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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Huron Consulting Group Inc | NASDAQ:HURN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.17 | 1.36% | 87.49 | 87.46 | 87.63 | 88.88 | 86.60 | 86.60 | 54,202 | 19:32:34 |
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
01-0666114
(I.R.S. Employer
Identification Number)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
|
NASDAQ Global Select Market
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
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Non-accelerated filer
o
|
|
Smaller reporting company
o
|
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|
|
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|
|
|
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|
|
|
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Emerging growth company
o
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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.
|
BUSINESS.
|
•
|
Enterprise Solutions and Analytics.
Our Enterprise Solutions and Analytics professionals deliver technology and analytic solutions that enable organizations to manage and optimize their financial performance, operational efficiency, and client or stakeholder experience. Our expertise in full-service enterprise performance management (EPM), enterprise resource planning (ERP), business intelligence and analytics, customer relationship management (CRM), and data management services helps clients identify and execute on business and technology strategies to drive results and gain a competitive advantage. Huron is a Platinum level member of the Oracle PartnerNetwork (OPN), a Workday Services Partner, and a Gold level consulting partner with Salesforce.com.
|
•
|
Business Advisory.
Our Business Advisory professionals resolve complex business issues and enhance client enterprise value through a suite of services including capital advisory, transaction advisory, operational improvement, restructuring and turnaround, valuation, and dispute advisory. We improve operations or capital structures for businesses performing at less than optimal levels, assess the short-term and long-term prospects of potential acquisition and divestiture opportunities, and provide independent valuation and advisory services to assist clients in making informed decisions for transaction, tax or litigation purposes. Securities transactions are handled by our registered broker-dealer, Huron Transaction Advisory LLC, a member of FINRA.
|
•
|
Strategy and Innovation.
Our Strategy and Innovation professionals collaborate with clients across a range of industries to achieve repeatable business growth and innovation. We help organizations identify new growth opportunities, build new ventures and capabilities, and accelerate organizational change.
|
•
|
Life Sciences.
Our Life Sciences professionals provide
strategic solutions to help pharmaceutical, medical device, and biotechnology companies deliver more value to patients, payers, and providers and comply with regulations. We advise clients in the areas of corporate and financial strategy, compliance and operations, reimbursement and access strategy, commercial contracting strategy, R&D and product strategy commercial segmentation, fair market value analysis, lifecycle management, litigation and investigations, government pricing and transparency reporting, auditing and monitoring, and overall business process improvement.
|
ITEM 1A.
|
RISK FACTORS.
|
•
|
the diversion of management’s time, attention, and resources from managing and marketing our Company;
|
•
|
the failure to retain key acquired personnel or existing personnel who may view the acquisition unfavorably;
|
•
|
the potential loss of clients of acquired businesses;
|
•
|
the need to compensate new employees while they wait for their restrictive covenants with other institutions to expire;
|
•
|
the potential need to raise significant amounts of capital to finance a transaction or the potential issuance of equity securities that could be dilutive to our existing stockholders;
|
•
|
increased costs to improve, coordinate, or integrate managerial, operational, financial, and administrative systems;
|
•
|
the potential assumption of liabilities of an acquired business;
|
•
|
the inability to attain the expected synergies with an acquired business;
|
•
|
the usage of earn-outs based on the future performance of our business acquisitions may deter the acquired company from fully integrating into our existing business;
|
•
|
the perception of inequalities if different groups of employees are eligible for different benefits and incentives or are subject to different policies and programs; and
|
•
|
difficulties in integrating diverse backgrounds and experiences of consultants, including if we experience a transition period for newly hired consultants that results in a temporary drop in our utilization rates or margins.
|
•
|
fluctuations in U.S. and global economies;
|
•
|
the U.S. or global financial markets and the availability, costs, and terms of credit;
|
•
|
changes in laws and regulations; and
|
•
|
other economic factors and general business conditions.
|
•
|
attract, integrate, retain, and motivate highly qualified professionals;
|
•
|
achieve and maintain adequate utilization and suitable billing rates for our revenue-generating professionals;
|
•
|
expand our existing relationships with our clients and identify new clients in need of our services;
|
•
|
successfully resell engagements and secure new engagements every year;
|
•
|
maintain and enhance our brand recognition; and
|
•
|
adapt quickly to meet changes in our markets, our business mix, the economic environment, the credit markets, and competitive developments.
|
•
|
the number and size of client engagements;
|
•
|
the timing of the commencement, completion and termination of engagements, which in many cases is unpredictable;
|
•
|
our ability to transition our consultants efficiently from completed engagements to new engagements;
|
•
|
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;
|
•
|
unanticipated changes in the scope of client engagements;
|
•
|
our ability to forecast demand for our services and thereby maintain an appropriate level of consultants; and
|
•
|
conditions affecting the industries in which we practice as well as general economic conditions.
|
•
|
our clients’ perception of our ability to add value through our services;
|
•
|
the market demand for the services we provide;
|
•
|
an increase in the number of engagements in the government sector, which are subject to federal contracting regulations;
|
•
|
introduction of new services by us or our competitors;
|
•
|
our competition and the pricing policies of our competitors; and
|
•
|
current economic conditions.
|
•
|
the timing and volume of client invoices processed and payments received, which may affect the fees payable to us under certain of our engagements;
|
•
|
client decisions regarding renewal or termination of their contracts;
|
•
|
the amount and timing of costs related to the development or acquisition of technologies or businesses; and
|
•
|
unforeseen legal expenses, including litigation and other settlement gains or losses.
|
•
|
compliance with additional U.S. regulations and those of other nations applicable to international operations;
|
•
|
cultural and language differences;
|
•
|
employment laws and rules and related social and cultural factors;
|
•
|
losses related to start-up costs, lack of revenue, higher costs due to low utilization, and delays in purchase decisions by prospective clients;
|
•
|
currency fluctuations between the U.S. dollar and foreign currencies, which are harder to predict in the current adverse global economic climate;
|
•
|
restrictions on the repatriation of earnings;
|
•
|
potentially adverse tax consequences and limitations on our ability to utilize losses generated in our foreign operations;
|
•
|
different regulatory requirements and other barriers to conducting business;
|
•
|
different or less stable political and economic environments;
|
•
|
greater personal security risks for employees traveling to or located in unstable locations; and
|
•
|
civil disturbances or other catastrophic events.
|
•
|
expose us to the risk of increased interest rates because some of our borrowings are at variable interest rates;
|
•
|
make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;
|
•
|
limit our ability to obtain additional financing and flexibility in planning for, or reacting to, changes in our business and our industry;
|
•
|
place us at a disadvantage compared to our competitors who have less debt or have better access to capital resources; and
|
•
|
require us to dedicate a larger portion of our cash from operations to service our indebtedness and thus reduce the level of cash for other purposes such as funding working capital, strategic acquisitions, capital expenditures, and other general corporate purposes.
|
•
|
our inability to estimate demand for the new service offerings;
|
•
|
competition from more established market participants;
|
•
|
a lack of market understanding; and
|
•
|
unanticipated expenses to recruit and hire qualified consultants and to market our new service offerings.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
ITEM 2.
|
PROPERTIES.
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
|
High
|
|
Low
|
||||
2016
|
|
|
|
||||
First Quarter
|
$
|
60.00
|
|
|
$
|
46.00
|
|
Second Quarter
|
$
|
62.34
|
|
|
$
|
54.14
|
|
Third Quarter
|
$
|
65.00
|
|
|
$
|
57.23
|
|
Fourth Quarter
|
$
|
60.64
|
|
|
$
|
41.20
|
|
2017
|
|
|
|
||||
First Quarter
|
$
|
49.25
|
|
|
$
|
39.15
|
|
Second Quarter
|
$
|
46.85
|
|
|
$
|
40.50
|
|
Third Quarter
|
$
|
43.70
|
|
|
$
|
29.53
|
|
Fourth Quarter
|
$
|
42.50
|
|
|
$
|
32.40
|
|
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, 2017 – October 31, 2017
|
|
354
|
|
|
$
|
35.85
|
|
|
—
|
|
|
$
|
35,143,546
|
|
November 1, 2017 – November 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
35,143,546
|
|
December 1, 2017 – December 31, 2017
|
|
9,478
|
|
|
$
|
40.45
|
|
|
—
|
|
|
$
|
35,143,546
|
|
Total
|
|
9,832
|
|
|
$
|
40.28
|
|
|
—
|
|
|
|
(1)
|
The number of shares repurchased for each period represents shares to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the Share Repurchase Program.
|
(2)
|
As of the end of the period.
