Huron Consulting Group Inc. Form 10-Q For The Period Ended 3/31/06
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended March 31, 2006
OR
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Commission
file number: 000-50976
Huron
Consulting Group Inc.
(Exact
name of registrant as specified in its charter)
Delaware
|
|
01-0666114
|
(State
or other jurisdiction
|
|
(IRS
Employer
|
of
incorporation or organization)
|
|
Identification
Number)
|
550
West Van Buren Street
Chicago,
Illinois
60607
(Address
of principal executive offices)
(Zip
Code)
(312)
583-8700
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
Yes
x No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer o Accelerated
filer x Non-accelerated
filer o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o
No
x
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
As
of
April 20, 2006, 17,404,488 shares of the registrant’s common stock, par
value $0.01 per share, were outstanding.
HURON
CONSULTING GROUP INC.
INDEX
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Page
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Part
I - Financial Information
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Item
1.
|
Consolidated
Financial Statements
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Consolidated
Balance Sheets
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1
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Consolidated
Statements of Income
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2
|
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Consolidated
Statement of Stockholders’ Equity
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3
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Consolidated
Statements of Cash Flows
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4
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Notes
to Consolidated Financial Statements
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5
-
12
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition
and
Results of Operations
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13
- 21
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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21
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Item
4.
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Controls
and Procedures
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21
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Part
II - Other Information
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Item
1.
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Legal
Proceedings
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21
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Item
1A.
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Risk
Factors
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21
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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21
- 22
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Item
3.
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Defaults
Upon Senior Securities
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22
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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22
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Item
5.
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Other
Information
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22
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Item
6.
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Exhibits
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23
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Signature
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24
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PART
I ¾
FINANCIAL INFORMATION
ITEM
1. CONSOLIDATED FINANCIAL STATEMENTS
HURON
CONSULTING GROUP INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share and per share amounts)
(Unaudited)
|
|
March
31,
2006
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|
December 31,
2005
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|
Assets
|
|
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|
|
|
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Current
assets:
|
|
|
|
|
|
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Cash
and cash equivalents
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|
$
|
16,177
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|
$
|
31,820
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|
Receivables
from clients, net
|
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|
34,770
|
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29,164
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Unbilled
services, net
|
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|
21,246
|
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18,187
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Income
tax receivable
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|
¾
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|
|
232
|
|
Deferred
income taxes
|
|
|
14,110
|
|
|
12,553
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|
Other
current assets
|
|
|
7,897
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|
|
5,799
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|
Total
current assets
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|
94,200
|
|
|
97,755
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Property
and equipment, net
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19,259
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13,162
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|
Deferred
income taxes
|
|
|
2,978
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|
2,154
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|
Deposits
and other assets
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1,024
|
|
|
1,147
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Intangible
assets, net
|
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|
629
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|
|
844
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|
Goodwill
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14,637
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14,637
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Total
assets
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$
|
132,727
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$
|
129,699
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|
|
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Liabilities
and stockholders’ equity
|
|
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Current
liabilities:
|
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|
|
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Accounts
payable
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$
|
2,236
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|
$
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2,671
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|
Accrued
expenses
|
|
|
7,289
|
|
|
4,357
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Accrued
payroll and related benefits
|
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|
17,872
|
|
|
32,073
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Income
tax payable
|
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2,666
|
|
|
491
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Deferred
revenues
|
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4,127
|
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4,609
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Current
portion of notes payable and capital lease obligations
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1,138
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|
1,282
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Total
current liabilities
|
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35,328
|
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|
45,483
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|
Non-current
liabilities:
|
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|
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|
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Accrued
expenses
|
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|
186
|
|
|
274
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|
Notes
payable and capital lease obligations, net of current
portion
|
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2,129
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|
2,127
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Deferred
lease incentives
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9,569
|
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6,283
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|
Total
non-current liabilities
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11,884
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8,684
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Commitments
and contingencies
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¾
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¾
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Stockholders’
equity
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Common
stock; $0.01 par value; 500,000,000 shares authorized; 17,608,266
and
17,397,312 shares issued at March 31, 2006 and December 31, 2005,
respectively
|
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|
176
|
|
|
174
|
|
Treasury
stock, at cost, 229,045 and 148,933 shares at March 31, 2006 and
December 31, 2005, respectively
|
|
|
(4,758
|
)
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|
(3,061
|
)
|
Additional
paid-in capital
|
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|
64,990
|
|
|
58,908
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|
Retained
earnings
|
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|
25,107
|
|
|
19,511
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|
Total
stockholders’ equity
|
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|
85,515
|
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|
75,532
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|
Total
liabilities and stockholders equity
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|
$
|
132,727
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|
$
|
129,699
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|
The
accompanying notes are an integral part of the consolidated financial
statements.
HURON
CONSULTING GROUP INC.
CONSOLIDATED
STATEMENTS OF INCOME
(In
thousands, except per share amounts)
(Unaudited)
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|
Three
months ended
March 31,
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|
2006
|
|
2005
|
|
Revenues
and reimbursable expenses:
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|
|
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|
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Revenues
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$
|
62,187
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$
|
46,760
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|
Reimbursable
expenses
|
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|
5,439
|
|
|
4,370
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|
Total
revenues and reimbursable expenses
|
|
|
67,626
|
|
|
51,130
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Direct
costs and reimbursable expenses (exclusive
of depreciation and
amortization
shown in operating expenses):
|
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Direct
costs
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35,990
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|
|
25,944
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Intangible
assets amortization
|
|
|
76
|
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¾
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|
Reimbursable
expenses
|
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|
5,538
|
|
|
4,387
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|
Total
direct costs and reimbursable expenses
|
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|
41,604
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|
|
30,331
|
|
Operating
expenses:
|
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|
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Selling,
general and administrative
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14,841
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|
11,723
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|
Depreciation
and amortization
|
|
|
1,508
|
|
|
847
|
|
Total
operating expenses
|
|
|
16,349
|
|
|
12,570
|
|
Operating
income
|
|
|
9,673
|
|
|
8,229
|
|
Other
income:
|
|
|
|
|
|
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Interest
income, net
|
|
|
232
|
|
|
165
|
|
Other
income
|
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|
¾
|
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|
1
|
|
Total
other income
|
|
|
232
|
|
|
166
|
|
Income
before provision for income taxes
|
|
|
9,905
|
|
|
8,395
|
|
Provision
for income taxes
|
|
|
4,309
|
|
|
3,568
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|
Net
income
|
|
$
|
5,596
|
|
$
|
4,827
|
|
|
|
|
|
|
|
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|
Earnings
per share:
|
|
|
|
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|
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|
Basic
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$
|
0.35
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|
$
|
0.31
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|
Diluted
|
|
$
|
0.33
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|
$
|
0.29
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Weighted
average shares used in calculating earnings per share:
|
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Basic
|
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|
16,077
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|
15,547
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Diluted
|
|
|
16,995
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|
|
16,677
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|
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|
|
|
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The
accompanying notes are an integral part of the consolidated financial
statements.
