|
29,184
|
|
|
156,648
|
|
||||
Total
|
$
|
399,221
|
|
|
$
|
252,508
|
|
|
$
|
225,028
|
|
|
$
|
876,757
|
|
|
|
|
|
|
|
|
|
||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
||||||||
Revenue recognized over time
|
$
|
390,884
|
|
|
$
|
252,508
|
|
|
$
|
223,673
|
|
|
$
|
867,065
|
|
Revenue recognized at a point in time
|
8,337
|
|
|
—
|
|
|
1,355
|
|
|
9,692
|
|
||||
Total
|
$
|
399,221
|
|
|
$
|
252,508
|
|
|
$
|
225,028
|
|
|
$
|
876,757
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
Healthcare
|
|
Business Advisory
|
|
Education
|
|
Total
|
||||||||
Billing Arrangements
|
|
|
|
|
|
|
|
||||||||
Fixed-fee
|
$
|
239,263
|
|
|
$
|
98,119
|
|
|
$
|
39,586
|
|
|
$
|
376,968
|
|
Time and expense
|
58,377
|
|
|
128,583
|
|
|
140,824
|
|
|
327,784
|
|
||||
Performance-based
|
42,684
|
|
|
5,405
|
|
|
—
|
|
|
48,089
|
|
||||
Software support, maintenance and subscriptions
|
24,439
|
|
|
4,078
|
|
|
13,767
|
|
|
42,284
|
|
||||
Total
|
$
|
364,763
|
|
|
$
|
236,185
|
|
|
$
|
194,177
|
|
|
$
|
795,125
|
|
|
|
|
|
|
|
|
|
||||||||
Employee Type (1)
|
|
|
|
|
|
|
|
||||||||
Revenue generated by full-time billable consultants
|
$
|
247,416
|
|
|
$
|
225,335
|
|
|
$
|
170,496
|
|
|
$
|
643,247
|
|
Revenue generated by full-time equivalents
|
117,347
|
|
|
10,850
|
|
|
23,681
|
|
|
151,878
|
|
||||
Total
|
$
|
364,763
|
|
|
$
|
236,185
|
|
|
$
|
194,177
|
|
|
$
|
795,125
|
|
|
|
|
|
|
|
|
|
||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
||||||||
Revenue recognized over time
|
$
|
356,826
|
|
|
$
|
236,185
|
|
|
$
|
190,526
|
|
|
$
|
783,537
|
|
Revenue recognized at a point in time
|
7,937
|
|
|
—
|
|
|
3,651
|
|
|
11,588
|
|
||||
Total
|
$
|
364,763
|
|
|
$
|
236,185
|
|
|
$
|
194,177
|
|
|
$
|
795,125
|
|
(1)
|
Full-time billable consultants consist of our full-time professionals who provide consulting services to our clients and are billable to our clients based on the number of hours worked. Full-time equivalent professionals consist of our coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to our clients.
|
|
Beginning
balance
|
|
Additions (1)
|
|
Deductions
|
|
Ending
balance
|
||||||
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
||||||
Allowances for doubtful accounts and unbilled services
|
$
|
21,259
|
|
|
43,888
|
|
|
40,648
|
|
|
$
|
24,499
|
|
Valuation allowance for deferred tax assets
|
$
|
626
|
|
|
793
|
|
|
172
|
|
|
$
|
1,247
|
|
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||
Allowances for doubtful accounts and unbilled services
|
$
|
24,499
|
|
|
49,390
|
|
|
51,648
|
|
|
$
|
22,241
|
|
Valuation allowance for deferred tax assets
|
$
|
1,247
|
|
|
2,314
|
|
|
418
|
|
|
$
|
3,143
|
|
Year ended December 31, 2019:
|
|
|
|
|
|
|
|
||||||
Allowances for doubtful accounts and unbilled services
|
$
|
22,241
|
|
|
69,979
|
|
|
73,552
|
|
|
$
|
18,668
|
|
Valuation allowance for deferred tax assets
|
$
|
3,143
|
|
|
1
|
|
|
2,128
|
|
|
$
|
1,016
|
|
(1)
|
Additions to allowances for doubtful accounts and unbilled services are charged to revenues to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client’s inability to make required payments on accounts receivables, the provision is charged to operating expenses. Additions also include allowances acquired in business acquisitions, which were not material in any period presented.
|
|
Quarter Ended
|
||||||||||||||
2019
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
204,445
|
|
|
$
|
220,754
|
|
|
$
|
219,289
|
|
|
$
|
232,269
|
|
Reimbursable expenses
|
18,617
|
|
|
23,534
|
|
|
23,636
|
|
|
22,930
|
|
||||
Total revenues and reimbursable expenses
|
223,062
|
|
|
244,288
|
|
|
242,925
|
|
|
255,199
|
|
||||
Gross profit
|
65,496
|
|
|
77,832
|
|
|
75,158
|
|
|
77,315
|
|
||||
Operating income
|
6,756
|
|
|
17,875
|
|
|
20,576
|
|
|
18,499
|
|
||||
Net income from continuing operations
|
3,350
|
|
|
10,569
|
|
|
13,706
|
|
|
14,354
|
|
||||
Loss from discontinued operations, net of tax
|
(46
|
)
|
|
(97
|
)
|
|
(52
|
)
|
|
(41
|
)
|
||||
Net income
|
3,304
|
|
|
10,472
|
|
|
13,654
|
|
|
14,313
|
|
||||
Net earnings per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
0.15
|
|
|
$
|
0.48
|
|
|
$
|
0.62
|
|
|
$
|
0.65
|
|
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
0.15
|
|
|
$
|
0.48
|
|
|
$
|
0.62
|
|
|
$
|
0.65
|
|
Net earnings per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
0.15
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.63
|
|
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
0.15
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.63
|
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
21,868
|
|
|
21,997
|
|
|
22,052
|
|
|
22,051
|
|
||||
Diluted
|
22,311
|
|
|
22,400
|
|
|
22,561
|
|
|
22,676
|
|
|
Quarter Ended
|
||||||||||||||
2018
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
193,679
|
|
|
$
|
197,544
|
|
|
$
|
198,448
|
|
|
$
|
205,454
|
|
Reimbursable expenses
|
17,619
|
|
|
20,733
|
|
|
21,296
|
|
|
23,226
|
|
||||
Total revenues and reimbursable expenses
|
211,298
|
|
|
218,277
|
|
|
219,744
|
|
|
228,680
|
|
||||
Gross profit
|
59,745
|
|
|
68,820
|
|
|
68,893
|
|
|
71,834
|
|
||||
Operating income
|
2,322
|
|
|
19,138
|
|
|
13,561
|
|
|
17,075
|
|
||||
Net income (loss) from continuing operations
|
(3,222
|
)
|
|
5,862
|
|
|
8,249
|
|
|
3,055
|
|
||||
Income (loss) from discontinued operations, net of tax
|
(42
|
)
|
|
(490
|
)
|
|
228
|
|
|
6
|
|
||||
Net income (loss)
|
(3,264
|
)
|
|
5,372
|
|
|
8,477
|
|
|
3,061
|
|
||||
Net earnings (loss) per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
(0.15
|
)
|
|
$
|
0.27
|
|
|
$
|
0.38
|
|
|
$
|
0.14
|
|
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
(0.02
|
)
|
|
0.01
|
|
|
—
|
|
||||
Net income (loss)
|
$
|
(0.15
|
)
|
|
$
|
0.25
|
|
|
$
|
0.39
|
|
|
$
|
0.14
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
(0.15
|
)
|
|
$
|
0.27
|
|
|
$
|
0.37
|
|
|
$
|
0.14
|
|
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
(0.02
|
)
|
|
0.01
|
|
|
—
|
|
||||
Net income (loss)
|
$
|
(0.15
|
)
|
|
$
|
0.25
|
|
|
$
|
0.38
|
|
|
$
|
0.14
|
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
21,592
|
|
|
21,709
|
|
|
21,745
|
|
|
21,774
|
|
||||
Diluted
|
21,592
|
|
|
21,918
|
|
|
22,110
|
|
|
22,294
|
|
•
|
for any breach of the director’s duty of loyalty to us or our stockholders;
|
•
|
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
•
|
under Section 174 of the DGCL (relating to unlawful stock repurchases, redemptions or other distributions or payment of dividends); or
|
•
|
for any transaction from which the director derived an improper personal benefit.