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
Consolidated Statements of Operations
(in thousands, except per share data):
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Revenues and reimbursable expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
|
$
|
627,686
|
|
|
$
|
538,128
|
|
Reimbursable expenses
|
|
75,175
|
|
|
71,712
|
|
|
70,013
|
|
|
73,847
|
|
|
64,623
|
|
|||||
Total revenues and reimbursable expenses
|
|
807,745
|
|
|
797,984
|
|
|
769,023
|
|
|
701,533
|
|
|
602,751
|
|
|||||
Direct costs and reimbursable expenses
(exclusive of depreciation and amortization shown in operating expenses)
(1)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct costs
|
|
454,806
|
|
|
437,556
|
|
|
401,915
|
|
|
384,277
|
|
|
323,398
|
|
|||||
Amortization of intangible assets and software development costs
|
|
10,932
|
|
|
15,140
|
|
|
16,788
|
|
|
4,590
|
|
|
2,660
|
|
|||||
Reimbursable expenses
|
|
75,436
|
|
|
71,749
|
|
|
69,932
|
|
|
73,855
|
|
|
64,665
|
|
|||||
Total direct costs and reimbursable expenses
|
|
541,174
|
|
|
524,445
|
|
|
488,635
|
|
|
462,722
|
|
|
390,723
|
|
|||||
Operating expenses and other losses (gains), net:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative expenses
|
|
175,364
|
|
|
160,204
|
|
|
157,902
|
|
|
132,799
|
|
|
116,976
|
|
|||||
Restructuring charges
|
|
6,246
|
|
|
9,592
|
|
|
3,329
|
|
|
2,811
|
|
|
305
|
|
|||||
Litigation and other (gains) losses, net
|
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|
(590
|
)
|
|
(5,875
|
)
|
|||||
Depreciation and amortization
(1)
|
|
38,213
|
|
|
31,499
|
|
|
25,135
|
|
|
15,451
|
|
|
10,723
|
|
|||||
Goodwill impairment charges
|
|
253,093
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses and other losses (gains), net
|
|
474,027
|
|
|
199,305
|
|
|
176,890
|
|
|
150,471
|
|
|
122,129
|
|
|||||
Operating income (loss)
|
|
(207,456
|
)
|
|
74,234
|
|
|
103,498
|
|
|
88,340
|
|
|
89,899
|
|
|||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net of interest income
|
|
(18,613
|
)
|
|
(16,274
|
)
|
|
(18,136
|
)
|
|
(8,679
|
)
|
|
(6,475
|
)
|
|||||
Other income (expense), net
|
|
3,565
|
|
|
1,197
|
|
|
(1,797
|
)
|
|
400
|
|
|
353
|
|
|||||
Total other expense, net
|
|
(15,048
|
)
|
|
(15,077
|
)
|
|
(19,933
|
)
|
|
(8,279
|
)
|
|
(6,122
|
)
|
|||||
Income (loss) from continuing operations before taxes
|
|
(222,504
|
)
|
|
59,157
|
|
|
83,565
|
|
|
80,061
|
|
|
83,777
|
|
|||||
Income tax expense (benefit)
|
|
(51,999
|
)
|
|
19,677
|
|
|
21,670
|
|
|
33,059
|
|
|
32,200
|
|
|||||
Net income (loss) from continuing operations
|
|
(170,505
|
)
|
|
39,480
|
|
|
61,895
|
|
|
47,002
|
|
|
51,577
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
|
388
|
|
|
(1,863
|
)
|
|
(2,843
|
)
|
|
32,049
|
|
|
14,856
|
|
|||||
Net income (loss)
|
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
|
$
|
79,051
|
|
|
$
|
66,433
|
|
Consolidated Statements of Operations
(in thousands, except per share data):
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Net earnings (loss) per basic share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
|
$
|
(7.95
|
)
|
|
$
|
1.87
|
|
|
$
|
2.80
|
|
|
$
|
2.10
|
|
|
$
|
2.31
|
|
Income (loss) from discontinued operations, net of tax
|
|
0.02
|
|
|
(0.09
|
)
|
|
(0.13
|
)
|
|
1.42
|
|
|
0.67
|
|
|||||
Net income (loss)
|
|
$
|
(7.93
|
)
|
|
$
|
1.78
|
|
|
$
|
2.67
|
|
|
$
|
3.52
|
|
|
$
|
2.98
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
|
$
|
2.05
|
|
|
$
|
2.26
|
|
Income (loss) from discontinued operations, net of tax
|
|
0.02
|
|
|
(0.08
|
)
|
|
(0.13
|
)
|
|
1.40
|
|
|
0.66
|
|
|||||
Net income (loss)
|
|
$
|
(7.93
|
)
|
|
$
|
1.76
|
|
|
$
|
2.61
|
|
|
$
|
3.45
|
|
|
$
|
2.92
|
|
Weighted average shares used in calculating net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
21,439
|
|
|
21,084
|
|
|
22,136
|
|
|
22,431
|
|
|
22,322
|
|
|||||
Diluted
|
|
21,439
|
|
|
21,424
|
|
|
22,600
|
|
|
22,925
|
|
|
22,777
|
|
Consolidated Balance Sheet Data
(in thousands):
|
|
As of December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Cash and cash equivalents
|
|
$
|
16,909
|
|
|
$
|
17,027
|
|
|
$
|
58,437
|
|
|
$
|
256,872
|
|
|
$
|
58,131
|
|
Working capital
|
|
$
|
51,828
|
|
|
$
|
44,314
|
|
|
$
|
96,966
|
|
|
$
|
307,978
|
|
|
$
|
98,394
|
|
Total assets
|
|
$
|
1,036,928
|
|
|
$
|
1,153,215
|
|
|
$
|
1,159,543
|
|
|
$
|
1,148,475
|
|
|
$
|
883,223
|
|
Long-term debt, net of current portion
|
|
$
|
342,507
|
|
|
$
|
292,065
|
|
|
$
|
307,376
|
|
|
$
|
320,413
|
|
|
$
|
141,421
|
|
Total stockholders’ equity
(2)
|
|
$
|
503,316
|
|
|
$
|
648,033
|
|
|
$
|
652,325
|
|
|
$
|
600,634
|
|
|
$
|
530,264
|
|
(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)
|
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,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Segment and Consolidated Operating Results (in thousands):
|
|
|
|
|
|
||||||
Healthcare:
|
|
|
|
|
|
||||||
Revenues
|
$
|
356,909
|
|
|
$
|
424,912
|
|
|
$
|
446,887
|
|
Operating income
|
$
|
118,761
|
|
|
$
|
147,903
|
|
|
$
|
169,560
|
|
Segment operating income as a percentage of segment revenues
|
33.3
|
%
|
|
34.8
|
%
|
|
37.9
|
%
|
|||
Education:
|
|
|
|
|
|
||||||
Revenues
|
$
|
167,908
|
|
|
$
|
149,817
|
|
|
$
|
134,009
|
|
Operating income
|
$
|
40,318
|
|
|
$
|
38,310
|
|
|
$
|
32,246
|
|
Segment operating income as a percentage of segment revenues
|
24.0
|
%
|
|
25.6
|
%
|
|
24.1
|
%
|
|||
Business Advisory:
|
|
|
|
|
|
||||||
Revenues
|
$
|
207,753
|
|
|
$
|
151,543
|
|
|
$
|
116,892
|
|
Operating income
|
$
|
46,600
|
|
|
$
|
29,382
|
|
|
$
|
31,233
|
|
Segment operating income as a percentage of segment revenues
|
22.4
|
%
|
|
19.4
|
%
|
|
26.7
|
%
|
|||
All Other:
|
|
|
|
|
|
||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,222
|
|
Operating loss
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,718
|
)
|
Segment operating loss as a percentage of segment revenues
|
N/A
|
|
|
N/A
|
|
|
N/M
|
|
|||
Total Company:
|
|
|
|
|
|
||||||
Revenues
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
Reimbursable expenses
|
75,175
|
|
|
71,712
|
|
|
70,013
|
|
|||
Total revenues and reimbursable expenses
|
$
|
807,745
|
|
|
$
|
797,984
|
|
|
$
|
769,023
|
|
Statements of Operations reconciliation:
|
|
|
|
|
|
||||||
Segment operating income
|
$
|
205,679
|
|
|
$
|
215,595
|
|
|
$
|
231,321
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
||||||
Other operating expenses
|
120,718
|
|
|
111,852
|
|
|
112,164
|
|
|||
Litigation and other losses (gains), net
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||
Depreciation and amortization
|
38,213
|
|
|
31,499
|
|
|
25,135
|
|
|||
Goodwill impairment charges
(1)
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Total operating income (loss)
|
(207,456
|
)
|
|
74,234
|
|
|
103,498
|
|
|||
Other expense, net
|
15,048
|
|
|
15,077
|
|
|
19,933
|
|
|||
Income (loss) from continuing operations before taxes
|
(222,504
|
)
|
|
59,157
|
|
|
83,565
|
|
|||
Income tax expense (benefit)
|
(51,999
|
)
|
|
19,677
|
|
|
21,670
|
|
|||
Net income (loss) from continuing operations
|
$
|
(170,505
|
)
|
|
$
|
39,480
|
|
|
$
|
61,895
|
|
Earnings (loss) per share from continuing operations
|
|
|
|
|
|
||||||
Basic
|
$
|
(7.95
|
)
|
|
$
|
1.87
|
|
|
$
|
2.80
|
|
Diluted
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Other Operating Data (excluding All Other):
|
|
|
|
|
|
||||||
Number of full-time billable consultants (at period end)
(2)
:
|
|
|
|
|
|
||||||
Healthcare
|
778
|
|
|
888
|
|
|
1,037
|
|
|||
Education
|
549
|
|
|
468
|
|
|
387
|
|
|||
Business Advisory
|
809
|
|
|
547
|
|
|
397
|
|
|||
Total
|
2,136
|
|
|
1,903
|
|
|
1,821
|
|
|||
Average number of full-time billable consultants (for the period)
(2)
:
|
|
|
|
|
|
||||||
Healthcare
|
796
|
|
|
998
|
|
|
1,085
|
|
|||
Education
|
509
|
|
|
437
|
|
|
351
|
|
|||
Business Advisory
|
740
|
|
|
486
|
|
|
334
|
|
|||
Total
|
2,045
|
|
|
1,921
|
|
|
1,770
|
|
|||
Full-time billable consultant utilization rate
(3)
:
|
|
|
|
|
|
||||||
Healthcare
|
78.4
|
%
|
|
77.1
|
%
|
|
77.9
|
%
|
|||
Education
|
72.8
|
%
|
|
70.6
|
%
|
|
74.6
|
%
|
|||
Business Advisory
|
71.7
|
%
|
|
73.1
|
%
|
|
76.2
|
%
|
|||
Total
|
74.5
|
%
|
|
74.6
|
%
|
|
76.9
|
%
|
|||
Full-time billable consultant average billing rate per hour
(4)
:
|
|
|
|
|
|
||||||
Healthcare
|
$
|
206
|
|
|
$
|
210
|
|
|
$
|
217
|
|
Education
|
$
|
213
|
|
|
$
|
219
|
|
|
$
|
216
|
|
Business Advisory
(5)
|
$
|
193
|
|
|
$
|
208
|
|
|
$
|
245
|
|
Total
|
$
|
203
|
|
|
$
|
212
|
|
|
$
|
222
|
|
Revenue per full-time billable consultant (in thousands):
|
|
|
|
|
|
||||||
Healthcare
|
$
|
295
|
|
|
$
|
300
|
|
|
$
|
313
|
|
Education
|
$
|
291
|
|
|
$
|
293
|
|
|
$
|
317
|
|
Business Advisory
|
$
|
268
|
|
|
$
|
293
|
|
|
$
|
335
|
|
Total
|
$
|
284
|
|
|
$
|
297
|
|
|
$
|
318
|
|
Average number of full-time equivalents (for the period)
(6)
:
|
|
|
|
|
|
||||||
Healthcare
|
213
|
|
|
203
|
|
|
179
|
|
|||
Education
|
35
|
|
|
38
|
|
|
39
|
|
|||
Business Advisory
|
20
|
|
|
20
|
|
|
12
|
|
|||
Total
|
268
|
|
|
261
|
|
|
230
|
|
|||
Revenue per full-time equivalent (in thousands):
|
|
|
|
|
|
||||||
Healthcare
|
$
|
576
|
|
|
$
|
614
|
|
|
$
|
604
|
|
Education
|
$
|
564
|
|
|
$
|
572
|
|
|
$
|
587
|
|
Business Advisory
|
$
|
464
|
|
|
$
|
453
|
|
|
$
|
418
|
|
Total
|
$
|
566
|
|
|
$
|
596
|
|
|
$
|
591
|
|
(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 our India
Enterprise Solutions and Analytics
practice, formerly known as Rittman Mead Consulting Private Limited, a business that we acquired in July 2015. The average billing rate per hour for this practice is lower than our overall average billing rate per hour for the Business Advisory segment. Absent the impact of our India
Enterprise Solutions and Analytics
practice, the average billing rate per hour for Business Advisory for the years ended December 31, 2017, 2016, and 2015 would have been $233, $235, and $267, respectively.