HURON
CONSULTING GROUP INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
(In
thousands, except share amounts)
(Unaudited)
|
|
Common
Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Stockholders’
Equity
|
|
|
|
Shares
|
|
Amount
|
|
Balance
at December 31, 2005
|
|
|
17,397,312
|
|
$
|
174
|
|
$
|
(3,061
|
)
|
$
|
58,908
|
|
$
|
19,511
|
|
$
|
75,532
|
|
Net
income
|
|
|
¾
|
|
|
¾
|
|
|
¾
|
|
|
¾
|
|
|
5,596
|
|
|
5,596
|
|
Issuance
of common stock in connection
with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
stock awards, net
of cancellations
|
|
|
5,000
|
|
|
¾
|
|
|
(833
|
)
|
|
833
|
|
|
¾
|
|
|
¾
|
|
Exercise
of stock options
|
|
|
205,954
|
|
|
2
|
|
|
¾
|
|
|
125
|
|
|
¾
|
|
|
127
|
|
Share-based
compensation
|
|
|
¾
|
|
|
¾
|
|
|
¾
|
|
|
2,263
|
|
|
¾
|
|
|
2,263
|
|
Shares
redeemed for employee tax withholdings
|
|
|
¾
|
|
|
¾
|
|
|
(864
|
)
|
|
¾
|
|
|
¾
|
|
|
(864
|
)
|
Income
tax benefit on share-based
compensation
|
|
|
¾
|
|
|
¾
|
|
|
¾
|
|
|
2,861
|
|
|
¾
|
|
|
2,861
|
|
Balance
at March 31, 2006
|
|
|
17,608,266
|
|
$
|
176
|
|
$
|
(4,758
|
)
|
$
|
64,990
|
|
$
|
25,107
|
|
$
|
85,515
|
|
The
accompanying notes are an integral part of the consolidated financial
statements.
HURON
CONSULTING GROUP INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
Three
months ended
March 31,
|
|
|
|
2006
|
|
2005
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
5,596
|
|
$
|
4,827
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,584
|
|
|
847
|
|
Deferred
income taxes
|
|
|
(2,380
|
)
|
|
(1,670
|
)
|
Share-based
compensation
|
|
|
2,263
|
|
|
1,410
|
|
Tax
benefit from share-based compensation
|
|
|
¾
|
|
|
113
|
|
Allowances
for doubtful accounts and unbilled services
|
|
|
404
|
|
|
547
|
|
Other
|
|
|
135
|
|
|
¾
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
Increase
in receivables from clients
|
|
|
(5,319
|
)
|
|
(1,244
|
)
|
Increase
in unbilled services
|
|
|
(3,750
|
)
|
|
(4,720
|
)
|
Decrease
in income tax receivable
|
|
|
232
|
|
|
494
|
|
Increase
in other current assets and other
|
|
|
(1,975
|
)
|
|
(320
|
)
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
5,695
|
|
|
(34
|
)
|
Decrease
in accrued payroll and related benefits
|
|
|
(14,201
|
)
|
|
(9,810
|
)
|
Increase
in income tax payable
|
|
|
2,175
|
|
|
3,456
|
|
Decrease
in deferred revenue
|
|
|
(482
|
)
|
|
(408
|
)
|
Net
cash used in operating activities
|
|
|
(10,023
|
)
|
|
(6,512
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchase
of property and equipment, net
|
|
|
(7,600
|
)
|
|
(993
|
)
|
Net
cash used in investing activities
|
|
|
(7,600
|
)
|
|
(993
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options
|
|
|
127
|
|
|
12
|
|
Tax
benefit from share-based compensation
|
|
|
2,861
|
|
|
¾
|
|
Shares
redeemed for employee tax withholdings
|
|
|
(864
|
)
|
|
¾
|
|
Principal
payments under capital lease obligations
|
|
|
(144
|
)
|
|
¾
|
|
Net
cash provided by financing activities
|
|
|
1,980
|
|
|
12
|
|
Net
decrease in cash and cash equivalents
|
|
|
(15,643
|
)
|
|
(7,493
|
)
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
|
Beginning
of the period
|
|
|
31,820
|
|
|
28,092
|
|
End
of the period
|
|
$
|
16,177
|
|
$
|
20,599
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
¾
|
|
$
|
63
|
|
Cash
paid for taxes
|
|
$
|
1,423
|
|
$
|
1,174
|
|
The
accompanying notes are an integral part of the consolidated financial
statements.
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
1. |
Description
of Business
|
Huron
Consulting Group Inc. was formed on March 19, 2002. Huron Consulting Group
Inc., together with its indirect wholly-owned operating subsidiaries, Huron
Consulting Services LLC and Speltz & Weis LLC, (collectively, the
“Company”), is an independent provider of financial and operational consulting
services, whose clients include Fortune 500 companies, medium-sized businesses,
leading academic institutions, healthcare organizations and the law firms that
represent these various organizations. In October 2004, the Company
completed its initial public offering of shares of its common stock. The
majority of the issued and outstanding common stock of the Company was held
by
HCG Holdings LLC until the first quarter of 2006, when it sold 7,245,000 shares
of the Company’s common stock in a secondary offering.
The
accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with the rules and regulations of the Securities
and
Exchange Commission. In the opinion of management, these financial statements
reflect all adjustments of a normal, recurring nature necessary for the fair
presentation of the Company’s financial position, results of operations and cash
flows for the interim periods presented in conformity with accounting principles
generally accepted in the United States of America. These financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 2005 included in the
Company’s annual report on Form 10-K. The Company’s results for any interim
period are not necessarily indicative of results for a full year or any other
interim period.
3. |
Share-based
Compensation
|
In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 123 (revised 2004),
“Share-Based Payment,” (“SFAS No. 123R”). This statement requires that the
costs of employee share-based payments be measured at fair value on the awards’
grant date and recognized in the financial statements over the requisite service
period.