|
•
|
we must indemnify our board members and officers to the fullest extent permitted by the DGCL, subject to limited exceptions; and
|
•
|
we may purchase and maintain insurance on behalf of our current or former board members, officers, employees or agents against any liability asserted against them and incurred by them in any such capacity, or arising out of their status as such.
|
By:
|
/s/ Brian Sandfort
|
Name:
|
Brian K. Sandfort
|
Title:
|
Managing Director, Asset Management
|
Date:
|
|
By:
|
/s/ Katherine Gibbons
|
Name:
|
Katherine Gibbons
|
Title:
|
Investment Director
|
Date:
|
12/10/13
|
By:
|
/s/ C. Mark Hussey
|
Name:
|
C. Mark Hussey
|
Title:
|
EVP, CFO & Treasurer
|
By:
|
/s/ C. Mark Hussey
|
Its:
|
EVP, CFO & Treasurer
|
1.
|
History and Purpose. Huron Consulting Group Inc., a Delaware corporation (“Huron”), previously established the Huron Consulting Group Inc. 2012 Omnibus Incentive Plan, as amended from time to time (the “Plan”) to attract and retain employees, non-employee directors and independent contractors providing services to Huron and/or the Affiliates (defined below), to motivate Participants (defined below) to achieve long-term goals of Huron and the Affiliates, to provide incentive compensation opportunities that are competitive with those of other corporations, and to further align Participants’ interests with those of Huron’s stockholders, and thereby to promote the long-term financial interest of Huron and the Affiliates, including growth in value of Huron’s equity and enhancement of long-term stockholder value. The Plan has been previously amended, and the following provisions constitute an amendment, restatement, and continuation of the Plan effective February 13, 2020.
|
2.
|
Definitions. As used in the Plan, the following definitions apply to the terms indicated below:
|
(a)
|
“Administrative Actions” shall have the meaning set forth in Section 5(d).
|
(b)
|
“Affiliate” means any corporation, partnership, joint venture or other entity during any period in which (i) Huron, directly or indirectly, owns at least 50% of the combined voting power of all classes of stock of such entity or at least 50% of the ownership interests in such entity or (ii) such entity, directly or indirectly, owns at least 50% of the combined voting power of all classes of stock of Huron.
|
(c)
|
“Agreement” shall mean an agreement between Huron and a Participant evidencing an Award or a notice of an Award, in a form approved by the Committee.
|
(d)
|
“Alternative Agreement” shall mean, with respect to any Participant, an employment agreement, senior management agreement or other written agreement describing the Participant’s terms of employment with Huron or an Affiliate.
|
(e)
|
“Award” shall mean any award described in Section 7 or 8 of the Plan.
|
(f)
|
“Board of Directors” shall mean the Board of Directors of Huron.
|
(g)
|
“Business Criteria” shall mean (i) return on total stockholder equity; (ii) earnings or book value per share of Common Stock (“EPS”); (iii) adjusted EPS; (iv) net income (before or after taxes); (v) earnings before all or any interest, taxes, depreciation and/or amortization (“EBIT”, “EBITA” or “EBITDA”) measured as a dollar amount or a percentage of revenue; return on assets, capital or investment; (vii) market share; (viii) market capitalization; (ix) cost reduction goals; (x) levels of expense, costs or liabilities; (xi) department, division or business unit level performance; (xii) operating income; sales or revenues; (xiv) stock price appreciation; (xv) total stockholder return (TSR); (xvi) implementation or completion of critical projects or processes; (xvii) adjusted EBITDA; (xviii) days sales outstanding (DSO); (xix) financial coverage ratios; other non-GAAP financial measures, or (xxi) any combination of the foregoing.
|
(h)
|
“Cash Incentive Award” shall mean the grant of a right to receive a payment of cash (or, in the discretion of the Committee, shares of Common Stock having value equivalent to the cash otherwise payable) that is contingent on achievement of performance objectives or other conditions over a specified period established by the Committee. The grant of Cash Incentive Awards may also be subject to such other conditions, restrictions, and contingencies, as determined by the Committee, including provisions relating to deferred payment.
|
(i)
|
“Cause” shall mean, unless otherwise defined in a Participant’s Agreement or an Alternative Agreement, any of the following actions or failures by the Participant, as determined in the reasonable judgment of Huron: (i) engaging in conduct that violates written policies of Huron or any Affiliate; (ii) failure to perform the essential functions of his or her job (except for a failure resulting from a bona fide illness or incapacity); (iii) failure to carry out the reasonable directions of Huron or any Affiliate, issued through Huron’s Chief Executive Officer, the Board of Directors, other appropriate senior employee responsible for the Participant’s business unit or area, the Participant’s supervisor, or the person to whom the Participant reports; (iv) embezzlement, misappropriation of corporate funds, any act of fraud, dishonesty or self-dealing, or the commission of a felony or any significant violation of any statutory or common law duty of loyalty to Huron or any Affiliate; an act or omission that could adversely and materially affect the business or reputation of Huron or any Affiliate or involves moral turpitude; or (vi) a breach of a material provision of this Plan, the Agreement evidencing an Award or an Alternate Agreement.