|
(6)
|
Consists of cultural transformation consultants within our Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
Net income (loss) from continuing operations
|
$
|
(170,505
|
)
|
|
$
|
39,480
|
|
|
$
|
61,895
|
|
Add back:
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
(51,999
|
)
|
|
19,677
|
|
|
21,670
|
|
|||
Interest expense, net of interest income
|
18,613
|
|
|
16,274
|
|
|
18,136
|
|
|||
Depreciation and amortization
|
49,145
|
|
|
46,639
|
|
|
41,923
|
|
|||
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)
|
(154,746
|
)
|
|
122,070
|
|
|
143,624
|
|
|||
Add back:
|
|
|
|
|
|
||||||
Restructuring charges
|
6,246
|
|
|
9,592
|
|
|
3,329
|
|
|||
Litigation and other losses (gains), net
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||
Goodwill impairment charges
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Other non-operating expense (income)
|
(696
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency transaction losses (gains), net
|
(434
|
)
|
|
(11
|
)
|
|
1,640
|
|
|||
Adjusted EBITDA
|
$
|
104,574
|
|
|
$
|
129,661
|
|
|
$
|
139,117
|
|
Adjusted EBITDA as a percentage of revenues
|
14.3
|
%
|
|
17.9
|
%
|
|
19.9
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss) from continuing operations
|
$
|
(170,505
|
)
|
|
$
|
39,480
|
|
|
$
|
61,895
|
|
Weighted average shares - diluted
|
21,439
|
|
|
21,424
|
|
|
22,600
|
|
|||
Diluted earnings (loss) per share from continuing operations
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
Add back:
|
|
|
|
|
|
||||||
Amortization of intangible assets
|
35,027
|
|
|
33,108
|
|
|
28,696
|
|
|||
Restructuring charges
|
6,246
|
|
|
9,592
|
|
|
3,329
|
|
|||
Litigation and other losses (gains), net
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||
Goodwill impairment charges
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Non-cash interest on convertible notes
|
7,851
|
|
|
7,488
|
|
|
7,141
|
|
|||
Other non-operating income, net
|
(696
|
)
|
|
—
|
|
|
—
|
|
|||
Tax effect
|
(91,557
|
)
|
|
(18,942
|
)
|
|
(11,698
|
)
|
|||
Tax expense related to the enactment of Tax Cuts and Jobs Act of 2017
|
8,762
|
|
|
—
|
|
|
—
|
|
|||
Tax benefit related to "check-the-box" election
|
(2,728
|
)
|
|
—
|
|
|
(12,336
|
)
|
|||
Total adjustments, net of tax
|
217,109
|
|
|
29,256
|
|
|
5,656
|
|
|||
Adjusted net income from continuing operations
|
$
|
46,604
|
|
|
$
|
68,736
|
|
|
$
|
67,551
|
|
Adjusted weighted average shares - diluted
|
21,627
|
|
|
21,424
|
|
|
22,600
|
|
|||
Adjusted diluted earnings per share from continuing operations
|
$
|
2.15
|
|
|
$
|
3.21
|
|
|
$
|
2.99
|
|
Cash Flows (in thousands):
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||
Net cash provided by operating activities
|
|
$
|
99,795
|
|
|
$
|
129,243
|
|
|
$
|
167,855
|
|
Net cash used in investing activities
|
|
(128,948
|
)
|
|
(86,636
|
)
|
|
(272,158
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
28,821
|
|
|
(84,095
|
)
|
|
(93,543
|
)
|
|||
Effect of exchange rate changes on cash
|
|
214
|
|
|
78
|
|
|
(589
|
)
|
|||
Net decrease in cash and cash equivalents
|
|
$
|
(118
|
)
|
|
$
|
(41,410
|
)
|
|
$
|
(198,435
|
)
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Convertible senior notes—principal and interest
(1)
|
$
|
256,250
|
|
|
$
|
3,125
|
|
|
$
|
253,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term bank borrowings—principal and interest
(2)
|
113,335
|
|
|
3,704
|
|
|
109,631
|
|
|
—
|
|
|
—
|
|
|||||
Promissory note—principal and interest
(3)
|
5,548
|
|
|
656
|
|
|
1,302
|
|
|
1,290
|
|
|
2,300
|
|
|||||
Operating lease obligations
(4)
|
99,960
|
|
|
14,739
|
|
|
25,710
|
|
|
21,707
|
|
|
37,804
|
|
|||||
Contingent consideration
(5)
|
22,828
|
|
|
8,515
|
|
|
12,513
|
|
|
1,800
|
|
|
—
|
|
|||||
Purchase obligations
(6)
|
12,533
|
|
|
10,442
|
|
|
2,091
|
|
|
—
|
|
|
—
|
|
|||||
Transition tax on accumulated foreign earnings
(7)
|
604
|
|
|
48
|
|
|
97
|
|
|
97
|
|
|
362
|
|
|||||
Deferred compensation
(8)
|
17,678
|
|
|
|
|
|
|
|
|
|
|||||||||
Uncertain tax positions
(9)
|
813
|
|
|
|
|
|
|
|
|
|
|||||||||
Total contractual obligations
|
$
|
529,549
|
|
|
$
|
41,229
|
|
|
$
|
404,469
|
|
|
$
|
24,894
|
|
|
$
|
40,466
|
|
(1)
|
In September 2014, we issued $250 million principal of 1.25% convertible senior notes due 2019. We will pay cash interest on the outstanding notes at an annual rate of 1.25% semi-annually on April 1 and October 1 of each year until October 1, 2019, at which time we will repay any accrued and unpaid interest and the principal amount of all outstanding notes.
|
(2)
|
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, 2017
. 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.
|
(3)
|
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, 2017
. 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.
|
(4)
|
We lease our facilities under operating lease arrangements expiring on various dates through 2028, 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.
|
(5)
|
In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. As of
December 31, 2017
, the estimated fair value of the contingent consideration liability was
$22.8 million
. The maximum amount that may be paid under contingent consideration liabilities existing as of
December 31, 2017
is $56.2 million.
|
(6)
|
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.
|
(7)
|
As a result of the 2017 Tax Reform, we are required to pay a one-time transition tax on our accumulated foreign earnings as of December 31, 2017, which were primarily generated by our operations in Canada. We have the option to pay this liability in installments over the next eight years as reflected in the table above, and the payments may be offset with certain foreign tax credits.
|
(8)
|
Included in deferred compensation and other liabilities on our consolidated balance sheet as of
December 31, 2017
is a
$17.7 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 fully funded by corresponding deferred compensation plan assets. Refer to Note 14 “Employee Benefit and Deferred Compensation Plans” within the notes to our consolidated financial statements for more information on our deferred compensation plan.
|
(9)
|
Our liabilities for uncertain tax positions are classified as non-current. 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
|
||||
Healthcare:
|
|
|
|
|
||||
Decrease in fair value
|
|
$
|
(46,700
|
)
|
|
$
|
(32,600
|
)
|
Percentage by which fair value exceeds carrying value
|
|
31
|
%
|
|
33
|
%
|
||
Education:
|
|
|
|
|
||||
Decrease in fair value
|
|
$
|
(16,900
|
)
|
|
$
|
(12,600
|
)
|
Percentage by which fair value exceeds carrying value
|
|
106
|
%
|
|
110
|
%
|
||
Business Advisory:
|
|
|
|
|
||||
Decrease in fair value
|
|
$
|
(2,200
|
)
|
|
$
|
(1,400
|
)
|
Percentage by which fair value exceeds carrying value
|
|
107
|
%
|
|
110
|
%
|
||
Strategy and Innovation:
|
|
|
|
|
||||
Decrease in fair value
|
|
$
|
(5,500
|
)
|
|
$
|
(3,100
|
)
|
Percentage by which fair value exceeds carrying value
|
|
27
|
%
|
|
30
|
%
|
||
Life Sciences
|
|
|
|
|
||||
Decrease in fair value
|
|
$
|
(2,100
|
)
|
|
$
|
(1,400
|
)
|
Percentage by which fair value exceeds carrying value
|
|
4
|
%
|
|
7
|
%
|
Reporting Unit
|
|
Carrying Value
of Goodwill
|
||
Healthcare
|
|
$
|
428,729
|
|
Education
|
|
102,829
|
|
|
Business Advisory
|
|
16,094
|
|
|
Enterprise Solutions and Analytics
|
|
—
|
|
|
Strategy and Innovation
|
|
87,411
|
|
|
Life Sciences
|
|
10,687
|
|
|
Total
|
|
$
|
645,750
|
|
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
1
st
column)
|
|
||||
Equity compensation plans approved by shareholders:
|
|
|
|
|
|
|
||||
2004 Omnibus Stock Plan
(1)
|
157,680
|
|
|
$
|
26.70
|
|
|
—
|
|
|
2012 Omnibus Incentive Plan
(2)
|
36,617
|
|
|
$
|
39.19
|
|
|
1,273,361
|
|
|
Stock Ownership Participation Program
(3)
|
—
|
|
|
$
|
—
|
|
|
141,153
|
|
|
Equity compensation plans not approved by shareholders
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Total
|
194,297
|
|
|
$
|
29.06
|
|
|
1,414,514
|
|
|
(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. At our annual meeting held on May 2, 2014, our shareholders approved an amendment to the 2012 Omnibus Incentive Plan to increase the number of shares reserved for issuance thereunder by 850,000 shares. At our annual meeting held on May 5, 2017, our shareholders approved an amended and restated 2012 Omnibus Incentive Plan which increased the number of shares authorized for issuance by 804,000 shares.
|
(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
|
||||
2.1
|
|
|
8-K
|
|
2.1
|
1/7/2016
|
|
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
|
|
|
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
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
10.7*
|
|
|
8-K
|
|
10.4
|
1/6/2017
|
|
10.8
|
|
|
10-K
|
12/31/2012
|
10.17
|
2/21/2013
|
|
10.9
|
|
|
10-K
|
12/31/2012
|
10.18
|
2/21/2013
|
|
10.10
|
|
|
10-K
|
12/31/2012
|
10.19
|
2/21/2013
|
|
10.11
|
|
|
8-K
|
|
10.1
|
1/4/2013
|
|
10.12*
|
|
|
10-K
|
12/31/2012
|
10.20
|
2/21/2013
|
|
10.13
|
|
|
8-K
|
|
10.1
|
9/5/2014
|
|
10.14
|
|
|
8-K
|
|
10.2
|
9/5/2014
|
|
10.15
|
|
|
8-K
|
|
10.3
|
9/5/2014
|
|
10.16
|
|
|
8-K
|
|
10.4
|
9/5/2014
|
|
10.17
|
|
|
8-K
|
|
10.5
|
9/5/2014
|
|
10.18
|
|
|
8-K
|
|
10.1
|
9/16/2014
|
|
10.19
|
|
|
8-K
|
|
10.2
|
9/16/2014
|
|
10.20
|
|
|
8-K
|
|
10.3
|
9/16/2014
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
10.21
|
|
|
8-K
|
|
10.4
|
9/16/2014
|
|
10.22*
|
|
|
10-K
|
12/31/2014
|
10.31
|
2/24/2015
|
|
10.23*
|
|
|
10-K
|
12/31/2014
|
10.32
|
2/24/2015
|
|
10.24*
|
|
|
10-K
|
12/31/2014
|
10.33
|
2/24/2015
|
|
10.25*
|
|
|
10-K
|
12/31/2014
|
10.34
|
2/24/2015
|
|
10.26
|
|
|
8-K
|
|
10.1
|
4/2/2015
|
|
10.27
|
|
|
8-K
|
|
10.2
|
4/2/2015
|
|
10.28
|
|
|
8-K
|
|
10.3
|
4/2/2015
|
|
10.29*
|
|
|
DEF 14A
|
|
Appendix A
|
3/20/2015
|
|
10.30*
|
|
|
|
DEF 14A
|
|
Appendix A
|
3/27/2017
|
10.31
|
|
|
|
8-K
|
|
10.1
|
3/6/2017
|
10.32
|
|
|
10-Q
|
9/30/2017
|
10.1
|
11/1/2017
|
|
21.1
|
X
|
|
|
|
|
|
|
23.1
|
X
|
|
|
|
|
|
Exhibit
Number
|
Exhibit Description
|
Filed
herewith
|
Furnished
herewith
|
Incorporated by Reference
|
|||
Form
|
Period
Ending
|
Exhibit
|
Filing Date
|
||||
31.1
|
X
|
|
|
|
|
|
|
31.2
|
X
|
|
|
|
|
|
|
32.1
|
|
X
|
|
|
|
|
|
32.2
|
|
X
|
|
|
|
|
|
101.INS
|
XBRL Instance Document.