Effective
January 1, 2006, the Company adopted the provisions of SFAS No. 123R
using the modified prospective application transition method. Under this method,
compensation cost for the portion of awards for which the requisite service
has
not yet been rendered that are outstanding as of the adoption date is recognized
over the remaining service period. The compensation cost for that portion of
awards is based on the grant-date fair value of those awards as calculated
for
pro forma disclosures under SFAS No. 123, as originally issued. All new
awards and awards that are modified, repurchased, or cancelled after the
adoption date are accounted for under the provisions of SFAS No. 123R.
Prior periods have not been restated under this transition method. The Company
recognizes share-based compensation ratably using the straight-line attribution
method over the requisite service period. In addition, pursuant to SFAS
No. 123R, the Company is required to estimate the amount of expected
forfeitures when calculating share-based compensation, instead of accounting
for
forfeitures as they occur, which was the Company’s practice prior to the
adoption of SFAS No. 123R. As of January 1, 2006, the cumulative
effect of adopting the estimated forfeiture method was not material.
Prior
to
January 1, 2006, the Company accounted for share-based compensation using
the intrinsic value method prescribed by Accounting Principles Board Opinion
No. 25, “Accounting for Stock Issued to Employees,” and related
interpretations and elected the disclosure option of SFAS No. 123 as amended
by
SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and
Disclosure.” SFAS No. 123 requires that companies either recognize compensation
expense for grants of stock, stock options and other equity instruments based
on
fair value, or provide pro forma disclosure of net income and earnings per
share
in the notes to the financial statements. Accordingly, the Company measured
compensation expense for stock options as the excess, if any, of the estimated
fair market value of the Company’s stock at the date of grant over the exercise
price. The following table details the effect on net income and earnings per
share for the three months ended March 31, 2005 had compensation expense
for the stock plans been recorded based on the fair value method under SFAS
No.
123.
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
|
|
Three
Months Ended March 31, 2005
|
|
Net
income
|
|
$
|
4,827
|
|
Add:
Total share-based compensation expense included in reported net income,
net
of related tax effects
|
|
|
843
|
|
Deduct:
Total share-based compensation expense determined under the fair
value
method for
all awards, net of related tax effects
|
|
|
(892
|
)
|
Pro
forma net income
|
|
$
|
4,778
|
|
Earnings
per share:
|
|
|
|
|
Basic
- as reported
|
|
$
|
0.31
|
|
Basic
- pro forma
|
|
$
|
0.31
|
|
Diluted
- as reported
|
|
$
|
0.29
|
|
Diluted
- pro forma
|
|
$
|
0.29
|
|
Equity
Incentive Plans
In
2004,
the Company adopted the 2004 Omnibus Stock Plan (the “Omnibus Plan”), which
replaced the Company’s prior share-based compensation plans. The Omnibus Plan
permits the grant of stock options, restricted stock, and other share-based
awards valued in whole or in part by reference to, or otherwise based on, the
Company’s common stock. Under the Omnibus Plan, a total of 2,141,000 shares of
common stock were reserved for issuance to eligible employees, executive
officers, independent contractors and outside directors. As of March 31,
2006, approximately 683,000 shares remain available for future
issuance.
The
Compensation Committee of the board of directors has the responsibility of
interpreting the Omnibus Plan and determining all of the terms and conditions
of
share-based awards made under the Omnibus Plan, including when the awards will
become exercisable or otherwise vest. Subject to acceleration under certain
conditions, the majority of the Company’s stock options and restricted stock
vest annually, pro-rata over 4 years. All stock options have a ten-year
contractual term.
The
Company did not grant any stock option awards during the three months ended
March 31, 2006. The weighted average fair value of options granted during
the three months ended March 31, 2005 was $11.21, which was estimated using
the Black-Scholes option-pricing model with the following weighted average
assumptions:
|
|
Three
Months Ended March 31, 2005
|
|
Expected
dividend yield
|
|
|
0%
|
|
Expected
volatility
|
|
|
50%
|
|
Risk-free
interest rate
|
|
|
4.1%
|
|
Expected
option life (in years)
|
|
|
4
|
|
Stock
option activity for the three months ended March 31, 2006 was as
follows:
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
|
|
Number
of
Options
(in
thousands)
|
|
Weighted
Average Exercise Price
(in
dollars)
|
|
Weighted
Average Remaining Contractual Term
|
|
Aggregate
Intrinsic Value
(in
millions)
|
|
Outstanding
at January 1, 2006
|
|
|
1,305
|
|
$
|
2.15
|
|
|
|
|
|
|
|
Granted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
price = fair market value
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Exercise
price < fair market value
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Exercised
|
|
|
(206
|
)
|
$
|
0.65
|
|
|
|
|
|
|
|
Forfeited
or expired
|
|
|
(37
|
)
|
$
|
5.01
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2006
|
|
|
1,062
|
|
$
|
2.34
|
|
|
7.4
|
|
$
|
26.5
|
|
Exercisable
at March 31, 2006
|
|
|
529
|
|
$
|
1.79
|
|
|
7.2
|
|
$
|
13.5
|
|
The
total
intrinsic value of options exercised during the three months ended
March 31, 2006 and 2005 was $5.5 million and $0.4 million,
respectively.
Restricted
stock activity for the three months ended March 31, 2006 was as
follows:
|
|
Number
of Shares
(in
thousands)
|
|
Weighted
Average Grant-Date Fair Value
(in
dollars)
|
|
Restricted
stock at January 1, 2006
|
|
|
1,279
|
|
$
|
19.24
|
|
Granted
|
|
|
9
|
|
$
|
25.70
|
|
Vested
|
|
|
(116
|
)
|
$
|
21.22
|
|
Forfeited
|
|
|
(52
|
)
|
$
|
17.14
|
|
Restricted
stock at March 31, 2006
|
|
|
1,120
|
|
$
|
19.19
|
|
The
aggregate fair value of restricted stock that vested during the three months
ended March 31, 2006 was $3.1 million. There was no restricted stock
vesting during the three months ended March 31, 2005. On February 28,
2006, the Company’s Compensation Committee approved a restricted stock award of
approximately 510,000 shares to be granted to certain employees effective
July 1, 2006. Although
these restricted shares will not be issued to the grantees until July 1,
2006, a grant date has been established for measurement purposes under
SFAS No. 123R. As such, the Company has begun to recognize the expense
relating to this award effective February 28, 2006.
Total
share-based compensation cost recognized for the three months ended March 31,
2006 and 2005 was $2.3 million and $1.4 million, respectively, with
related income tax benefits of $0.9 million and $0.6 million,
respectively. As of March 31, 2006, there was $33.8 million of total
unrecognized compensation cost related to nonvested share-based awards. This
cost is expected to be recognized over a weighted-average period of 3.4
years.