|
(j)
|
“Change of Control” shall mean the first to occur of the following events:
|
(i)
|
any Person becomes the Beneficial Owner, directly or indirectly, of Common Stock or voting securities of Huron (not including in the amounts beneficially owned by such Person any Common Stock or voting securities acquired directly from Huron or the Affiliates) representing 40% or more of the combined voting power of Huron’s then outstanding securities;
|
(ii)
|
there is consummated a merger or consolidation of Huron or any direct or indirect subsidiary of Huron with any Person, other than (A) a merger or consolidation which would result in the voting securities of Huron outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of Huron or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; (B) a merger or consolidation effected to implement a recapitalization of Huron (or similar transaction) in which no Person other than existing security holders is or becomes the Beneficial Owner, directly or indirectly, of securities
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(iii)
|
the stockholders of Huron approve a plan of complete liquidation or dissolution of Huron (except for a plan of liquidation or dissolution effected to implement a recapitalization of Huron addressed in paragraph (ii) above); or
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(iv)
|
there is consummated an agreement for the sale or disposition of all or substantially all of the assets of Huron to a Person, other than a sale or disposition by Huron of all or substantially all of the assets of Huron to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of Huron.
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(k)
|
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.
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(l)
|
“Committee” shall mean a committee of the Board of Directors consisting of two or more persons each of whom shall qualify as an “outside director” within the meaning of Section 162(m) of the Code, a “nonemployee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, and an “independent director” within the meaning of the NASD Rule 4350(c)(1).
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(m)
|
“Common Stock” shall mean the common stock of Huron, par value $.01 per share.
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(n)
|
“Covered Employee” shall have the meaning set forth in Section 162(m) of the Code.
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(o)
|
“Disabled” shall mean permanently and totally disabled within the meaning of Section 22(e)(3) of the Code.
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(p)
|
“Effective Date” shall have the meaning set forth in Section 3.
|
(q)
|
“Eligible Individuals” shall mean employees of Huron or any of the Affiliates (including officers, whether or not they are directors of Huron or any Affiliate), independent contractors providing services to Huron or any Affiliate and non-employee directors of Huron or any Affiliate.
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(r)
|
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.
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(s)
|
“Exercise Price” shall have the meaning set forth in Section 7(c).
|
(t)
|
“Fair Market Value” of a share of Common Stock as of any date shall mean the value determined in accordance with the following rules:
|
(i)
|
If the Common Stock is at the time listed or admitted to trading on any stock exchange, then the Fair Market Value shall be the closing price per share of Common Stock on such date on the principal exchange on which the Common Stock is then listed or admitted to trading or, if no such sale is reported on such date, on the last preceding date on which a sale was so reported.
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(ii)
|
If the Common Stock is not at the time listed or admitted to trading on a stock exchange but bid and asked prices for the Common Stock are regularly reported, then the Fair Market Value shall be the arithmetic mean between the closing or last bid and asked prices for the Common Stock on such date or, if no bid and asked prices for Common Stock are reported on such date, on the most recent day immediately prior thereto on which bid and asked prices were so reported.
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(iii)
|
If the Common Stock is not listed or admitted to trading on any stock exchange and if prices are not regularly reported for the Common Stock as described in paragraph (ii), the Fair Market Value shall be as determined by the Committee in good faith in its sole discretion or under procedures established by the Committee, whose determination shall be conclusive and binding.
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(iv)
|
For purposes of determining the Fair Market Value of shares of Common Stock that are sold pursuant to a broker- assisted cashless exercise program, Fair Market Value shall be the price at which such shares are sold.
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(u)
|
“Full Value Award” shall mean an Award that is granted pursuant to Section 8 hereof and that is the grant of one or more shares of Common Stock or a right to receive one or more shares of Common Stock in the future, which grant may be subject to one or more of the following, as determined by the Committee:
|
(i)
|
The grant may be in consideration of a Participant’s previously performed services or surrender of other compensation that may be due.
|
(ii)
|
The grant may be contingent on the achievement of performance or other objectives during a specified period.
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(iii)
|
The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or achievement of performance or other objectives.
|
(v)
|
“Huron” shall have the meaning set forth in Section 1.
|
(w)
|
“Incentive Stock Option” shall mean an Option that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code, or any successor provision, and which is designated by the Committee as an Incentive Stock Option.
|
(x)
|
“Nonqualified Stock Option” shall mean an Option other than an Incentive Stock Option.
|
(y)
|
“Option” shall mean an Award that is granted pursuant to Section 7 hereof that entitles a Participant to purchase shares of Common Stock at the applicable Exercise Price established by the Committee.
|
(z)
|
“Participant” shall mean an Eligible Individual to whom an Award is granted pursuant to the Plan.
|
(aa)
|
“Performance-Based Compensation” shall have the meaning set forth in Section 9.
|
(cc)
|
“Retirement” shall mean the voluntary termination with Huron and the Affiliates of a Participant who is in the position of corporate vice president, managing director or executive officer and (i) such termination occurs on or after the date on which he or she has attained age 62 and completed at least seven years of employment with Huron and (ii) in conjunction with such termination such Participant has executed a non-competition and non-solicitation agreement provided by Huron. A Participant’s termination of employment shall not be considered to be on account of Retirement if the employment is terminated by Huron or any Affiliate for any reason.
|
(dd)
|
“Stock Appreciation Right” shall mean an Award is granted pursuant to Section 7 hereof that entitles a Participant to receive, upon exercise of the Award, an amount of cash or shares of Common Stock (as determined in accordance with the terms of the Plan and the Award) having a value equal to the excess of: (i) the value, determined at the time of exercise, of a specified number of shares of Common Stock; over (ii) the applicable Exercise Price.
|
(ee)
|
“Subsidiary” shall mean a “subsidiary corporation” of Huron within the meaning of Section 424(f) of the Code.
|
3.
|
Effective Date and Duration of Plan. The Plan, as amended and restated, will be effective February 13, 2020 (the “Effective Date”), subject to approval by Huron’s stockholders. The Plan shall be unlimited in duration; however, in the event of Plan termination, the Plan shall remain in effect as long as any shares of Common Stock awarded under it are outstanding and not fully vested. No new Awards will be made under the Plan on or after the tenth anniversary of the Effective Date or, if earlier, on or after termination of the Plan.