|
X
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
X
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
X
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
X
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
X
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
X
|
|
|
|
|
|
*
|
Indicates the exhibit is a management contract or compensatory plan or arrangement.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Huron Consulting Group Inc.
|
|
|
|
|
(Registrant)
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ James H. Roth
|
|
President, Chief Executive Officer and Director
|
|
2/28/2018
|
James H. Roth
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JAMES H. ROTH
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
2/28/2018
|
James H. Roth
|
|
|
||
|
|
|
||
/s/ JOHN F. MCCARTNEY
|
|
Non-Executive Chairman of the Board
|
|
2/28/2018
|
John F. McCartney
|
|
|
||
|
|
|
||
/s/ GEORGE E. MASSARO
|
|
Vice Chairman of the Board
|
|
2/28/2018
|
George E. Massaro
|
|
|
||
|
|
|
||
/s/ JOHN D. KELLY
|
|
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
|
2/28/2018
|
John D. Kelly
|
|
|
||
|
|
|
||
/s/ JAMES D. EDWARDS
|
|
Director
|
|
2/28/2018
|
James D. Edwards
|
|
|
||
|
|
|
||
/s/ H. EUGENE LOCKHART
|
|
Director
|
|
2/28/2018
|
H. Eugene Lockhart
|
|
|
||
|
|
|
||
/s/ JOHN S. MOODY
|
|
Director
|
|
2/28/2018
|
John S. Moody
|
|
|
||
|
|
|
||
/s/ HUGH E. SAWYER
|
|
Director
|
|
2/28/2018
|
Hugh E. Sawyer
|
|
|
||
|
|
|
||
/s/ DEBRA ZUMWALT
|
|
Director
|
|
2/28/2018
|
Debra Zumwalt
|
|
|
|
|
Page
|
F-
2
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
F-
3
|
Consolidated Statements of Operations and Other Comprehensive Income for the years ended December 31, 2017, 2016, and 2015
|
F-
4
|
F-5
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 20
17, 2016, and 2015
|
F-6
|
F-7
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
16,909
|
|
|
$
|
17,027
|
|
Receivables from clients, net
|
101,778
|
|
|
94,246
|
|
||
Unbilled services, net
|
57,618
|
|
|
51,290
|
|
||
Income tax receivable
|
4,039
|
|
|
4,211
|
|
||
Prepaid expenses and other current assets
|
10,951
|
|
|
13,308
|
|
||
Total current assets
|
191,295
|
|
|
180,082
|
|
||
Property and equipment, net
|
45,541
|
|
|
32,434
|
|
||
Deferred income taxes, net
|
16,752
|
|
|
—
|
|
||
Long-term investment
|
39,904
|
|
|
34,675
|
|
||
Other non-current assets
|
25,375
|
|
|
24,814
|
|
||
Intangible assets, net
|
72,311
|
|
|
81,348
|
|
||
Goodwill
|
645,750
|
|
|
799,862
|
|
||
Total assets
|
$
|
1,036,928
|
|
|
$
|
1,153,215
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,194
|
|
|
$
|
7,273
|
|
Accrued expenses and other current liabilities
|
20,144
|
|
|
19,788
|
|
||
Accrued payroll and related benefits
|
73,698
|
|
|
82,669
|
|
||
Accrued contingent consideration for business acquisitions
|
8,515
|
|
|
1,985
|
|
||
Deferred revenues
|
27,916
|
|
|
24,053
|
|
||
Total current liabilities
|
139,467
|
|
|
135,768
|
|
||
Non-current liabilities:
|
|
|
|
||||
Deferred compensation and other liabilities
|
20,895
|
|
|
24,171
|
|
||
Accrued contingent consideration for business acquisitions, net of current portion
|
14,313
|
|
|
6,842
|
|
||
Long-term debt, net of current portion
|
342,507
|
|
|
292,065
|
|
||
Deferred lease incentives
|
15,333
|
|
|
10,703
|
|
||
Deferred income taxes, net
|
1,097
|
|
|
35,633
|
|
||
Total non-current liabilities
|
394,145
|
|
|
369,414
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,560,468 and 24,126,118 shares issued at December 31, 2017 and December 31, 2016, respectively
|
241
|
|
|
235
|
|
||
Treasury stock, at cost, 2,443,577 and 2,408,343 shares at December 31, 2017 and December 31, 2016, respectively
|
(121,994
|
)
|
|
(113,195
|
)
|
||
Additional paid-in capital
|
434,256
|
|
|
405,895
|
|
||
Retained earnings
|
180,443
|
|
|
351,483
|
|
||
Accumulated other comprehensive income
|
10,370
|
|
|
3,615
|
|
||
Total stockholders’ equity
|
503,316
|
|
|
648,033
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,036,928
|
|
|
$
|
1,153,215
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues and reimbursable expenses:
|
|
|
|
|
|
||||||
Revenues
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
Reimbursable expenses
|
75,175
|
|
|
71,712
|
|
|
70,013
|
|
|||
Total revenues and reimbursable expenses
|
807,745
|
|
|
797,984
|
|
|
769,023
|
|
|||
Direct costs and reimbursable expenses
(exclusive of depreciation and amortization shown in operating expenses):
|
|
|
|
|
|
||||||
Direct costs
|
454,806
|
|
|
437,556
|
|
|
401,915
|
|
|||
Amortization of intangible assets and software development costs
|
10,932
|
|
|
15,140
|
|
|
16,788
|
|
|||
Reimbursable expenses
|
75,436
|
|
|
71,749
|
|
|
69,932
|
|
|||
Total direct costs and reimbursable expenses
|
541,174
|
|
|
524,445
|
|
|
488,635
|
|
|||
Operating expenses and other losses (gains), net:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
175,364
|
|
|
160,204
|
|
|
157,902
|
|
|||
Restructuring charges
|
6,246
|
|
|
9,592
|
|
|
3,329
|
|
|||
Litigation and other losses (gains), net
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||
Depreciation and amortization
|
38,213
|
|
|
31,499
|
|
|
25,135
|
|
|||
Goodwill impairment charges
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses and other losses (gains), net
|
474,027
|
|
|
199,305
|
|
|
176,890
|
|
|||
Operating income (loss)
|
(207,456
|
)
|
|
74,234
|
|
|
103,498
|
|
|||
Other income (expense), net:
|
|
|
|
|
|
||||||
Interest expense, net of interest income
|
(18,613
|
)
|
|
(16,274
|
)
|
|
(18,136
|
)
|
|||
Other income (expense), net
|
3,565
|
|
|
1,197
|
|
|
(1,797
|
)
|
|||
Total other expense, net
|
(15,048
|
)
|
|
(15,077
|
)
|
|
(19,933
|
)
|
|||
Income (loss) from continuing operations before taxes
|
(222,504
|
)
|
|
59,157
|
|
|
83,565
|
|
|||
Income tax expense (benefit)
|
(51,999
|
)
|
|
19,677
|
|
|
21,670
|
|
|||
Net income (loss) from continuing operations
|
(170,505
|
)
|
|
39,480
|
|
|
61,895
|
|
|||
Income (loss) from discontinued operations, net of tax
|
388
|
|
|
(1,863
|
)
|
|
(2,843
|
)
|
|||
Net income (loss)
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
Net earnings (loss) per basic share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
(7.95
|
)
|
|
$
|
1.87
|
|
|
$
|
2.80
|
|
Income (loss) from discontinued operations, net of tax
|
0.02
|
|
|
(0.09
|
)
|
|
(0.13
|
)
|
|||
Net income (loss)
|
$
|
(7.93
|
)
|
|
$
|
1.78
|
|
|
$
|
2.67
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
Income (loss) from discontinued operations, net of tax
|
0.02
|
|
|
(0.08
|
)
|
|
(0.13
|
)
|
|||
Net income (loss)
|
$
|
(7.93
|
)
|
|
$
|
1.76
|
|
|
$
|
2.61
|
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
||||||
Basic
|
21,439
|
|
|
21,084
|
|
|
22,136
|
|
|||
Diluted
|
21,439
|
|
|
21,424
|
|
|
22,600
|
|
|||
Comprehensive income (loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
Foreign currency translation adjustments, net of tax
|
1,602
|
|
|
64
|
|
|
1,817
|
|
|||
Unrealized gain (loss) on investment, net of tax
|
4,724
|
|
|
(97
|
)
|
|
4,435
|
|
|||
Unrealized gain (loss) on cash flow hedging instruments, net of tax
|
429
|
|
|
63
|
|
|
(12
|
)
|
|||
Other comprehensive income
|
6,755
|
|
|
30
|
|
|
6,240
|
|
|||
Comprehensive income (loss)
|
$
|
(163,362
|
)
|
|
$
|
37,647
|
|
|
$
|
65,292
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Stockholders'
Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
||||||||||||||||||||
Balance at December 31, 2014
|
24,115,593
|
|
|
$
|
241
|
|
|
(2,109,316
|
)
|
|
$
|
(94,074
|
)
|
|
$
|
442,308
|
|
|
$
|
254,814
|
|
|
$
|
(2,655
|
)
|
|
$
|
600,634
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
59,052
|
|
|
6,240
|
|
|
65,292
|
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
504,955
|
|
|
5
|
|
|
(42,797
|
)
|
|
(2,506
|
)
|
|
2,501
|
|
|
|
|
|
|
—
|
|
||||||||
Business acquisition
|
28,486
|
|
|
—
|
|
|
|
|
|
|
2,204
|
|
|
|
|
|
|
2,204
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
22,484
|
|
|
|
|
|
|
22,484
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(109,967
|
)
|
|
(7,154
|
)
|
|
|
|
|
|
|
|
(7,154
|
)
|
|||||||||||
Income tax benefit on share-based compensation
|
|
|
|
|
|
|
|
|
3,456
|
|
|
|
|
|
|
3,456
|
|
||||||||||||
Share repurchases
|
(583,880
|
)
|
|
(5
|
)
|
|
|
|
|
|
(34,586
|
)
|
|
|
|
|
|
(34,591
|
)
|
||||||||||
Balance at December 31, 2015
|
24,065,154
|
|
|
$
|
241
|
|
|
(2,262,080
|
)
|
|
$
|
(103,734
|
)
|
|
$
|
438,367
|
|
|
$
|
313,866
|
|
|
$
|
3,585
|
|
|
$
|
652,325
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
37,617
|
|
|
30
|
|
|
37,647
|
|
|||||||||||
Issuance of common stock in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock awards, net of cancellations
|
390,348
|
|
|
4
|
|
|
(70,419
|
)
|
|
(4,508
|
)
|
|
4,504
|
|
|
|
|
|
|
—
|
|
||||||||
Exercise of stock options
|
4,706
|
|
|
—
|
|
|
|
|
|
|
123
|
|
|
|
|
|
|
123
|
|
||||||||||
Share-based compensation
|
|
|
|
|
|
|
|
|
17,929
|
|
|
|
|
|
|
17,929
|
|
||||||||||||
Shares redeemed for employee tax withholdings
|
|
|
|
|
(88,414
|
)
|
|
(4,953
|
)
|
|
|
|
|
|
|
|
(4,953
|
)
|
|||||||||||
Income tax benefit on share-based compensation
|
|
|
|
|
|
|
|
|
227
|
|
|
|
|
|
|
227
|
|
||||||||||||
Share repurchases
|
(982,192
|