Acquisition
of MSGalt & Company, LLC
On
April 3, 2006, the Company acquired substantially all of the assets of
MSGalt & Company, LLC (“Galt”), a specialized advisory firm consisting of 25
consultants that designs and implements corporate-wide programs to improve
shareholder returns, for $20.4 million. The Company financed this
acquisition with cash on hand and borrowings of $6.5 million under the
Company’s bank credit agreement in the second quarter of 2006. Additional
purchase consideration may be payable if specific performance targets are met
over a four-year period. Such amounts will be recorded as an adjustment to
goodwill if payable. Also, additional payments may be made based on the amount
of revenues the Company receives from referrals made by Galt employees over
a
four-year period. Such
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
amounts
will be recorded as an expense if payable. The acquisition will be accounted
for
under the purchase method of accounting. It was consummated on April 3,
2006 and the results of operations of Galt will be included within the
Operational Consulting segment beginning on that date.
Based
on
a preliminary third-party valuation that is subject to refinement, the
identifiable intangible assets that were acquired totaled approximately
$4.6 million and have an estimated weighted average useful life of
20.2 months, which consisted of customer contracts totaling
$1.8 million (3.2 months weighted average useful life), customer
relationships totaling $1.5 million (6.1 months weighted average useful
life), and non-competition agreements totaling $1.3 million (60.0 months
weighted average useful life). Additionally, the Company will record
approximately $15.8 million of goodwill, which the Company intends to
deduct for income tax purposes.
Acquisition
of Speltz & Weis LLC
On
May 9, 2005, Huron Consulting Group Inc. acquired Speltz & Weis LLC
(“S&W”), a specialized consulting firm that consisted of 26 consultants. The
aggregate purchase price of the acquisition was $17.2 million, which
consisted of $14.0 million cash paid at closing, notes payable totaling
$3.0 million payable in three equal annual installments of
$1.0 million (together with accrued interest at 4% per annum) beginning on
May 8, 2006, and $0.2 million of transaction costs. Additional
purchase consideration may be payable based on the performance of S&W over a
three-year period. Such amounts will be recorded as an adjustment to goodwill
if
payable. Also, additional payments may be made based on the amount of revenues
the Company receives from certain referrals made by S&W employees. Such
amounts will be recorded as an expense if payable. The acquisition was accounted
for under the purchase method of accounting. It was consummated on May 9,
2005 and the results of operations of S&W have been included within the
Financial Consulting segment since that date.
The
identifiable intangible assets that were acquired consisted of customer
contracts of $1.9 million (8.4 months weighted average useful life) and
customer relationships of $0.7 million (15.1 months weighted average useful
life). Amortization expense relating to customer contracts is classified as
a
component of total direct costs on the Company’s consolidated statement of
income while amortization expense relating to customer relationships is
classified as a component of operating expenses. The Company assigned relatively
short lives to the customer contracts and customer relationships due to the
short-term nature of the services and relationships provided under these
contracts, which primarily consisted of interim management services.
Additionally, the Company recorded $14.6 million of goodwill, which the
Company intends to deduct for income tax purposes.
Purchase
Price Allocations
The
following table summarizes the estimated fair values of the assets acquired
and
liabilities assumed at the date of the acquisitions. The Company is in the
process of obtaining a third-party valuation of certain intangible assets
relating to the Galt acquisition; thus, the allocation of the purchase price
is
subject to refinement.
|
|
S&W
|
|
Galt
|
|
Assets
Acquired:
|
|
May 9,
2005
|
|
April 3,
2006
|
|
Current
assets
|
|
$
|
2,291
|
|
$
|
—
|
|
Equipment
|
|
|
16
|
|
|
11
|
|
Intangible
assets
|
|
|
2,600
|
|
|
4,600
|
|
Goodwill
|
|
|
14,637
|
|
|
15,776
|
|
|
|
|
19,544
|
|
|
20,387
|
|
Liabilities
Assumed:
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
2,307
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net
Assets Acquired
|
|
$
|
17,237
|
|
$
|
20,387
|
|
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
The
following unaudited pro forma financial data gives effect to the acquisitions
of
S&W and Galt as if they had been completed at the beginning of the period
presented. The unaudited pro forma financial data are not necessarily indicative
of the operating results that would have been achieved if the acquisition had
occurred on the dates indicated, nor are they necessarily indicative of future
results.
|
|
Historical
Huron and Historical S&W
|
|
Historical
Huron and Historical Galt
|
|
|
|
Three
Months Ended March 31,
|
|
Three
Months Ended March 31,
|
|
|
|
2006
Actual
|
|
2005
Pro
forma
|
|
2006
Pro
forma
|
|
2005
Pro
forma
|
|
Revenues,
net of reimbursable expenses
|
|
$
|
62,187
|
|
$
|
52,706
|
|
$
|
66,256
|
|
$
|
49,864
|
|
Operating
income
|
|
$
|
9,673
|
|
$
|
9,036
|
|
$
|
9,679
|
|
$
|
7,645
|
|
Income
before provision for income taxes
|
|
$
|
9,905
|
|
$
|
9,178
|
|
$
|
9,721
|
|
$
|
7,685
|
|
Net
income
|
|
$
|
5,596
|
|
$
|
5,191
|
|
$
|
5,487
|
|
$
|
4,408
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
$
|
0.33
|
|
$
|
0.34
|
|
$
|
0.28
|
|
Diluted
|
|
$
|
0.33
|
|
$
|
0.31
|
|
$
|
0.32
|
|
$
|
0.26
|
|
5. |
Goodwill
and Intangible Assets
|
The
carrying amount of goodwill at both March 31, 2006 and December 31,
2005 was $14.6 million, which resulted from the acquisition of S&W as
described in note 4 above, and has been assigned to the Company’s segments as
follows:
Financial
Consulting
|
|
$
|
11,739
|
|
Operational
Consulting
|
|
|
2,898
|
|
Total
|
|
$
|
14,637
|
|
Intangible
assets consisted of the following:
|
|
March 31,
2006
|
|
December 31,
2005
|
|
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Customer
contracts
|
|
$
|
1,900
|
|
$
|
1,900
|
|
$
|
1,900
|
|
$
|
1,848
|
|
Customer
relationships
|
|
|
700
|
|
|
498
|
|
|
700
|
|
|
359
|
|
Technology
|
|
|
475
|
|
|
48
|
|
|
475
|
|
|
24
|
|
Total
|
|
$
|
3,075
|
|
$
|
2,446
|
|
$
|
3,075
|
|
$
|
2,231
|
|
During
2005, in connection with the hiring of a managing director, the Company
purchased technology valued at $0.5 million, which is being amortized over
an estimated useful life of 5.0 years and is classified as a component of total
direct costs.