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4.
|
Shares Reserved and Other Limitations.
|
(a)
|
Source of Shares. Shares of Common Stock reserved for issuance under the Plan may be authorized but unissued shares of Common Stock or authorized and issued shares of Common Stock held in Huron’s treasury, including shares purchased in the open market or in private transactions.
|
(b)
|
Shares Available for Awards. Subject to the terms and conditions of the Plan, the number of shares of Common Stock reserved for issuance under the Plan shall be 3,652,204 shares (comprised of: (i) the 1,398,204 shares of Common Stock authorized under the Plan as originally adopted, (ii) an additional 850,000 shares of Common Stock authorized in the amendment and restatement of the Plan effective May 2, 2014, (iii) an additional 804,000 shares of Common Stock authorized in the amendment and restatement of the Plan effective May 1, 2017, and (iv) an additional 600,000 shares of Common Stock authorized in the amendment of the Plan effective May 3, 2019), subject to adjustment as provided herein.
|
(c)
|
Individual Limitations on Awards.
|
(i)
|
The maximum number of shares of Common Stock that may be granted to any Participant during any calendar-year period with respect to Full Value Awards that are intended to be Performance-Based Compensation shall not exceed 500,000 shares in the aggregate (subject to adjustment as provided herein).
|
(1)
|
If Awards are denominated in shares of Common Stock but an equivalent amount of cash is delivered in lieu of shares of Common Stock, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of shares into cash.
|
(2)
|
If delivery of shares of Common Stock or cash is deferred until after shares of Common Stock have been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the shares are earned shall be disregarded.
|
(ii)
|
For any participant who is an outside director of Huron, the aggregate grant date fair value of Awards granted to such individual during any calendar year, along with any regular cash retainer or meeting fees paid to such participant during such calendar year shall not exceed $1,500,000; provided, however, that if an individual employee becomes an outside director (or vice versa) during a calendar year, the limit in this sentence shall not apply to Awards granted to the individual in the individual’s capacity as an employee.
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(d)
|
Limits on Incentive Stock Options. The maximum number of shares of Common Stock to which Incentive Stock Options relate that may be granted under the Plan shall be 325,000 (subject to adjustment as provided herein).
|
(e)
|
Individual Limitations on Cash Incentive Awards. The maximum amount payable to any Participant for any 12-month performance period with respect to a Cash Incentive Award granted under the Plan that is intended to be Performance- Based Compensation shall be $10,000,000 (prorated for performance periods that are greater or lesser than 12 months). For purposes of this Section 4(e):
|
(i)
|
If the Award is denominated in cash but an equivalent amount of Common Stock is delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into shares.
|
(ii)
|
If delivery of shares of Common Stock or cash is deferred until after cash has been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the cash is earned shall be disregarded.
|
(f)
|
Adjustments for Change in Capitalization. In the event that any dividend or other distribution is declared (whether in the form of cash, Common Stock, or other property), or there occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate transaction or event, the Committee shall equitably adjust, in its sole and absolute discretion, (i) the number and kind of shares of stock which may thereafter be issued in connection with Awards; (ii) the number and kind of shares of stock or other property issued or issuable in respect of outstanding Awards; (iii) the exercise price, grant price or purchase price relating to any Award; (iv) the limitations set forth in Sections 4(b), 4(c), 4(d), and 4(e) (provided that, with respect to Incentive Stock Options, such adjustment shall be made in accordance with Section 424 of the Code and any regulations thereunder and provided further that, to the extent applicable, such adjustment shall comply with Section 409A of the Code); and (v) any other adjustments that the Committee determines to be equitable (which may include, without limitation, replacement of Awards with other Awards which the Committee determines have comparable value and which are based on stock of a company resulting from the transaction and (2) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of payment, provided that in the case of an Option or Stock Appreciation Right, the amount of such payment may be the excess of value of the shares of Common Stock subject to the Option or Stock Appreciation Right at the time of the transaction over the Exercise Price).
|
(g)
|
Reuse of Shares. Except to the extent that to do so would prevent the grant of Incentive Stock Options hereunder, the following shares of Common Stock shall again become available for Awards:
|
(i)
|
any shares subject to an Award that remain unissued upon the cancellation, surrender, exchange, forfeiture or termination of such Award without having been exercised or settled; and
|
(ii)
|
to the extent an Award is paid or settled in cash, the number of shares of Common Stock with respect to which such payment or settlement is made.
|
(x)
|
any shares subject to an Award that are retained as payment of the exercise price of an Option;
|
(y)
|
any shares retained to satisfy: (A) all tax withholding obligations with respect to an Option or Stock Appreciation Right, or (B) tax withholding obligations in excess of the minimum required withholding amount with respect to a Full Value Award; and
|
(z)
|
any shares repurchased by Huron using stock option exercise proceeds.
|
(h)
|
Special Vesting Rules for All Awards. Except for Awards (when aggregated with all other Awards under the Plan) which do not exceed 5% of the total number of shares of Common Stock reserved for issuance under the Plan in the aggregate, in no event shall the required period of service for full vesting be less than one year (subject, to the extent provided by the Committee, to acceleration of vesting in the event of the Participant’s death, Disability, or Change of Control).
|
(i)
|
Dividends. Dividends may be accrued but shall not be paid with respect to any Award unless and until the Participant has vested in the underlying Award.
|
5.
|
Administration of the Plan.
|
(a)
|
General. The Plan shall be administered by the Committee. The Committee shall have the authority in its sole discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to (i) grant Awards; (ii) determine the Eligible Individuals to whom, and the time or times at which, Awards shall be granted; (iii) determine the type and number of Awards to be granted; the number of shares of Common Stock or cash or other property to which an Award may relate and the terms, conditions, restrictions and performance criteria relating to any Award; (iv) determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; (v) conclusively construe and interpret the Plan and all Awards; (vi) prescribe, amend and rescind rules and regulations relating to the Plan; (vii) determine the terms and provisions of Agreements; and (viii) make all other determinations deemed necessary or advisable for the operation and administration of the Plan. The Committee may, in its sole and absolute discretion, without amendment to the Plan (but subject to the terms and conditions of the Plan), (w) accelerate the date on which any Option or Stock Appreciation Right becomes exercisable; (x) waive or amend the operation of Plan provisions respecting exercise after termination of employment (provided that the term of an Option or Stock Appreciation Right may not be extended beyond ten years from the date of grant); (y) accelerate the vesting date, or waive any condition imposed hereunder, with respect to any Full Value Award; and (z) otherwise adjust any of the terms applicable to any such Award in a manner consistent with the terms of the Plan.