)
|
|
(10
|
)
|
|
|
|
|
|
(55,255
|
)
|
|
|
|
|
|
(55,265
|
)
|
||||||||||
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
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
50,089
|
|
|
46,816
|
|
|
58,053
|
|
|||
Share-based compensation
|
14,838
|
|
|
16,577
|
|
|
21,487
|
|
|||
Amortization of debt discount and issuance costs
|
10,203
|
|
|
9,609
|
|
|
9,329
|
|
|||
Goodwill impairment charge
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Allowances for doubtful accounts and unbilled services
|
3,217
|
|
|
4,250
|
|
|
1,025
|
|
|||
Deferred income taxes
|
(53,753
|
)
|
|
1,189
|
|
|
6,353
|
|
|||
(Gain) loss on sale of businesses
|
(931
|
)
|
|
—
|
|
|
2,303
|
|
|||
Change in fair value of contingent consideration liabilities
|
1,111
|
|
|
(1,990
|
)
|
|
(1,126
|
)
|
|||
Changes in operating assets and liabilities, net of acquisitions and divestitures:
|
|
|
|
|
|
||||||
(Increase) decrease in receivables from clients
|
1,650
|
|
|
1,440
|
|
|
(2,836
|
)
|
|||
(Increase) decrease in unbilled services
|
(4,332
|
)
|
|
2,443
|
|
|
31,696
|
|
|||
(Increase) decrease in current income tax receivable / payable, net
|
210
|
|
|
(4,410
|
)
|
|
8,818
|
|
|||
(Increase) decrease in other assets
|
(366
|
)
|
|
11,904
|
|
|
(14,742
|
)
|
|||
Increase (decrease) in accounts payable and accrued liabilities
|
3,732
|
|
|
(3,144
|
)
|
|
8,805
|
|
|||
Increase (decrease) in accrued payroll and related benefits
|
(10,966
|
)
|
|
3,044
|
|
|
(25,221
|
)
|
|||
Increase (decrease) in deferred revenues
|
2,117
|
|
|
3,898
|
|
|
4,859
|
|
|||
Net cash provided by operating activities
|
99,795
|
|
|
129,243
|
|
|
167,855
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment, net
|
(24,402
|
)
|
|
(13,936
|
)
|
|
(18,571
|
)
|
|||
Investment in life insurance policies
|
(1,826
|
)
|
|
(2,035
|
)
|
|
(5,804
|
)
|
|||
Distributions from life insurance policies
|
2,889
|
|
|
—
|
|
|
—
|
|
|||
Purchases of businesses, net of cash acquired
|
(106,915
|
)
|
|
(69,133
|
)
|
|
(339,966
|
)
|
|||
Purchases of convertible debt investment
|
—
|
|
|
—
|
|
|
(15,438
|
)
|
|||
Capitalization of internally developed software
|
(1,370
|
)
|
|
(1,086
|
)
|
|
(866
|
)
|
|||
Proceeds from note receivable
|
1,177
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of businesses, net of cash sold
|
1,499
|
|
|
(446
|
)
|
|
108,487
|
|
|||
Net cash used in investing activities
|
(128,948
|
)
|
|
(86,636
|
)
|
|
(272,158
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercises of stock options
|
—
|
|
|
123
|
|
|
—
|
|
|||
Shares redeemed for employee tax withholdings
|
(4,846
|
)
|
|
(4,953
|
)
|
|
(7,154
|
)
|
|||
Share repurchases
|
—
|
|
|
(55,265
|
)
|
|
(34,591
|
)
|
|||
Proceeds from borrowings under credit facility
|
277,500
|
|
|
200,000
|
|
|
314,000
|
|
|||
Repayments of debt
|
(240,745
|
)
|
|
(224,000
|
)
|
|
(365,750
|
)
|
|||
Payments for debt issuance costs
|
(408
|
)
|
|
—
|
|
|
—
|
|
|||
Payments for capital lease obligations
|
—
|
|
|
—
|
|
|
(48
|
)
|
|||
Deferred acquisition payments
|
(2,680
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
28,821
|
|
|
(84,095
|
)
|
|
(93,543
|
)
|
|||
Effect of exchange rate changes on cash
|
214
|
|
|
78
|
|
|
(589
|
)
|
|||
Net decrease in cash and cash equivalents
|
(118
|
)
|
|
(41,410
|
)
|
|
(198,435
|
)
|
|||
Cash and cash equivalents at beginning of the period
|
17,027
|
|
|
58,437
|
|
|
256,872
|
|
|||
Cash and cash equivalents at end of the period
|
$
|
16,909
|
|
|
$
|
17,027
|
|
|
$
|
58,437
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Property and equipment expenditures included in accounts payable and accrued expenses
|
$
|
1,567
|
|
|
$
|
4,461
|
|
|
$
|
2,089
|
|
Promissory note assumed for purchase of property and equipment
|
$
|
5,113
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contingent consideration related to business acquisitions
|
$
|
15,489
|
|
|
$
|
8,754
|
|
|
$
|
2,963
|
|
Common stock issued related to business acquisitions
|
$
|
9,560
|
|
|
$
|
—
|
|
|
$
|
2,204
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
9,068
|
|
|
$
|
6,470
|
|
|
$
|
9,274
|
|
Income taxes
|
$
|
5,399
|
|
|
$
|
24,584
|
|
|
$
|
10,955
|
|
|
Year Ended
December 31, 2015 |
||
Revenues and reimbursable expenses:
|
|
||
Revenues
|
$
|
139,430
|
|
Reimbursable expenses
|
3,148
|
|
|
Total revenues and reimbursable expenses
|
142,578
|
|
|
Direct costs and reimbursable expenses
(exclusive of depreciation and amortization shown in operating expenses):
|
|
||
Direct costs
|
95,247
|
|
|
Amortization of intangible assets and software development costs
|
233
|
|
|
Reimbursable expenses
|
3,153
|
|
|
Total direct costs and reimbursable expenses
|
98,633
|
|
|
Operating expenses and other operating gain:
|
|
||
Selling, general and administrative expenses
|
20,640
|
|
|
Restructuring charges
(1)
|
13,341
|
|
|
Other gain
|
(900
|
)
|
|
Depreciation and amortization
|
9,605
|
|
|
Total operating expenses and other operating gain
|
42,686
|
|
|
Operating income
|
1,259
|
|
|
Other expense, net
|
(13
|
)
|
|
Income from discontinued operations before taxes
|
1,246
|
|
|
Loss on disposal
|
(2,303
|
)
|
|
Total loss from discontinued operations before taxes
|
(1,057
|
)
|
|
Income tax benefit
(2)
|
1,786
|
|
|
Net loss from discontinued operations
|
$
|
(2,843
|
)
|
(2)
|
Refer to Note 16 "Income Taxes" for additional detail on the income tax benefit recognized for discontinued operations.
|
|
Year Ended
December 31, 2015 |
||
Depreciation and amortization
|
$
|
15,974
|
|
Share-based compensation
|
$
|
2,215
|
|
Purchases of property and equipment
|
$
|
6,234
|
|
Significant non-cash investing items of discontinued operations:
|
|
||
Contingent consideration related to a business acquisition
|
$
|
900
|
|
|
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
|
|
2016
|
||||
Revenues
|
$
|
741,695
|
|
|
$
|
769,114
|
|
Net income (loss) from continuing operations
|
$
|
(167,346
|
)
|
|
$
|
42,760
|
|
Net income (loss) from continuing operations per share - basic
|
$
|
(7.79
|
)
|
|
$
|
2.01
|
|
Net income (loss) from continuing operations per share - diluted
|
$
|
(7.79
|
)
|
|
$
|
1.98
|
|
|
February 12, 2015
|
||
Assets acquired:
|
|
||
Accounts receivable
|
$
|
14,906
|
|
Prepaid expenses and other current assets
|
1,385
|
|
|
Deferred income tax asset
|
4,335
|
|
|
Property and equipment
|
4,509
|
|
|
Intangible assets
|
97,500
|
|
|
Liabilities assumed:
|
|
||
Accounts payable
|
760
|
|
|
Accrued expenses and other current liabilities
|
2,868
|
|
|
Accrued payroll and related benefits
|
1,574
|
|
|
Deferred revenues
|
2,449
|
|
|
Deferred income tax liability
|
21,263
|
|
|
Other non-current liabilities
|
1,211
|
|
|
Total identifiable net assets
|
92,510
|
|
|
Goodwill
|
232,676
|
|
|
Total purchase price
|
$
|
325,186
|
|
|
Fair Value
|
|
Useful Life in
Years
|
||
Customer relationships
|
$
|
42,400
|
|
|
9
|
Customer contracts
|
25,100
|
|
|
4
|
|
Trade name
|
22,800
|
|
|
5
|
|
Technology and software
|
3,900
|
|
|
3
|
|
Publishing content
|
3,300
|
|
|
3
|
|
Total intangible assets subject to amortization
|
$
|
97,500
|
|
|
|
|
|
Year Ended
December 31, 2015
|
||
Revenues
|
|
$
|
709,813
|
|
Net income from continuing operations
|
|
$
|
63,600
|
|
Net income from continuing operations per share - basic
|
|
$
|
2.87
|
|
Net income from continuing operations per share - diluted
|
|
$
|
2.81
|
|
|
|
Healthcare
|
|
Education
|
|
Business
Advisory
|
|
Total
|
||||||||
Balance as of December 31, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
$
|
610,264
|
|
|
$
|
102,906
|
|
|
$
|
181,213
|
|
|
$
|
894,383
|
|
Accumulated impairment losses
|
|
—
|
|
|
—
|
|
|
(142,983
|
)
|
|
(142,983
|
)
|
||||
Goodwill, net as of December 31, 2015
|
|
$
|
610,264
|
|
|
$
|
102,906
|
|
|
$
|
38,230
|
|
|
$
|
751,400
|
|
Goodwill recorded in connection with business combinations
(1)
|
|
26,538
|
|
|
—
|
|
|
21,824
|
|
|
48,362
|
|
||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
100
|
|
|
100
|
|
||||
Balance as of December 31, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
636,802
|
|
|
102,906
|
|
|
203,137
|
|
|
942,845
|
|
||||
Accumulated impairment losses
|
|
—
|
|
|
—
|
|
|
(142,983
|
)
|
|
(142,983
|
)
|
||||
Goodwill, net as of December 31, 2016
|
|
$
|
636,802
|
|
|
$
|
102,906
|
|
|
$
|
60,154
|
|
|
$
|
799,862
|
|
Goodwill recorded in connection with business combinations
(1)
|
|
8
|
|
|
10,252
|
|
|
88,183
|
|
|
98,443
|
|
||||
Goodwill impairment charge
|
|
(208,081
|
)
|
|
—
|
|
|
(45,012
|
)
|
|
(253,093
|
)
|
||||
Goodwill reallocation
(2)
|
|
—
|
|
|
(10,794
|
)
|
|
10,794
|
|
|
—
|
|
||||
Goodwill allocated to disposal of business
(3)
|
|
—
|
|
|
—
|
|
|
(568
|
)
|
|
(568
|
)
|
||||
Foreign currency translation
|
|
—
|
|
|
465
|
|
|
641
|
|
|
1,106
|
|
||||
Balance as of December 31, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
636,810
|
|
|
102,829
|
|
|
302,187
|
|
|
1,041,826
|
|
||||
Accumulated impairment losses
|
|
(208,081
|
)
|
|
—
|
|
|
(187,995
|
)
|
|
(396,076
|
)
|
||||
Goodwill, net as of December 31, 2017:
|
|
$
|
428,729
|
|
|
$
|
102,829
|
|
|
$
|
114,192
|
|
|
$
|
645,750
|
|
(1)
|
Refer to Note 4 "Acquisitions" for additional information on the goodwill recorded in connection with business combinations.