In
connection with the Galt acquisition described in note 4 above, the Company
will
record approximately $15.8 million of goodwill and $4.6 million of
intangible assets in the second quarter of 2006.
Intangible
assets amortization expense was $0.2 million for the three months ended
March 31, 2006. After recognition of the intangible assets acquired related
to the acquisition of Galt, estimated intangible assets amortization expense
is
$2.5 million for 2006, $1.9 million for 2007, $0.4 million for
each of 2008 and 2009,
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
$0.3 million
for 2010 and $0.1 million for 2011. These amounts are subject to change
based on the finalization of the purchase price allocation relating to the
acquisition of Galt.
6. |
Property
and Equipment
|
Property
and equipment at March 31, 2006 and December 31, 2005 are detailed
below:
|
|
March 31,
|
|
December 31,
|
|
|
|
2006
|
|
2005
|
|
Computers,
related equipment and software
|
|
$
|
10,215
|
|
$
|
9,747
|
|
Furniture
and fixtures
|
|
|
3,939
|
|
|
3,721
|
|
Leasehold
improvements
|
|
|
7,979
|
|
|
6,122
|
|
Assets
under capital lease
|
|
|
409
|
|
|
409
|
|
Assets
under construction
|
|
|
5,941
|
|
|
1,229
|
|
Property
and equipment
|
|
|
28,483
|
|
|
21,228
|
|
Accumulated
depreciation and amortization
|
|
|
(9,224
|
)
|
|
(8,066
|
)
|
Property
and equipment, net
|
|
$
|
19,259
|
|
$
|
13,162
|
|
Basic
earnings per share excludes dilution and is computed by dividing net income
by
the weighted average number of common shares outstanding for the period,
excluding unvested restricted common stock. Diluted earnings per share reflects
the potential reduction in earnings per share that could occur if securities
or
other contracts to issue common stock were exercised or converted into common
stock under the treasury stock method. Earnings per share under the basic and
diluted computations are as follows:
|
|
Three
Months Ended
March 31,
|
|
|
|
2006
|
|
2005
|
|
Net
income
|
|
$
|
5,596
|
|
$
|
4,827
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding - basic
|
|
|
16,077
|
|
|
15,547
|
|
Weighted
average common stock equivalents
|
|
|
918
|
|
|
1,130
|
|
Weighted
average common shares outstanding - diluted
|
|
|
16,995
|
|
|
16,677
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
0.35
|
|
$
|
0.31
|
|
Diluted
earnings per share
|
|
$
|
0.33
|
|
$
|
0.29
|
|
There
were no anti-dilutive securities for the three months ended March 31, 2006
and 2005.
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
The
Company has a bank credit agreement that originally expired on February 10,
2006. On January 17, 2006, the Company extended the credit agreement for
ninety days to May 10, 2006. On March 28, 2006, the Company further
extended the credit agreement for another sixty days to July 10, 2006, and
also amended certain terms of the original agreement. Under the terms of the
current agreement, the Company may borrow up to $35.0 million. Borrowings
under the agreement are limited by any outstanding letters of credit, bear
interest at LIBOR plus 1.25%, and are secured by substantially all of the
Company’s assets. The bank credit agreement includes covenants for minimum
equity and maximum annual capital expenditures, as well as covenants restricting
the Company’s ability to incur additional indebtedness or engage in certain
types of transactions outside of the ordinary course of business. The Company
had no borrowings outstanding under the bank credit agreement as of
March 31, 2006 and December 31, 2005. At both March 31, 2006 and
December 31, 2005, the Company was in compliance with its debt
covenants.
9. |
Commitments
and Contingencies
|
Litigation
From
time
to time, the Company is involved in various legal matters arising out of the
ordinary course of business. Although the outcome of these matters cannot
presently be determined, in the opinion of management, disposition of these
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
Guarantees
Guarantees
in the form of letters of credit totaling $6.5 million were outstanding at
both March 31, 2006 and December 31, 2005, respectively, to support certain
office lease obligations.
To
the
extent permitted by law, the Company’s by-laws and articles of incorporation
require that the Company indemnify its officers and directors against judgments,
fines, and amounts paid in settlement, including attorneys’ fees, incurred in
connection with civil or criminal action or proceedings, as it relates to their
services to the Company if such person acted in good faith. Although there
is no
limit on the amount of indemnification, the Company may have recourse against
its insurance carrier for certain payments made.
Segments
are defined by SFAS No. 131, “Disclosures about Segments of an Enterprise and
Related Information,” as components of a company in which separate financial
information is available and is evaluated regularly by the chief operating
decision maker, or decision making group, in deciding how to allocate resources
and in assessing performance.
The
Company provides services through two segments: Financial Consulting and
Operational Consulting. The Financial Consulting segment provides services
that
help clients effectively address complex challenges that arise from litigation,
disputes, investigations, regulation, financial distress and other sources
of
significant conflict or change. The Operational Consulting segment provides
services that help clients improve the overall efficiency and effectiveness
of
their operations by enhancing revenue, reducing costs, managing regulatory
compliance and maximizing procurement efficiency.
Segment
operating income consists of the revenues generated by a segment, less the
direct costs of revenue and selling, general and administrative costs that
are
incurred directly by the segment. Unallocated corporate costs include costs
related to administrative functions that are performed in a centralized manner
that are not attributable to a particular segment. These administrative function
costs include costs for corporate office support, all office facility costs,
costs relating to accounting and finance, human resources, legal, marketing,
information technology and company-wide business development functions, as
well
as costs related to overall corporate management.