|
(b)
|
Decisions Binding. Any interpretations of the Plan by the Committee and any decisions made by it under the Plan are final and binding on all persons.
|
(c)
|
Delegation. Except to the extent prohibited by the applicable rules of any stock exchange or applicable law, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of Huron or any of its Affiliates the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election that is the responsibility of or that is allocated to the Committee herein, and that may be so delegated as a matter of law, except for grants of Awards to persons (i) who are non-employee members of the Board or otherwise are subject to Section 16 of the Exchange Act
|
(d)
|
Indemnification. No member of the Committee (or an authorized delegate of the Committee), and no officer of Huron or any of the Affiliates, shall be liable for any action taken or omitted to be taken by such individual or by any other member of the Committee or officer of Huron or any Affiliate in connection with the performance of duties under this Plan, except for such individual’s own willful misconduct or as expressly provided by law (the “Administrative Actions”). Further, the Committee (and all delegates of the Committee), in addition to such other rights of indemnification as they may have as members of the Board of Directors or officers of Huron or an Affiliate, any individual serving as a Committee member (and any authorized delegate) shall be indemnified and held harmless by Huron to the fullest extent allowed by law against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any Administrative Action.
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6.
|
Participation. Subject to the terms and conditions of the Plan, the Committee shall determine and designate, from time to time, from among the Eligible Individuals those persons who will be granted one or more Awards under the Plan and, subject to the terms and conditions of the Plan, a Participant may be granted any Award permitted under the provisions of the Plan and more than one Award may be granted to a Participant. Except as otherwise agreed between Huron and the Participant, or except as otherwise provided in the Plan, an Award under the Plan shall not affect any previous Award under the Plan or an award under any other plan maintained by Huron or any of the Affiliates. No Participant or other person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards, or of multiple Awards granted to a Participant. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).
|
7.
|
Options and Stock Appreciation Rights.
|
(a)
|
Grant of Awards. The Committee may grant Options and/or Stock Appreciation Rights to Eligible Individuals, subject to the terms and conditions of the Plan.
|
(b)
|
Identification of Options. Each Option shall be clearly identified as either an Incentive Stock Option or a Nonqualified Stock Option.
|
(c)
|
Exercise Price. The “Exercise Price” of an Option or Stock Appreciation Right shall be established by the Committee at the time the Option or Stock Appreciation Right is granted; provided, however, that in no event shall the Exercise Price be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant (or, if greater, the par value of a share of Common Stock on the date of grant).
|
(d)
|
No Repricing/Prohibition on Buy-Back. Except for either adjustments pursuant to Section 4(f) or reductions of the Exercise Price approved by Huron’s stockholders, the Exercise Price for any outstanding Option or Stock Appreciation Right may not be decreased after the date of grant nor may an outstanding Option or Stock Appreciation Right granted under the Plan be surrendered to Huron as consideration for the grant of a replacement Option or Stock Appreciation Right with a lower Exercise Price. Except as approved by Huron’s stockholders, in no event shall any Option or Stock Appreciation Right granted under the Plan be surrendered to Huron in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or Stock Appreciation Right is greater than the then current Fair Market Value of a share of Common Stock. In addition, no repricing of an Option shall be permitted without the approval of Huron’s stockholders if such approval is required under the rules of any stock exchange on which Common Stock is listed.
|
(e)
|
Term and Exercise.
|
(i)
|
Each Option or Stock Appreciation Right shall become exercisable at the time determined by the Committee at the date of grant, subject to the terms and conditions of the Plan. At the time of grant of an Option or Stock Appreciation Right, as applicable, the Committee may impose such restrictions or conditions of the exercisability of the Award as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria or conditions relating to the completion of a specified
|
(ii)
|
An Option or Stock Appreciation Right shall be exercised by delivering the form of notice of exercise provided by Huron. Unless otherwise provided in the Award Agreement, an Option will be automatically exercised via a broker- assisted cashless exercise upon the expiration date of the Option if the value of a share of Common Stock on the expiration date exceeds the Exercise Price for such Option.
|
(iii)
|
Payment for shares of Common Stock purchased upon the exercise of the Option shall be made on the effective date of such exercise by one or a combination of the following means (except that in the case of exercise using a broker- assisted cashless exercise, payment may be made as soon as practicable after exercise): (1) in cash or cash equivalents; (2) by tendering, by actual delivery or attestation, shares of Common Stock owned by the Participant for at least six months prior to the date of exercise and valued on the effective date of such exercise; or (3) by any such other methods (including broker-assisted cashless exercise via a broker selected by the Committee) as the Committee may from time to time authorize; provided, however, that in all cases, the method of making such payment shall be in compliance with applicable law.
|
(iv)
|
Payment in settlement of a Stock Appreciation Right may be made solely in whole shares of Common Stock valued on the date of exercise of the Stock Appreciation Right or alternatively, in the sole discretion of the Committee, solely in cash or a combination of cash and shares. If the Committee decides that payment will be made in shares of Common Stock, and the amount payable results in a fractional share, payment for the fractional share will be made in cash.
|
(v)
|
Upon the exercise of an Option or settlement of a Stock Appreciation Right in shares of Common Stock, in a manner determined by the Committee, either (1) certificates for shares of Common Stock shall be issued in the name of or for the account of the Participant or other person entitled to receive such shares or (2) shares of Common Stock shall be credited to such person’s account via book-entry transfer and shall be registered in such person’s name solely on the records of Huron’s transfer agent, in each case, as soon as practicable following the effective date on which the Option or Stock Appreciation Right, as applicable, is exercised.