|
(2)
|
In the second quarter of 2017, we reorganized our internal financial reporting structure, which management uses to assess performance and allocate resources, by moving our Life Sciences practice from the Education and Life Sciences segment to the Business Advisory segment. The remaining Education and Life Sciences segment is now referred to as the Education segment. The Life Sciences practice is a separate reporting unit for purposes of goodwill impairment testing. See Note 18 "Segment Information" for additional information on our reportable segments.
|
(3)
|
On June 16, 2017, we sold our Life Sciences Compliance and Operations practice ("Life Sciences C&O") to a third-party, and allocated a portion of goodwill within the Life Sciences reporting unit to the disposed business based on the relative fair values of Life Sciences C&O and the remaining reporting unit. The allocated goodwill of
$0.6 million
was written off and included in the gain on sale of Life Sciences C&O. The sale of Life Sciences C&O did not meet the criteria for reporting separately as discontinued operations. In connection with the sale, we recorded a
$0.9 million
gain which is included in other income, net in our consolidated statements of operations.
|
|
|
|
As of December 31,
|
||||||||||||||
|
|
|
2017
|
|
2016
|
||||||||||||
|
Useful Life
in Years
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
4 to 13
|
|
$
|
106,195
|
|
|
$
|
51,588
|
|
|
$
|
89,279
|
|
|
$
|
34,827
|
|
Trade names
|
2 to 6
|
|
29,016
|
|
|
18,915
|
|
|
22,930
|
|
|
11,652
|
|
||||
Customer contracts
|
1 to 4
|
|
25,154
|
|
|
24,751
|
|
|
26,497
|
|
|
21,295
|
|
||||
Technology and software
|
3 to 5
|
|
9,340
|
|
|
5,098
|
|
|
8,970
|
|
|
2,667
|
|
||||
Non-competition agreements
|
3 to 5
|
|
5,163
|
|
|
2,637
|
|
|
3,685
|
|
|
1,697
|
|
||||
Publishing content
|
3
|
|
3,300
|
|
|
3,163
|
|
|
3,300
|
|
|
2,062
|
|
||||
Favorable lease contract
|
3
|
|
720
|
|
|
425
|
|
|
720
|
|
|
203
|
|
||||
In-process technology
|
Indefinite
|
|
—
|
|
|
—
|
|
|
370
|
|
|
—
|
|
||||
Total
|
|
|
$
|
178,888
|
|
|
$
|
106,577
|
|
|
$
|
155,751
|
|
|
$
|
74,403
|
|
Year Ending December 31,
|
|
Estimated
Amortization Expense
|
||
2018
|
|
$
|
23,936
|
|
2019
|
|
$
|
17,279
|
|
2020
|
|
$
|
12,116
|
|
2021
|
|
$
|
8,070
|
|
2022
|
|
$
|
6,092
|
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Computers, related equipment, and software
|
$
|
46,216
|
|
|
$
|
48,607
|
|
Leasehold improvements
|
45,244
|
|
|
38,502
|
|
||
Furniture and fixtures
|
16,434
|
|
|
12,545
|
|
||
Aircraft
|
7,541
|
|
|
—
|
|
||
Assets under construction
|
250
|
|
|
294
|
|
||
Property and equipment
|
115,685
|
|
|
99,948
|
|
||
Accumulated depreciation and amortization
|
(70,144
|
)
|
|
(67,514
|
)
|
||
Property and equipment, net
|
$
|
45,541
|
|
|
$
|
32,434
|
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
1.25% convertible senior notes due 2019
|
$
|
233,140
|
|
|
$
|
224,065
|
|
Senior secured credit facility
|
105,000
|
|
|
68,000
|
|
||
Promissory note due 2024
|
4,868
|
|
|
—
|
|
||
Total long-term debt
|
$
|
343,008
|
|
|
$
|
292,065
|
|
Current maturities of debt
(1)
|
(501
|
)
|
|
—
|
|
||
Long-term debt, net of current portion
|
$
|
342,507
|
|
|
$
|
292,065
|
|
(1)
|
The current maturities of debt are included as a component of accrued expenses and other current liabilities on our consolidated balance sheets.
|
•
|
during any calendar quarter (and only during such calendar quarter) commencing after December 31, 2014 if, for each of at least
20
trading days (whether or not consecutive) during the
30
consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock for such trading day is equal to or greater than
130%
of the applicable conversion price on such trading day;
|
•
|
during the five consecutive business day period immediately following any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which, for each trading day of the measurement period, the “trading price” (as defined in the Indenture) per
$1,000
principal amount of the Convertible Notes for such trading day was less than
98%
of the product of the last reported sale price of the Company’s common stock for such trading day and the applicable conversion rate on such trading day; or
|
•
|
upon the occurrence of specified corporate transactions described in the Indenture.
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Liability component:
|
|
|
|
||||
Proceeds
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Less: debt discount, net of amortization
|
(14,668
|
)
|
|
(22,520
|
)
|
||
Less: debt issuance costs, net of amortization
|
(2,192
|
)
|
|
(3,415
|
)
|
||
Net carrying amount
|
$
|
233,140
|
|
|
$
|
224,065
|
|
Equity component
(1)
|
$
|
39,287
|
|
|
$
|
39,287
|
|
(1)
|
Included in additional paid-in capital on the consolidated balance sheet.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Contractual interest coupon
|
$
|
3,125
|
|
|
$
|
3,125
|
|
|
$
|
3,125
|
|
Amortization of debt discount
|
7,851
|
|
|
7,488
|
|
|
7,141
|
|
|||
Amortization of debt issuance costs
|
1,224
|
|
|
1,201
|
|
|
1,180
|
|
|||
Total interest expense
|
$
|
12,200
|
|
|
$
|
11,814
|
|
|
$
|
11,446
|
|
•
|
Convertible Note Hedge Transactions
. In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions whereby the Company has call options to purchase a total of approximately
3.1 million
shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the Convertible Notes in full, at a price of approximately
$79.89
, which corresponds to the initial conversion price of the Convertible Notes, subject to customary anti-dilution adjustments substantially similar to those in the Convertible Notes. The convertible note hedge transactions are exercisable upon conversion of the Convertible Notes and will expire in 2019 if not earlier exercised. We paid an aggregate amount of
$42.1 million
for the convertible note hedge transactions, which was recorded as additional paid-in capital on the consolidated balance sheets. The convertible note hedge transactions are separate transactions and are not part of the terms of the Convertible Notes.
|
•
|
Warrants.
In connection with the issuance of the Convertible Notes, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately
3.1 million
shares of the Company’s common stock at a strike price of approximately
$97.12
. The warrants will expire incrementally on 100 different dates from January 6, 2020 to May 28, 2020 and are exercisable at each such expiry date. If the average market value per share of our common stock for the reporting period exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share. We received aggregate proceeds of
$23.6 million
from the sale of the warrants, which was recorded as additional paid-in capital on the consolidated balance sheets. The warrants are separate transactions and are not part of the terms of the Convertible Notes or the convertible note hedge transactions.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss) from continuing operations
|
$
|
(170,505
|
)
|
|
$
|
39,480
|
|
|
$
|
61,895
|
|
Income (loss) from discontinued operations, net of tax
|
388
|
|
|
(1,863
|
)
|
|
(2,843
|
)
|
|||
Net income (loss)
|
$
|
(170,117
|
)
|
|
$
|
37,617
|
|
|
$
|
59,052
|
|
Weighted average common shares outstanding—basic
|
21,439
|
|
|
21,084
|
|
|
22,136
|
|
|||
Weighted average common stock equivalents
|
—
|
|
|
340
|
|
|
464
|
|
|||
Weighted average common shares outstanding—diluted
|
21,439
|
|
|
21,424
|
|
|
22,600
|
|
|||
Net earnings (loss) per basic share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
(7.95
|
)
|
|
$
|
1.87
|
|
|
$
|
2.80
|
|
Income (loss) from discontinued operations, net of tax
|
0.02
|
|
|
(0.09
|
)
|
|
(0.13
|
)
|
|||
Net income (loss)
|
$
|
(7.93
|
)
|
|
$
|
1.78
|
|
|
$
|
2.67
|
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
(7.95
|
)
|
|
$
|
1.84
|
|
|
$
|
2.74
|
|
Income (loss) from discontinued operations, net of tax
|
0.02
|
|
|
(0.08
|
)
|
|
(0.13
|
)
|
|||
Net income (loss)
|
$
|
(7.93
|
)
|
|
$
|
1.76
|
|
|
$
|
2.61
|
|
|
As of December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Unvested restricted stock awards
|
636
|
|
|
2
|
|
|
21
|
|
Outstanding common stock options
|
194
|
|
|
—
|
|
|
—
|
|
Convertible senior notes
|
3,129
|
|
|
3,129
|
|
|
3,129
|
|
Warrants related to the issuance of convertible senior notes
|
3,129
|
|
|
3,129
|
|
|
3,129
|
|
Total anti-dilutive securities
|
7,088
|
|
|
6,260
|
|
|
6,279
|
|
|
Employee Costs
|
|
Office Space Reductions
|
|
Other
|
|
Total
|
||||||||
Balance as of December 31, 2015
|
$
|
2,323
|
|
|
$
|
6,379
|
|
|
$
|
—
|
|
|
$
|
8,702
|
|
Additions
(1)
|
9,082
|
|
|
57
|
|
|
585
|
|
|
9,724
|
|
||||
Payments
|
(5,906
|
)
|
|
(2,424
|
)
|
|
(482
|
)
|
|
(8,812
|
)
|
||||
Adjustments
(1)
|
(317
|
)
|
|
1,765
|
|
|
245
|
|
|
1,693
|
|
||||
Non-cash items
|
—
|
|
|
(4
|
)
|
|
(324
|
)
|
|
(328
|
)
|
||||
Balance as of December 31, 2016
|
5,182
|
|
|
5,773
|
|
|
24
|
|
|
10,979
|
|
||||
Additions
(1)
|
3,859
|
|
|
2,426
|
|
|
110
|
|
|
6,395
|
|
||||
Payments
|
(7,611
|
)
|
|
(2,860
|
)
|
|
5
|
|
|
(10,466
|
)
|
||||
Adjustments
(1)
|
(117
|
)
|
|
(973
|
)
|
|
(78
|
)
|
|
(1,168
|
)
|
||||
Non-cash items
|
(46
|
)
|
|
(119
|
)
|
|
(61
|
)
|
|
(226
|
)
|
||||
Balance as of December 31, 2017
|
$
|
1,267
|
|
|
$
|
4,247
|
|
|
$
|
—
|
|
|
$
|
5,514
|
|
(1)
|
Additions and adjustments for the years ended December 31,
2017
and
2016
include a gain of
$1.0 million
and a charge of
$2.0 million
, respectively, related to updated lease assumptions for vacated offices spaces directly related to discontinued operations. Refer to Note 3 "Discontinued Operations" for additional information on our discontinued operations.