HURON
CONSULTING GROUP INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
amounts in thousands, except per share amounts)
The
following table presents information about reported segments along with the
items necessary to reconcile the segment information to the totals reported
in
the accompanying consolidated financial statements:
|
|
Three
Months Ended
March
31,
|
|
|
|
2006
|
|
2005
|
|
Financial
Consulting:
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
35,197
|
|
$
|
24,553
|
|
Operating
income
|
|
$
|
13,446
|
|
$
|
9,987
|
|
Segment
operating income as a percent of segment revenues
|
|
|
38.2
|
%
|
|
40.7
|
%
|
Operational
Consulting:
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
26,990
|
|
$
|
22,207
|
|
Operating
income
|
|
$
|
9,929
|
|
$
|
8,751
|
|
Segment
operating income as a percent of segment revenues
|
|
|
36.8
|
%
|
|
39.4
|
%
|
Total
Company:
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
62,187
|
|
$
|
46,760
|
|
Reimbursable
expenses
|
|
|
5,439
|
|
|
4,370
|
|
Total
revenues and reimbursable expenses
|
|
$
|
67,626
|
|
$
|
51,130
|
|
|
|
|
|
|
|
|
|
Statement
of operations reconciliation:
|
|
|
|
|
|
|
|
Segment
operating income
|
|
$
|
23,375
|
|
$
|
18,738
|
|
Charges
not allocated at the segment level:
|
|
|
|
|
|
|
|
Other
selling, general and administrative expenses
|
|
|
(12,194
|
)
|
|
(9,662
|
)
|
Depreciation
and amortization
|
|
|
(1,508
|
)
|
|
(847
|
)
|
Other
income
|
|
|
232
|
|
|
166
|
|
Income
before provision for income taxes
|
|
$
|
9,905
|
|
$
|
8,395
|
|
During
the first quarter of 2006, one client generated $6.0 million, or 9.6%, of
the Company's consolidated revenues. Of the $6.0 million, $5.4 million
was generated by the Financial Consulting segment and $0.6 million was
generated by the Operational Consulting segment. During the first quarter of
2005, this same client generated $6.5 million,
or 13.8%, of the Company’s consolidated revenues. Of the $6.5 million,
$5.5 million was generated by the Financial Consulting segment and
$1.0 million was generated by the Operational Consulting
segment.
At
March 31, 2006, another client’s total receivables and unbilled services
balance represented 10.2% of the Company’s total receivables and unbilled
services balance.
On
April 3, 2006, the Company acquired substantially all of the assets of
Galt, a specialized advisory firm that designs and implements corporate-wide
programs to improve shareholder returns. See note 4 above for further details
relating to this transaction.
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
In
this
Quarterly Report on Form 10-Q, unless the context otherwise requires, the
terms “Huron,” “Company,” “we,” “us” and “our” refer to Huron Consulting Group
Inc. and its operating subsidiaries, Huron Consulting Services LLC and Speltz
& Weis LLC.
This
Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are identified
by
words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” or “continues.” These forward-looking statements reflect our
current expectation about our future results, levels of activity, performance
or
achievements, including without limitation, that our business continues to
grow
at the current expectations; that we are able to expand our service offerings
through our existing consultants and new hires; and that existing market
conditions do not change from current expectations. These statements involve
known and unknown risks, uncertainties and other factors that may cause actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Please
see “Risk Factors” in our 2005 annual report on Form 10-K for a complete
description of the material risks we face.
OVERVIEW
Our
History
Huron
was
formed in March 2002 and commenced operations in May 2002. We were founded
by a
core group of experienced financial and operational consultants that consisted
primarily of former Arthur Andersen LLP partners and professionals, with equity
sponsorship from a group of investors led by Lake Capital Management LLC. On
October 18, 2004, we completed our initial public offering (“IPO”) and became a
publicly traded company. During the first quarter of 2006, HCG Holdings LLC
sold
7,245,000 shares of our common stock in a secondary offering.
On
May 9, 2005, we acquired Speltz & Weis LLC (“S&W”), a specialized
consulting firm that consisted of 26 consultants. With the acquisition of
S&W, the Company provides interim management, organizational renewal and
turnaround services, and other crisis management services to distressed
hospitals and other healthcare facilities. The
results of operations of S&W have been included within the Financial
Consulting segment since the date of acquisition.
On
April 3, 2006, the Company acquired substantially all of the assets of
MSGalt & Company, LLC (“Galt”), a specialized advisory firm consisting of 25
consultants that designs and implements corporate-wide programs to improve
shareholder returns. The results of operations of Galt will be included within
the Operational Consulting segment beginning on April 3, 2006. See
“Subsequent Event” below for further details relating to this
transaction.
Our
Business
Huron
is
an independent provider of financial and operational consulting services, with
clients that include Fortune 500 companies, medium-sized businesses, leading
academic institutions, healthcare organizations and the law firms that represent
these various organizations.
We
provide our services through two segments: Financial Consulting and Operational
Consulting. Our Financial Consulting segment provides services that help clients
effectively address complex challenges that arise from litigation, disputes,
investigations, regulation, financial distress and other sources of significant
conflict or change. Our Operational Consulting segment provides services that
help clients improve the overall efficiency and effectiveness of their
operations, reduce costs, manage regulatory compliance and maximize procurement
efficiency.
We
derive
all of our revenues through three principal types of billing arrangements
consisting of time and expense, fixed fee and performance-based. We manage
our
business on the basis of revenues before reimbursable expenses. We believe
this
is the most accurate reflection of our consulting services because it eliminates
the effect of reimbursable expenses that we bill to our clients at
cost.
Most of our revenues are generated from time and expense
engagements. In time and expense engagements, fees are
based
on
the hours incurred at agreed upon billing rates. Time and expense engagements
represented approximately 87.3% of our revenues in the three months ended
March 31, 2006.
In
fixed
fee engagements, we agree to a pre-established fee in exchange for a
pre-determined set of consulting services. We set the fees based on our
estimates of the costs and timing for completing the fixed fee engagements.
It
is the client’s expectation in these engagements that the pre-established fee
will not be exceeded except in mutually agreed upon circumstances. For the
three
months ended March 31, 2006, fixed fee engagements represented
approximately 10.5% of our revenues.
Performance-based
fee engagements generally tie fees to the attainment of contractually defined
objectives. We enter into performance-based engagements in essentially two
forms. First, we generally earn fees that are directly related to the savings
formally acknowledged by the client as a result of adopting our recommendations
for improving cost effectiveness in the procurement area. Second, we have
performance-based engagements in which we earn a success fee when and if certain
pre-defined outcomes occur. Often this type of success fee supplements time
and
expense or fixed fee engagements. While performance-based fee revenues
represented only approximately 2.2% of our revenues for the three months ended
March 31, 2006, such revenues in the future may cause significant
variations in quarterly revenues and operating results due to the timing of
achieving the performance-based criteria.
Business
Strategy, Opportunities and Challenges
Our
primary strategy is to meet the needs of our financial consulting and
operational consulting clients by providing a balanced portfolio of service
offerings and capabilities, so that we can adapt quickly and effectively to
emerging opportunities in the marketplace. To achieve this, we continue to
hire
highly qualified consultants. Since we commenced operations, we nearly tripled
the number of our consultants from 213 on May 31, 2002 to 636 as of
March 31, 2006. To expand our business, we will remain focused on growing
our existing relationships and developing new relationships, continue to promote
and provide an integrated approach to service delivery, broaden the scope of
our
existing services, and enter into select acquisitions of complementary
businesses. Additionally, we intend to enhance our visibility in the marketplace
by continuing to build our brand.