|
(f)
|
Provisions Relating to Incentive Stock Options. Incentive Stock Options may only be granted to employees of Huron and its Subsidiaries, in accordance with the provisions of Section 422 of the Code. To the extent that the aggregate Fair Market Value of shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of Huron or any of its Subsidiaries shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence, Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of Huron and its Subsidiaries unless (i) the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option is granted and (ii) such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted. A Participant shall be required to notify Huron of any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances
|
(g)
|
Effect of Termination of Employment or Provision of Services on Options and Stock Appreciation Rights. The Committee shall determine the effect of termination of employment or termination of service on each Option and Stock Appreciation Right, subject to the terms and conditions of the Plan. Unless otherwise provided by the Committee:
|
(i)
|
any Option or Stock Appreciation Right that is outstanding on the date on which a Participant’s employment or service with Huron and the Affiliates terminates due to death or as a result of the Participant’s being Disabled shall become fully vested and exercisable on the date on which the Participant’s employment or service terminates due to the Participant’s death or as a result of the Participant’s being Disabled;
|
(ii)
|
any Option or Stock Appreciation Right that is outstanding on the date on which a Participant’s employment or service with Huron and the Affiliates terminates for Cause, whether or not then exercisable, shall be terminated effective as of the day immediately prior to the date of termination;
|
(iii)
|
any Option or Stock Appreciation Right that is outstanding on the date that a Participant’s employment or service with Huron and the Affiliates terminates for any reason other than Cause, death, or the Participant’s being Disabled or Retirement, (1) shall remain exercisable for the 90-day period following such termination to the extent that it is exercisable at the time of such termination, but in no event following the expiration of its term and (2) shall be terminated effective as of the date of termination to the extent it remains unexercisable as of the date of termination; and
|
(iv)
|
with respect to any Participant who is an employee of Huron or any Affiliate and who is in a position of corporate vice president, managing director or executive officer, any Option or Stock Appreciation Right that is outstanding on the date on which such Participant’s employment with Huron and the Affiliates terminates due to Retirement shall continue to vest and be exercisable in accordance with its terms as though the Participant had remained in the employ of Huron and its Affiliates, provided that the Participant complies with the terms of the non-competition agreement and non-solicitation agreement in the form determined by Huron and signed by the Participant; provided further, however, that the foregoing provisions of this paragraph (iv) shall not apply with respect to any Option or Stock Appreciation Right that is subject to Section 409A of the Code. Notwithstanding the foregoing, if a Participant dies following Retirement, any Option or Stock Appreciation Right that is still outstanding on the date of such Participant’s death shall become fully vested and exercisable on the date of such Participant’s death, and shall expire on the earlier of such Award’s expiration date and the one-year anniversary of the Participant’s death.
|
(h)
|
Leaves of Absence. Unless otherwise provided by the Committee and, with respect to Incentive Stock Options, to the extent permitted under Section 422 of the Code, subject in all cases to the terms and conditions of the Award, in the case of any Participant who takes an approved unpaid leave of absence (i) the Participant’s employment or service shall not be deemed to be terminated solely because of such leave of absence; (ii) the Participant shall continue to vest in his or her outstanding Options and Stock Appreciation Rights under the Plan during the first 30 days of such leave of absence; and the Participant shall cease to vest in his or her outstanding Options and Stock Appreciation Rights under the Plan during any period of such leave of absence which exceeds 30 days.
|
(i)
|
Post-Exercise Limitations. Without otherwise limiting the Committee’s authority under the Plan, the Committee, in its discretion, may impose such restrictions on shares of Common Stock acquired pursuant to the exercise of an Option or received in settlement of a Stock Appreciation Right as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, share ownership by the Participant, conformity with Huron’s recoupment or clawback policies and such other factors as the Committee determines to be appropriate.
|
8.
|
Full Value Awards and Cash Incentive Awards.
|
(a)
|
Grant of Awards. The Committee may grant Full Value Awards and/or Cash Incentive Awards to Eligible Individuals, subject to the terms and conditions of the Plan.
|
(b)
|
Effect of Termination of Employment or Provision of Services on Full Value Awards. The Committee shall determine the effect of termination of employment or termination of service on each Full Value Award, subject to the terms and conditions of the Plan. Unless otherwise provided by the Committee:
|
(i)
|
any Full Value Award that is outstanding on the date on which a Participant’s employment or service with Huron and the Affiliates terminates due to death or as a result of the Participant’s being Disabled shall become fully vested (and exercisable, if applicable) on the date on which the Participant’s employment or service terminates due to the Participant’s death or as a result of the Participant’s being Disabled;
|
(ii)
|
a Full Value Award that is outstanding on the date on which a Participant’s employment or service with Huron and the Affiliates terminates for Cause shall be terminated effective as of the day immediately prior to the date of termination and all shares subject to the Full Value Award (whether or not then vested or distributable) shall be terminated effective as of the day immediately prior to the date of termination;
|
(iii)
|
any Full Value Award that is outstanding on the date that a Participant’s employment or service with Huron and the Affiliates terminates for any reason other than Cause, death, the Participant’s being Disabled or Retirement and that has not vested on the date of termination (and all rights with respect thereto, such as dividends or dividend equivalents) shall be terminated effective as of the date of termination; and
|
(iv)
|
with respect to any Participant who is an employee of Huron or any Affiliate and who is in a position of corporate vice president, managing director or executive officer, any Full Value Award that is outstanding on the date on which such Participant’s employment with Huron and the Affiliates terminates due to Retirement shall continue to vest and be distributable in accordance with its terms as though the Participant had remained in the employ of Huron and the Affiliates; provided that the Participant complies with the terms of the non-competition agreement and non-solicitation agreement in the form determined by Huron and signed by the Participant. Notwithstanding the foregoing, if a Participant dies following Retirement, any Full Value Award that is still outstanding on the date of such Participant's death shall become fully vested on the date of such Participant's death.
|
(c)
|
Leaves of Absence. Unless otherwise provided by the Committee, subject in all cases to the terms and conditions of the Award, in the case of any Participant who takes an approved unpaid leave of absence (i) the Participant’s employment or service shall not be deemed to be terminated solely because of such leave of absence; (ii) the Participant shall continue to vest in his or her outstanding Full Value Awards under the Plan during the first 30 days of such leave of absence; and the Participant shall cease to vest in his or her outstanding Full Value Awards under the Plan during any period of such leave of absence which exceeds 30 days.
|
(d)
|
Restrictions. Without otherwise limiting the Committee’s authority under the Plan, the Committee, in its discretion, may impose such restrictions on shares of Common Stock acquired pursuant to the grant or settlement of a Full Value Award or the payment or retention of a Cash Incentive Award as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, share ownership by the Participant, conformity with Huron’s recoupment or clawback policies and such other factors as the Committee determines to be appropriate.
|
9.
|
Performance-Based Compensation. The Committee may designate any Full Value Award or a Cash Incentive Award granted to a Participant under the Plan as “Performance-Based Compensation” within the meaning of Section 162(m) of the Code and regulations thereunder. To the extent required by Section162(m) of the Code, any such Award so designated shall be conditioned on the achievement of one or more performance targets as determined by the Committee and the following shall apply:
|
(a)
|
Establishment of Performance Criteria. The performance targets established for the performance period by the Committee shall be objective (as that term is described in regulations under Section 162(m) of the Code), and shall be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee may be with respect to corporate performance, operating group or sub-group performance, individual performance, other group or individual performance, or division performance, and shall be based on one or more of the Business Criteria.