|
|
Fair Value (Derivative Asset and Liability)
As of December 31,
|
||||||
Balance Sheet Location
|
2017
|
|
2016
|
||||
Other non-current assets
|
$
|
581
|
|
|
$
|
—
|
|
Accrued expenses
|
$
|
48
|
|
|
$
|
54
|
|
Level 1 Inputs
|
|
Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
|
|
|
Level 2 Inputs
|
|
Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
Level 3 Inputs
|
|
Unobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
533
|
|
|
$
|
—
|
|
|
$
|
533
|
|
Promissory note
|
—
|
|
|
—
|
|
|
1,078
|
|
|
1,078
|
|
||||
Convertible debt investment
|
—
|
|
|
—
|
|
|
39,904
|
|
|
39,904
|
|
||||
Deferred compensation assets
|
—
|
|
|
17,786
|
|
|
—
|
|
|
17,786
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
18,319
|
|
|
$
|
40,982
|
|
|
$
|
59,301
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration for business acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,828
|
|
|
$
|
22,828
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,828
|
|
|
$
|
22,828
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Promissory note
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,325
|
|
|
$
|
2,325
|
|
Convertible debt investment
|
—
|
|
|
—
|
|
|
34,675
|
|
|
34,675
|
|
||||
Deferred compensation assets
|
—
|
|
|
16,408
|
|
|
—
|
|
|
16,408
|
|
||||
Total assets
|
$
|
—
|
|
|
$
|
16,408
|
|
|
$
|
37,000
|
|
|
$
|
53,408
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
54
|
|
Contingent consideration for business acquisitions
|
—
|
|
|
—
|
|
|
8,827
|
|
|
8,827
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
8,827
|
|
|
$
|
8,881
|
|
|
|
Promissory Note
|
||
Balance as of December 31, 2015
|
|
$
|
2,309
|
|
Interest payments received
|
|
(191
|
)
|
|
Change in fair value of promissory note
|
|
207
|
|
|
Balance as of December 31, 2016
|
|
2,325
|
|
|
Interest payments received
|
|
(185
|
)
|
|
Principal payments received
|
|
(1,177
|
)
|
|
Change in fair value of promissory note
|
|
115
|
|
|
Balance as of December 31, 2017
|
|
$
|
1,078
|
|
|
|
Convertible Debt Investment
|
||
Balance as of December 31, 2015
|
|
$
|
34,831
|
|
Change in fair value of convertible debt investment
|
|
(156
|
)
|
|
Balance as of December 31, 2016
|
|
34,675
|
|
|
Change in fair value of convertible debt investment
|
|
5,229
|
|
|
Balance as of December 31, 2017
|
|
$
|
39,904
|
|
|
|
Contingent Consideration for Business Acquisitions
|
||
Balance as of December 31, 2015
|
|
$
|
2,063
|
|
Acquisitions
|
|
8,754
|
|
|
Remeasurement of contingent consideration for business acquisitions
|
|
(1,990
|
)
|
|
Balance as of December 31, 2016
|
|
8,827
|
|
|
Acquisitions
|
|
15,489
|
|
|
Payments
|
|
(2,938
|
)
|
|
Remeasurement of contingent consideration for business acquisitions
|
|
1,111
|
|
|
Unrealized loss due to foreign currency translation
|
|
339
|
|
|
Balance as of December 31, 2017
|
|
$
|
22,828
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount |
|
Estimated
Fair Value |
||||||||
1.25% convertible senior notes due 2019
|
$
|
233,140
|
|
|
$
|
232,578
|
|
|
$
|
224,065
|
|
|
$
|
245,018
|
|
|
Foreign
Currency
Translation
|
|
Available-for-
Sale
Investments
|
|
Cash Flow
Hedges
(1)
|
|
Total
|
||||||||
Balance as of December 31, 2014
|
$
|
(2,334
|
)
|
|
$
|
(250
|
)
|
|
$
|
(71
|
)
|
|
$
|
(2,655
|
)
|
Foreign currency translation adjustment, net of tax of $0
|
(403
|
)
|
|
—
|
|
|
—
|
|
|
(403
|
)
|
||||
Reclassification adjustment into earnings, net of tax of $0
(2)
|
2,220
|
|
|
—
|
|
|
—
|
|
|
2,220
|
|
||||
Unrealized gain on investments, net of tax of $(2,709)
|
—
|
|
|
4,435
|
|
|
—
|
|
|
4,435
|
|
||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $327
|
—
|
|
|
—
|
|
|
(492
|
)
|
|
(492
|
)
|
||||
Reclassification adjustment into earnings, net of tax of $(320)
|
—
|
|
|
—
|
|
|
480
|
|
|
480
|
|
||||
Balance as of December 31, 2015
|
(517
|
)
|
|
4,185
|
|
|
(83
|
)
|
|
3,585
|
|
||||
Foreign currency translation adjustment, net of tax of $0
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
||||
Unrealized loss on investments, net of tax of $59
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in fair value, net of tax of $122
|
—
|
|
|
—
|
|
|
(179
|
)
|
|
(179
|
)
|
||||
Reclassification adjustment into earnings, net of tax of $(161)
|
—
|
|
|
—
|
|
|
242
|
|
|
242
|
|
||||
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
(3)
|
—
|
|
|
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
(3)
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Balance as of December 31, 2017
|
$
|
1,149
|
|
|
$
|
8,812
|
|
|
$
|
409
|
|
|
$
|
10,370
|
|
(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)
|
In connection with the divestiture of Huron Legal, which included the sale of certain wholly-owned foreign subsidiaries, we reclassified
$2.2 million
of accumulated translation losses to net income from discontinued operations.
|
(3)
|
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. Refer to Note 2 "Summary of Significant Accounting Policies" for additional information on the adoption of ASU 2018-02.
|
|
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, 2016
|
610
|
|
|
12
|
|
|
622
|
|
|
$
|
59.77
|
|
Granted
|
270
|
|
|
14
|
|
|
284
|
|
|
$
|
42.11
|
|
Vested
|
(247
|
)
|
|
(9
|
)
|
|
(256
|
)
|
|
$
|
57.80
|
|
Forfeited
|
(72
|
)
|
|
(4
|
)
|
|
(76
|
)
|
|
$
|
59.18
|
|
Nonvested restricted stock at December 31, 2017
|
561
|
|
|
13
|
|
|
574
|
|
|
$
|
51.97
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
(in dollars)
|
|||
Nonvested performance-based stock at December 31, 2016
|
239
|
|
|
$
|
58.47
|
|
Granted
(1)
|
328
|
|
|
$
|
42.75
|
|
Vested
|
(85
|
)
|
|
$
|
61.66
|
|
Forfeited
(2)
|
(129
|
)
|
|
$
|
54.85
|
|
Nonvested performance-based stock at December 31, 2017
(3)
|
353
|
|
|
$
|
44.45
|
|
(1)
|
Shares granted in
2017
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
353,000
nonvested performance-based shares outstanding as of
December 31, 2017
, approximately
316,000
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
2017
financial results, approximately
235,000
of the
316,000
unearned shares will be forfeited in the first quarter of
2018
.
|
|
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, 2016
|
194
|
|
|
$
|
29.06
|
|
|
4.3
|
|
$
|
4.2
|
|
Granted
|
—
|
|
|
|
|
|
|
|
||||
Exercised
|
—
|
|
|
|
|
|
|
|
||||
Forfeited or expired
|
—
|
|
|
|
|
|
|
|
||||
Outstanding at December 31, 2017
(1)
|
194
|
|
|
$
|
29.06
|
|
|
3.3
|
|
$
|
2.2
|
|
Exercisable at December 31, 2017
|
194
|
|
|
$
|
29.06
|
|
|
3.3
|
|
$
|
2.2
|
|
(1)
|
Of the
194,000
outstanding options, approximately
157,000
were granted under the 2004 Omnibus Stock Plan, and the remaining
37,000
options were granted under the 2012 Omnibus Incentive Plan.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(635
|
)
|
|
$
|
15,726
|
|
|
$
|
4,806
|
|
State
|
545
|
|
|
1,623
|
|
|
2,380
|
|
|||
Foreign
|
2,040
|
|
|
1,021
|
|
|
350
|
|
|||
Total current
|
1,950
|
|
|
18,370
|
|
|
7,536
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(46,103
|
)
|
|
1,662
|
|
|
12,450
|
|
|||
State
|
(6,576
|
)
|
|
(274
|
)
|
|
1,482
|
|
|||
Foreign
|
(1,270
|
)
|
|
(81
|
)
|
|
202
|
|
|||
Total deferred
|
(53,949
|
)
|
|
1,307
|
|
|
14,134
|
|
|||
Income tax expense for continuing operations
|
$
|
(51,999
|
)
|
|
$
|
19,677
|
|
|
$
|
21,670
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Percent of pretax income from continuing operations:
|
|
|
|
|
|
|||
At U.S. statutory tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
2.7
|
|
|
1.7
|
|
|
4.6
|
|
Goodwill impairment charges
|
(10.2
|
)
|
|
—
|
|
|
—
|
|
U.S. federal rate change
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
Transition tax on accumulated foreign earnings, net of credits
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
Stock-based compensation
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
Meals and entertainment
|
(0.3
|
)
|
|
1.1
|
|
|
0.6
|
|
Valuation allowance
|
(0.2
|
)
|
|
(3.2
|
)
|
|
0.5
|
|
Foreign source income
|
0.1
|
|
|
(0.5
|
)
|
|
0.5
|
|
Tax credits / Section 199 Deduction
|
0.2
|
|
|
(1.1
|
)
|
|
(1.0
|
)
|
Net tax benefit related to “check-the-box” election
(1)
|
1.2
|
|
|
—
|
|
|
(14.7
|
)
|
Other
|
(0.6
|
)
|
|
0.3
|
|
|
0.4
|
|
Effective income tax rate for continuing operations
|
23.4
|
%
|
|
33.3
|
%
|
|
25.9
|
%
|
(1)
|
In the fourth quarter of 2015, we made a tax election to classify two of our wholly-owned foreign subsidiaries as disregarded entities for U.S. federal income tax purposes (commonly referred to as a “check-the-box” election). As a result of this election, we realized an income tax benefit of
$13.0 million
, of which
$0.7 million
is unrecognized, resulting in a net recognized tax benefit of
$12.3 million
. Due to the expiration of statute of limitations, in the third quarter of 2017, we recognized a
$2.7 million
tax benefit, including the reversal of accrued interest and penalties, related to a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat one of our wholly-owned foreign subsidiaries as a disregarded entity for U.S federal income tax purposes.