CRITICAL
ACCOUNTING POLICIES
Management’s
discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared
in
accordance with accounting principles generally accepted in the United States
of
America, or GAAP. The preparation of financial statements in conformity with
GAAP requires management to make assessments, estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements,
as
well as the reported amounts of revenues and expenses during the reporting
period. Critical accounting policies are those policies that we believe present
the most complex or subjective measurements and have the most potential to
impact our financial position and operating results. While all decisions
regarding accounting policies are important, we believe that there are five
accounting policies that could be considered critical. These critical accounting
policies include revenue recognition, the allowances for doubtful accounts
and
unbilled services, carrying value of goodwill and other intangible assets,
valuation of net deferred tax assets, and share-based compensation.
Revenue
Recognition
We
recognize revenues in accordance with Staff Accounting Bulletin, or SAB, No.
101, “Revenue Recognition in Financial Statements,” as amended by SAB No. 104,
“Revenue Recognition.” Revenue is recognized when persuasive evidence of an
arrangement exists, the related services are provided, the price is fixed and
determinable and collectibility is reasonably assured. Our services are
primarily rendered under engagements that require the client to pay on a time
and expense basis. Fees are based on the hours incurred at agreed-upon rates
and
recognized as services are provided. Revenues related to fixed fee engagements
are recognized based on estimates of services provided versus the total services
to be provided under the engagement. Losses, if any, on fixed fee engagements
are recognized in the period in which the loss first becomes probable and
reasonably estimable. To date, such losses have not been significant. Revenues
related to performance-based engagements are recognized when all
performance-based criteria are met. We also have contracts with clients to
deliver multiple services that are covered under both individual and separate
engagement letters. These arrangements allow for our services to be valued
and
accounted for on a separate basis. Reimbursable expenses related to time and
expense and fixed fee engagements are recognized as revenue in the period in
which the expense is incurred. Reimbursable expenses subject to
performance-based
criteria are recognized as revenue
when all performance criteria are met. Direct costs incurred on all types of
engagements, including performance-based engagements, are recognized in the
period in which incurred.
Differences
between the timing of billings and the recognition of revenue are recorded
as
either unbilled services or deferred revenue. Revenues recognized for services
performed but not yet billed to clients are recorded as unbilled services.
Amounts billed to clients but not yet recognized as revenues are recorded as
deferred revenue. Client prepayments and retainers that are unearned are also
classified as deferred revenue and recognized over future periods as earned
in
accordance with the applicable engagement agreement.
Allowances
for Doubtful Accounts and Unbilled Services
We
maintain allowances for doubtful accounts and for services performed but not
yet
billed for estimated losses based on several factors, including the historical
percentages of fee adjustments and write-offs by service group, an assessment
of
a client’s ability to make required payments and the estimated cash realization
from amounts due from clients. The allowances are assessed by management on
a
regular basis. If the financial condition of a client deteriorates in the
future, impacting the client’s ability to make payments, an increase to our
allowance might be required or our allowance may not be sufficient to cover
actual write-offs.
The
provision for doubtful accounts and unbilled services is recorded as a reduction
in revenue 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, the provision is recorded in
operating expenses.
Carrying
Value of Goodwill and Other Intangible Assets
Goodwill
represents the excess of the cost of an acquired entity over the net of the
amounts assigned to assets acquired and liabilities assumed. Our goodwill
balance as of March 31, 2006 was $14.6 million, which resulted from
the acquisition of S&W in 2005. Under the provisions of SFAS No. 142 -
Goodwill and Other Intangible Assets, goodwill is required to be tested for
impairment on an annual basis and between annual tests whenever indications
of
impairment exist. We have elected and will begin to perform this annual
impairment test in the second quarter of 2006 or earlier, if indications of
impairment arise, such as loss of key personnel, unanticipated competition,
or
other unforeseen developments. Impairment exists when the carrying amount of
goodwill exceeds its implied fair value, resulting in an impairment charge
for
this excess. An impairment test involves considerable management judgment and
estimates regarding future operating results and cash flows.
Intangible
assets represent purchased assets that lack physical substance but can be
distinguished from goodwill. Our intangible assets balances, net of accumulated
amortization, totaled $0.6 million at March 31, 2006 and consist of
customer relationships relating to the S&W acquisition, as well as purchased
technology. We obtained third-party valuations to assist us in estimating the
initial fair value of acquired intangible assets. These valuations are primarily
based on the present value of the estimated net cash flows expected to be
derived from the client contracts and relationships, discounted for assumptions
about future customer attrition. We evaluate our intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. Therefore, higher or
earlier-than-expected customer attrition may result in higher future
amortization charges or an impairment charge for customer-related intangible
assets.
Valuation
of Net Deferred Tax Assets
We
have
recorded net deferred tax assets as we expect to realize future tax benefits
related to the utilization of these assets. Although we experienced net losses
early in our history, no valuation allowance has been recorded relating to
these
deferred tax assets because we believe that it is more likely than not that
future taxable income will be sufficient to allow us to utilize these assets.
Should we determine in the future that we will not be able to fully utilize
all
or part of these deferred tax assets, we would need to establish a valuation
allowance, which would be recorded as a charge to income in the period the
determination was made. While utilization of these deferred tax assets will
provide future cash flow benefits, they will not have an effect on future income
tax provisions.
Share-based
Compensation
Effective
January 1, 2006, we adopted Statement of Financial Accounting Standards No.
123 (revised 2004), “Share-Based Payment,” which requires that companies
recognize compensation expense for grants of stock, stock options and other
equity instruments based on fair value.
Given
the lack of a public market for our common stock prior to our IPO, we
established an estimated fair value of the common stock as well as the exercise
price for the
options
to purchase this stock. We estimated the fair
value of our common stock by evaluating our results of business activities
and
projections of our future results of operations.