|
(b)
|
Certification of Targets. A Participant otherwise entitled to receive a Performance-Based Compensation Award for any performance period shall not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this Section 9(b), such exercise of discretion may not result in an increase in the amount of the payment.
|
(c)
|
Special Termination Rules. Subject to the other terms and conditions of the Plan, if an Award is intended to constitute Performance-Based Compensation, the Committee may provide that if a Participant’s employment with Huron and the Affiliates terminates because of death or the Participant’s being Disabled, or if a Change of Control occurs prior to the Participant’s termination date, the Participant’s Performance-Based Compensation may become vested without regard to whether the Award would continue to constitute Performance-Based Compensation, subject to the terms of Section 10 below.
|
10.
|
Change of Control.
|
(a)
|
Termination of Employment without Cause; Termination of Plan without Substitution.
|
(i)
|
Except as otherwise provided in an Agreement or an Alternative Agreement, in the event that (A) a Participant is employed, or performs services as a director or independent contractor, on the date of a Change of Control and the Participant's employment or service, as applicable, is terminated by Huron or the successor to Huron (or a Related Company which is his or her employer) for reasons other than Cause within 12 months following the Change of Control, or (B) the Plan is terminated by Huron or its successor following a Change of Control without provision for the continuation of outstanding Awards hereunder, then (i) all Options and Stock Appreciation Rights which are then outstanding shall become immediately exercisable, and (ii) all other Awards shall become fully vested.
|
(ii)
|
In the case of an award constituting Performance-Based Compensation, the phrase "fully vested" in the immediately prior sentence shall mean the greater of (x) vesting at target (or, if target is not defined in the award, vesting at 100% of the number of units granted), or (y) vesting in the award based on the extent, as determined by the Committee, to which the applicable performance metrics have been met during the applicable performance period up through and including the effective date of the Change of Control. If an Agreement or Alternative Agreement contains a vesting provision for a Performance-Based Compensation award that would result in lesser vesting than per this subsection (ii), then the terms of the Agreement or Alternate Agreement, as applicable, shall govern.
|
(iii)
|
In addition, to the extent any accelerated exercisability and/or vesting pursuant to clause (B) of Section 10(a)(i) above applies to an award that is deferred compensation subject to, and not exempt from, the provisions of Internal Revenue Code Section 409A, then the definition of "Change of Control" for purposes of accelerated exercisability and/or vesting under clause
|
(b)
|
Substitution and Continued Employment. If, upon a Change of Control, awards in other shares or securities are substituted for outstanding Awards under the Plan and, immediately following the Change of Control, the Participant becomes employed (if the Participant was an employee immediately prior to the Change of Control) or remains in continued service (as a director or independent contractor if the Participant was a director or independent contractor immediately prior to the Change of Control) of the entity into which Huron merged, or the purchaser of substantially all of the assets of Huron or a successor to such entity or purchaser, then the Participant shall not be treated as having terminated employment or service for purposes of this Section 10 until such time as the Participant terminates employment or service with the merged entity or purchaser (or successor), as applicable.
|
(c)
|
Failure to Take Comparable Job not Termination. If, as described in subsection 10(b) above, awards in other shares or securities are substituted for outstanding Awards under the Plan in connection with a Change of Control, in the event a Participant is offered employment with a successor to Huron (or an Affiliate) for which the Participant is reasonably qualified and on financial terms and conditions which are comparable to the financial terms and conditions that applied to the Participant's employment immediately prior to the Change of Control, then, if the Participant does not accept the offer of employment and, as a result, the Participant's employment with Huron, the Affiliates and their respective successors is terminated, such Participant shall not be treated as having a termination of employment for purposes of this Section 10.
|
11.
|
Rights as a Stockholder. No person shall have any rights as a stockholder with respect to any shares of Common Stock covered by or relating to any Award until the date of issuance of a stock certificate with respect to such shares or the date of crediting such shares to such person’s account via book-entry transfer. Except for adjustments pursuant to Section 4(f), no adjustment to any Award shall be made for dividends or other rights for which the record date occurs prior to the date such stock certificate is issued or credit via book-entry transfer is made.
|
12.
|
Limitations of Implied Rights.
|
(a)
|
No Right to Employment or Continued Service. Nothing contained in the Plan or any Agreement shall confer upon any Participant any right with respect to the continuation of employment by or provision of services to Huron and the Affiliates or interfere in any way with the right of Huron and the Affiliates, subject to the terms of any separate agreement to the contrary, at any time to terminate such employment or service or to increase or decrease the compensation of any Participant.
|
(b)
|
No Claim to Award. No person shall have any claim or right to receive an Award hereunder. The grant of an Award to a Participant at any time shall neither require the Committee to grant any other Award to such Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other person.
|
(c)
|
No Right to Assets or Property. Neither a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of Huron or any Affiliate whatsoever, including, without limitation, any specific funds, assets, or other property which Huron or any Affiliate, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of Huron and any Affiliate. Nothing contained in the Plan shall constitute a guarantee by Huron or any Affiliate that the assets of such companies shall be sufficient to pay any benefits to any person.
|
13.
|
Securities Matters.
|
(a)
|
Compliance with Law. Notwithstanding anything herein to the contrary, Huron shall not be obligated to cause to be issued or delivered any certificates evidencing shares of Common Stock pursuant to the Plan (or any crediting of shares to a person’s account via book-entry transfer) unless and until Huron is advised by its counsel (which may be Huron’s in-house counsel) that the issuance and delivery of such certificates (or crediting of such shares to an account) is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition of the issuance and delivery of certificates (or crediting to an account) pursuant to the terms hereof, that the recipient of
|
(b)
|
Transfer of Shares. The transfer of any shares of Common Stock hereunder shall be effective only at such time as counsel to Huron (which may be Huron’s in-house counsel) shall have determined that the issuance and delivery of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may, in its sole discretion, defer the effectiveness of any transfer of shares of Common Stock hereunder in order to allow the issuance of such shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Participant in writing of its decision to defer the effectiveness of a transfer. During the period of such deferral in connection with the exercise of an Option, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.
|
14.
|
Withholding Taxes. All Awards and other payments under the Plan are subject to withholding of all applicable taxes. Whenever cash is to be paid pursuant to an Award, Huron and the Affiliates shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever shares of Common Stock are to be delivered pursuant to an Award, Huron and the Affiliates shall have the right to require the Participant to remit to Huron and the Affiliates in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With the approval of the Committee, a Participant may satisfy the foregoing requirement by electing to have Huron and the Affiliates withhold from delivery shares of Common Stock having a value equal to the amount of tax required to be withheld, as determined by the Committee or through the surrender of shares of Common Stock which the Participant already owns. As determined solely by Huron and the Affiliates, the number of shares used for withholding may exceed the number needed to satisfy the required withholding but shall not exceed the number of shares of Common Stock needed for the maximum tax withholding under applicable law (or other rates that will not have a negative accounting impact). Such a withholding election may be made by the Participant with respect to all or any portion of the shares to be delivered pursuant to an Award.