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Share-based compensation
|
$
|
5,674
|
|
|
$
|
10,151
|
|
Accrued payroll and other liabilities
|
7,010
|
|
|
10,004
|
|
||
Intangibles and goodwill
|
2,137
|
|
|
—
|
|
||
Deferred lease incentives
|
4,352
|
|
|
4,666
|
|
||
Convertible note hedge transactions
|
250
|
|
|
12,197
|
|
||
Revenue recognition
|
1,586
|
|
|
1,983
|
|
||
Restructuring charge liability
|
1,104
|
|
|
2,230
|
|
||
Net operating loss carry-forwards
|
495
|
|
|
92
|
|
||
Tax credits
|
1,918
|
|
|
1,804
|
|
||
Other
|
882
|
|
|
1,934
|
|
||
Total deferred tax assets
|
25,408
|
|
|
45,061
|
|
||
Valuation allowance
|
(1,247
|
)
|
|
(626
|
)
|
||
Net deferred tax assets
|
24,161
|
|
|
44,435
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Prepaid expenses
|
(1,229
|
)
|
|
(2,500
|
)
|
||
Property and equipment
|
(4,031
|
)
|
|
(2,933
|
)
|
||
Intangibles and goodwill
|
—
|
|
|
(60,411
|
)
|
||
Convertible note discount
|
(3
|
)
|
|
(11,586
|
)
|
||
Convertible debt investment
|
(3,110
|
)
|
|
(2,600
|
)
|
||
Other
|
(133
|
)
|
|
(38
|
)
|
||
Total deferred tax liabilities
|
(8,506
|
)
|
|
(80,068
|
)
|
||
Net deferred tax asset (liability) for continuing operations
|
$
|
15,655
|
|
|
$
|
(35,633
|
)
|
|
|
Unrecognized Tax Benefits
|
||
Balance at January 1, 2015
|
|
$
|
2,488
|
|
Additions based on tax positions related to the current year
|
|
735
|
|
|
Balance at December 31, 2015
|
|
3,223
|
|
|
Additions based on tax positions related to the current year
|
|
117
|
|
|
Balance at December 31, 2016
|
|
3,340
|
|
|
Decrease due to lapse of statute of limitations
|
|
(2,410
|
)
|
|
Decrease based on tax positions related to the prior year
|
|
(117
|
)
|
|
Balance at December 31, 2017
|
|
$
|
813
|
|
|
|
Operating
Lease
Obligations
|
|
Sublease
Income
|
||||
2018
|
|
$
|
14,739
|
|
|
$
|
1,316
|
|
2019
|
|
13,444
|
|
|
291
|
|
||
2020
|
|
12,266
|
|
|
—
|
|
||
2021
|
|
11,298
|
|
|
—
|
|
||
2022
|
|
10,409
|
|
|
—
|
|
||
Thereafter
|
|
37,804
|
|
|
—
|
|
||
Total
|
|
$
|
99,960
|
|
|
$
|
1,607
|
|
•
|
Healthcare
|
•
|
Education
|
•
|
Business Advisory
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Healthcare:
|
|
|
|
|
|
||||||
Revenues
|
$
|
356,909
|
|
|
$
|
424,912
|
|
|
$
|
446,887
|
|
Operating income
|
$
|
118,761
|
|
|
$
|
147,903
|
|
|
$
|
169,560
|
|
Segment operating income as a percentage of segment revenues
|
33.3
|
%
|
|
34.8
|
%
|
|
37.9
|
%
|
|||
Education:
|
|
|
|
|
|
||||||
Revenues
|
$
|
167,908
|
|
|
$
|
149,817
|
|
|
$
|
134,009
|
|
Operating income
|
$
|
40,318
|
|
|
$
|
38,310
|
|
|
$
|
32,246
|
|
Segment operating income as a percentage of segment revenues
|
24.0
|
%
|
|
25.6
|
%
|
|
24.1
|
%
|
|||
Business Advisory:
|
|
|
|
|
|
||||||
Revenues
|
$
|
207,753
|
|
|
$
|
151,543
|
|
|
$
|
116,892
|
|
Operating income
|
$
|
46,600
|
|
|
$
|
29,382
|
|
|
$
|
31,233
|
|
Segment operating income as a percentage of segment revenues
|
22.4
|
%
|
|
19.4
|
%
|
|
26.7
|
%
|
|||
All Other:
(1)
|
|
|
|
|
|
||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,222
|
|
Operating loss
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,718
|
)
|
Segment operating loss as a percentage of segment revenues
|
N/A
|
|
|
N/A
|
|
|
N/M
|
|
|||
Total Company:
|
|
|
|
|
|
||||||
Revenues
|
$
|
732,570
|
|
|
$
|
726,272
|
|
|
$
|
699,010
|
|
Reimbursable expenses
|
75,175
|
|
|
71,712
|
|
|
70,013
|
|
|||
Total revenues and reimbursable expenses
|
$
|
807,745
|
|
|
$
|
797,984
|
|
|
$
|
769,023
|
|
|
|
|
|
|
|
||||||
Segment operating income
|
$
|
205,679
|
|
|
$
|
215,595
|
|
|
$
|
231,321
|
|
Items not allocated at the segment level:
|
|
|
|
|
|
||||||
Other operating expenses
|
120,718
|
|
|
111,852
|
|
|
112,164
|
|
|||
Litigation and other losses (gains), net
|
1,111
|
|
|
(1,990
|
)
|
|
(9,476
|
)
|
|||
Depreciation and amortization
|
38,213
|
|
|
31,499
|
|
|
25,135
|
|
|||
Goodwill impairment charges
(2)
|
253,093
|
|
|
—
|
|
|
—
|
|
|||
Other expense, net
|
15,048
|
|
|
15,077
|
|
|
19,933
|
|
|||
Income (loss) from continuing operations before taxes
|
$
|
(222,504
|
)
|
|
$
|
59,157
|
|
|
$
|
83,565
|
|
(1)
|
During 2015, we wound down the businesses within our All Other operating segment, which consisted of our public sector consulting practice and our foreign consulting operations based in the Middle East. We did not generate any revenues from our All Other segment during 2016 and 2017.
|
(2)
|
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:
|
|
2017
|
|
2016
|
|
2015
|
||||||
Healthcare
|
|
$
|
70,097
|
|
|
$
|
69,274
|
|
|
$
|
84,088
|
|
Education
|
|
31,367
|
|
|
33,094
|
|
|
28,192
|
|
|||
Business Advisory
|
|
58,217
|
|
|
43,151
|
|
|
29,609
|
|
|||
Unallocated assets
(1)
|
|
877,247
|
|
|
1,007,696
|
|
|
1,017,654
|
|
|||
Total assets
|
|
$
|
1,036,928
|
|
|
$
|
1,153,215
|
|
|
$
|
1,159,543
|
|
(1)
|
Unallocated assets includes goodwill and intangible assets and our convertible debt investment, as management does not evaluate these items at the segment level when assessing segment performance or allocating resources. Refer to Note 5 “Goodwill and Intangible Assets" and Note 12 "Fair Value of Financial Instruments" for further information on these assets.
|
|
Beginning
balance
|
|
Additions
(1)
|
|
Deductions
|
|
Ending
balance
|
||||||
Year ended December 31, 2015:
|
|
|
|
|
|
|
|
||||||
Allowances for doubtful accounts and unbilled services
|
$
|
14,129
|
|
|
40,003
|
|
|
37,246
|
|
|
$
|
16,886
|
|
Valuation allowance for deferred tax assets
|
$
|
2,431
|
|
|
1,212
|
|
|
1,401
|
|
|
$
|
2,242
|
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
||||||
Allowances for doubtful accounts and unbilled services
|
$
|
16,886
|
|
|
48,901
|
|
|
44,528
|
|
|
$
|
21,259
|
|
Valuation allowance for deferred tax assets
|
$
|
2,242
|
|
|
113
|
|
|
1,729
|
|
|
$
|
626
|
|
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
|
|
(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
|
||||||||||||||
2017
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
188,849
|
|
|
$
|
181,418
|
|
|
$
|
176,376
|
|
|
$
|
185,927
|
|
Reimbursable expenses
|
16,950
|
|
|
20,930
|
|
|
17,982
|
|
|
19,313
|
|
||||
Total revenues and reimbursable expenses
|
205,799
|
|
|
202,348
|
|
|
194,358
|
|
|
205,240
|
|
||||
Gross profit
|
70,203
|
|
|
64,981
|
|
|
59,847
|
|
|
71,540
|
|
||||
Operating income (loss)
|
14,149
|
|
|
(200,575
|
)
|
|
6,098
|
|
|
(27,128
|
)
|
||||
Net income (loss) from continuing operations
|
5,155
|
|
|
(150,482
|
)
|
|
4,132
|
|
|
(29,310
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
143
|
|
|
309
|
|
|
238
|
|
|
(302
|
)
|
||||
Net income (loss)
|
5,298
|
|
|
(150,173
|
)
|
|
4,370
|
|
|
(29,612
|
)
|
||||
Net earnings (loss) per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.24
|
|
|
$
|
(7.00
|
)
|
|
$
|
0.19
|
|
|
$
|
(1.36
|
)
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
(0.02
|
)
|
||||
Net income (loss)
|
$
|
0.25
|
|
|
$
|
(6.99
|
)
|
|
$
|
0.20
|
|
|
$
|
(1.38
|
)
|
Net earnings (loss) per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.24
|
|
|
$
|
(7.00
|
)
|
|
$
|
0.19
|
|
|
$
|
(1.36
|
)
|
Income (loss) from discontinued operations, net of tax
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
(0.02
|
)
|
||||
Net income (loss)
|
$
|
0.25
|
|
|
$
|
(6.99
|
)
|
|
$
|
0.20
|
|
|
$
|
(1.38
|
)
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
21,239
|
|
|
21,492
|
|
|
21,505
|
|
|
21,515
|
|
||||
Diluted
|
21,474
|
|
|
21,492
|
|
|
21,622
|
|
|
21,515
|
|
|
Quarter Ended
|
||||||||||||||
2016
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
180,489
|
|
|
$
|
184,259
|
|
|
$
|
183,400
|
|
|
$
|
178,124
|
|
Reimbursable expenses
|
16,561
|
|
|
18,982
|
|
|
19,093
|
|
|
17,076
|
|
||||
Total revenues and reimbursable expenses
|
197,050
|
|
|
203,241
|
|
|
202,493
|
|
|
195,200
|
|
||||
Gross profit
|
65,180
|
|
|
77,138
|
|
|
71,131
|
|
|
60,090
|
|
||||
Operating income
|
14,376
|
|
|
28,209
|
|
|
23,240
|
|
|
8,409
|
|
||||
Net income from continuing operations
|
6,866
|
|
|
16,139
|
|
|
12,288
|
|
|
4,187
|
|
||||
Income (loss) from discontinued operations, net of tax
|
(864
|
)
|
|
(970
|
)
|
|
4
|
|
|
(33
|
)
|
||||
Net income
|
6,002
|
|
|
15,169
|
|
|
12,292
|
|
|
4,154
|
|
||||
Net earnings per basic share:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
0.33
|
|
|
$
|
0.77
|
|
|
$
|
0.58
|
|
|
$
|
0.20
|
|
Income (loss) from discontinued operations, net of tax
|
(0.05
|
)
|
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
0.28
|
|
|
$
|
0.72
|
|
|
$
|
0.58
|
|
|
$
|
0.20
|
|
Net earnings per diluted share:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
0.32
|
|
|
$
|
0.76
|
|
|
$
|
0.57
|
|
|
$
|
0.19
|
|
Income (loss) from discontinued operations, net of tax
|
(0.04
|
)
|
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
0.28
|
|
|
$
|
0.71
|
|
|
$
|
0.57
|
|
|
$
|
0.19
|
|
Weighted average shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
21,114
|
|
|
21,061
|
|
|
21,076
|
|
|
21,083
|
|
||||
Diluted
|
21,460
|
|
|
21,376
|
|
|
21,445
|
|
|
21,473
|
|
1 Year Huron Consulting Chart |
1 Month Huron Consulting Chart |
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