|
15.
|
Notification of Election Under Section 83(b) of the Code. If any Participant shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify Huron of such election within 10 days of filing notice of the election with the Internal Revenue Service.
|
16.
|
Amendment or Termination of the Plan. The Board of Directors may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, that approval of Huron’s stockholders shall be required for any such amendment if and to the extent such approval is required in order to comply with applicable law (including, but not limited to, the Incentive Stock Option regulations and any amendments thereto), or stock exchange or automated quotation system listing requirement. Without limiting the generality of the foregoing, no amendment of the Plan will be made without the approval of Huron’s stockholders if such amendment would (a) materially increase the benefits accruing to a Participant under the Plan; increase the aggregate number of shares of Common Stock that may be issued under the Plan; (c) modify the requirements as to eligibility for participation in the Plan; or (d) be required under Section 7(d) of the Plan (relating to prohibitions on repricing and buy-backs).
|
17.
|
Transferability.
|
(a)
|
General. Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution. Upon the death of a Participant, outstanding Awards granted to such Participant may be exercised only by the executor or administrator of the Participant’s estate or by a person who shall have acquired the right to such exercise by will or by the laws of descent and distribution. No transfer of an Award by will or the laws of descent and distribution shall be effective to bind Huron unless the Committee shall have been furnished with (i) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (ii) an agreement by the transferee to comply with all the terms and conditions of
|
(b)
|
Family Members. Notwithstanding Section 17(a), during a Participant’s lifetime, the Committee may, in its sole discretion, pursuant to the provisions set forth in this Section 17(b), permit the transfer, assignment or other encumbrance of an outstanding Option, unless such Option is an Incentive Stock Option and the Committee and the Participant intend that it shall retain such status. Subject to the approval of the Committee and to any conditions that the Committee may prescribe, a Participant may, upon providing written notice to Huron, elect to transfer any or all Options granted to such Participant pursuant to the Plan to members of his or her immediate family, including, but not limited to, children, grandchildren and spouse or to trusts for the benefit of such immediate family members or to partnerships in which such family members are the only partners; provided, however, that no such transfer by any Participant may be made in exchange for consideration. Any such transferee must agree, in writing, to be bound by all terms and conditions of the Plan.
|
(c)
|
Beneficiary. A Participant may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant’s estate shall be deemed to be the Participant’s beneficiary.
|
18.
|
Miscellaneous.
|
(a)
|
Notices. Any notice or document required to be filed with the Committee under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of Huron at its principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice procedure from time to time. Any notice required under the Plan (other than exercise notice) may be waived by the person entitled to notice.
|
(b)
|
Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be in writing filed with the applicable Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.
|
(c)
|
Agreement. The Committee may require a Participant to enter into an Agreement evidencing the Award, which Agreement shall contain such terms and conditions, not inconsistent with the Plan, as the Committee determines in its discretion.
|
(d)
|
Liability for Cash Payments. Subject to the terms and conditions of the Plan, Huron and each Affiliate shall be liable for payment of cash due under the Plan with respect to any Participant to the extent that such benefits are attributable to the service rendered for Huron or the Affiliate, as applicable, by the Participant. Any disputes relating to the liability of Huron or an Affiliate for cash payments shall be resolved by the Committee.
|
(e)
|
Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
|
(f)
|
Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
|
(g)
|
Expenses and Receipts. The expenses of the Plan shall be paid by Huron. Any proceeds received by Huron in connection with any Award may be used for general corporate purposes.
|
(h)
|
Applicable Law, Venue. Except to the extent preempted by any applicable federal law, the Plan shall be construed and administered in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law. Any legal action related to this Plan shall be brought only in a federal or state court located in Chicago, Illinois.
|
(i)
|
No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, other Awards, or other property shall be
|
19.
|
Severability. If any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.
|
20.
|
Foreign Employees. Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. In furtherance of such purposes, the Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which Huron or an Affiliate operates or has employees.
|
|
|
|
Name
|
|
Jurisdiction of Organization
|
Huron Consulting Group Holdings LLC
|
|
Delaware
|
Huron Consulting Services LLC
|
|
Delaware
|
Huron Consulting South East Asia PTE. LTD.
|
|
Singapore
|
Huron Consulting Saudi Limited
|
|
Saudi Arabia
|
Huron Saudi Limited
|
|
Saudi Arabia
|
Huron Management Services LLC
|
|
Delaware
|
Huron Demand LLC
|
|
Delaware
|
Conseillers Huron Canada Limitée
|
|
Canada
|
Huron Technologies Inc.
|
|
Delaware
|
Huron Transaction Advisory LLC
|
|
Delaware
|
Studer Holdings, Inc.
|
|
Delaware
|
The Studer Group, LLC
|
|
Florida
|
Huron Eurasia India Private Limited
|
|
India
|
Pope Woodhead and Associates
|
|
England and Wales
|
Innosight Holdings, LLC
|
|
Delaware
|
Innosight International, LLC
|
|
Delaware
|
Innosight Consulting Asia Pacific PTE. LTD.
|
|
Singapore
|
Innosight Consulting SARL
|
|
Switzerland
|
Innosight Consulting, LLC
|
|
Delaware
|
Huron Aviation One LLC
|
|
Delaware
|
Huron Aviation Two LLC
|
|
Delaware
|
Huron Managed Services LLC
|
|
Delaware
|
/s/ PricewaterhouseCoopers LLP
|
|
Chicago, Illinois
|
February 25, 2020
|
1.
|
I have reviewed this Annual Report on Form 10-K 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;
|
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:
|
|
February 25, 2020
|
|
By:
|
|
/S/ JAMES H. ROTH
|
|
|
|
|
|
|
James H. Roth
|
|
|
|
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K 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;
|
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:
|
|
February 25, 2020
|
|
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:
|
|
February 25, 2020
|
|
By:
|
|
/S/ JAMES H. ROTH
|
|
|
|
|
|
|
James H. Roth
|
|
|
|
|
|
|
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:
|
|
February 25, 2020
|
|
By:
|
|
/S/ JOHN D. KELLY
|
|
|
|
|
|
|
John D. Kelly
|
|
|
|
|
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|