RESULTS
OF OPERATIONS
The
following table sets forth selected segment and consolidated operating results
and other operating data for the periods indicated. Segment operating income
consists of the revenues generated by a segment, less the direct costs of
revenue and selling, general and administrative costs that are incurred directly
by the segment. Unallocated corporate costs include costs related to
administrative functions that are performed in a centralized manner that are
not
attributable to a particular segment.
|
|
Three
Months Ended
March
31,
|
|
Segment
and Consolidated Operating Results (in
thousands):
|
|
2006
|
|
2005
|
|
Revenues
and reimbursable expenses:
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
$
|
35,197
|
|
$
|
24,553
|
|
Operational
Consulting
|
|
|
26,990
|
|
|
22,207
|
|
Total
revenues
|
|
|
62,187
|
|
|
46,760
|
|
Total
reimbursable expenses
|
|
|
5,439
|
|
|
4,370
|
|
Total
revenues and reimbursable expenses
|
|
$
|
67,626
|
|
$
|
51,130
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
$
|
13,446
|
|
$
|
9,987
|
|
Operational
Consulting
|
|
|
9,929
|
|
|
8,751
|
|
Total
segment operating income
|
|
|
23,375
|
|
|
18,738
|
|
|
|
|
|
|
|
|
|
Unallocated
corporate costs
|
|
|
12,194
|
|
|
9,662
|
|
Depreciation
and amortization expense
|
|
|
1,508
|
|
|
847
|
|
Total
operating expenses
|
|
|
13,702
|
|
|
10,509
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
|
9,673
|
|
$
|
8,229
|
|
|
|
|
|
|
|
|
|
Other
Operating Data:
|
|
|
|
|
|
|
|
Number
of consultants (at period end) (1):
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
|
303
|
|
|
257
|
|
Operational
Consulting
|
|
|
333
|
|
|
241
|
|
Total
|
|
|
636
|
|
|
498
|
|
Average
number of consultants (for the period):
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
|
307
|
|
|
267
|
|
Operational
Consulting
|
|
|
332
|
|
|
231
|
|
Total
|
|
|
639
|
|
|
498
|
|
Utilization
rate (2):
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
|
83.6
|
%
|
|
74.3
|
%
|
Operational
Consulting
|
|
|
71.9
|
%
|
|
78.6
|
%
|
Total
|
|
|
77.5
|
%
|
|
76.3
|
%
|
Average
billing rate per hour (3):
|
|
|
|
|
|
|
|
Financial
Consulting
|
|
$
|
277
|
|
$
|
274
|
|
Operational
Consulting
|
|
$
|
230
|
|
$
|
228
|
|
Total
|
|
$
|
255
|
|
$
|
250
|
|
(1) |
Consultants
consist of our billable professionals, excluding interns and independent
contractors.
|
(2) |
We
calculate the utilization rate for our consultants by dividing the
number
of hours all our consultants worked on client assignments during
a period
by the total available working hours for all of our consultants during
the
same period, assuming a forty-hour work week, less paid holidays
and
vacation days.
|
(3) |
Average
billing rate per hour is calculated by dividing revenues for a period
by
the number of hours worked on client assignments during the same
period.
|
Three
Months Ended March 31, 2006 Compared to Three Months Ended March 31,
2005
Revenues
Revenues
increased $15.4 million, or 33.0%, to $62.2 million for the three months ended
March 31, 2006 from $46.8 million for the three months ended March 31,
2005. Revenues from time and expense engagements increased $16.1 million, or
42.1%, to $54.3 million for the first quarter of 2006 from $38.2 million
for the first quarter of 2005. Revenues from fixed fee engagements decreased
$1.2 million, or 15.6%, to $6.5 million for the three months ended
March 31, 2006 from $7.7 million for the three months ended March 31,
2005. Revenues from performance-based engagements increased $0.5 million,
or 55.6%, to $1.4 million for the three months ended March 31, 2006 from
$0.9 million for the three months ended March 31, 2005.
Of
the
overall $15.4 million increase in revenues, $13.5 million was attributable
to an
increase in the number of consultants and increased usage of independent
contractors, $1.2 million was attributable to an increase in the
utilization rate of our consultants, and $0.7 million was attributable to
an increase in the average billing rate per hour.
These
increases were reflective of growing demand for our services from new and
existing clients. The average number of consultants increased to 639 for the
three months ended March 31, 2006 from 498 for the three months ended
March 31, 2005, as we added a significant number of consultants. The
increase in consultants was also reflective of the S&W acquisition. Revenues
generated by independent contractors increased $0.3 million, or 30.0%, to
$1.3 million for the three months ended March 31, 2006 from
$1.0 million for the same period last year. Our utilization rate increased
slightly to 77.5% for the three months ended March 31, 2006 from 76.3% for
the three months ended March 31, 2005. The utilization rate for any given
period is calculated by dividing the number of hours all our consultants worked
on client assignments during the period by the total available working hours
for
all of our consultants during the same period, assuming a 40-hour work week,
less paid holidays and vacation days. In addition, our average billing rate
per
hour increased 2.0% to $255 for the three months ended March 31, 2006 from
$250 for the three months ended March 31, 2005. Average billing rate per
hour for any given period is calculated by dividing revenues for the period
by
the number of hours worked on client assignments during the same period.
Direct
Costs
Our
direct costs increased $10.1 million, or 38.7%, to $36.0 million in the
three months ended March 31, 2006 from $25.9 million in the three
months ended March 31, 2005. Approximately $8.6 million of the
increase was attributable to the increase in the average number of consultants
described above, the promotion of nine of our employees to the managing director
level effective January 1, 2006, and their related compensation and benefit
costs. Additionally, stock-based compensation expense associated with our
billable professionals increased $0.7 million, or 70.0%, to
$1.7 million in the first quarter of 2006 from $1.0 million in the
first quarter of 2005. We expect to continue to hire additional managing
directors during 2006, as well as hire additional managers, associates and
analysts to expand support for our existing practices and better leverage our
managing directors and directors. As such, we expect direct costs will continue
to increase in the near term.
Operating
Expenses
Selling,
general and administrative expenses increased $3.1 million, or 26.6%, to $14.8
million in the three months ended March 31, 2006 from $11.7 million in the
three months ended March 31, 2005. Approximately $1.1 million of this
increase was due to higher facilities cost attributable to two new leases that
we entered into during the second half of 2005. In connection with a secondary
offering that was completed in February 2006, we incurred costs totaling
$0.6 million after tax, or $0.03 per diluted share, during the first
quarter of 2006. These costs were expensed in the period incurred because we
did
not issue securities in the offering. The remaining increase in selling, general
and administrative costs in the three months ended March 31, 2006 compared
to the same period last year was due to increases in salaries and stock-based
compensation associated with our non-billable professionals, legal fees, and
marketing expenses.
Depreciation
expense increased $0.6 million, or 75.0%, to $1.4 million in the three
months ended March 31, 2006 from $0.8 million in the three months ended
March 31, 2005 as computers, network equipment, furniture and fixtures, and
leasehold improvements were added to support our increase in employees. In
conjunction with the S&W acquisition, we recorded $0.7 million of
intangible assets representing customer relationships, which is being amortized
over a weighted-average life of 15.1 months. Intangible assets amortization
pertaining to customer relationships was $0.1 million in the three months
ended March 31, 2006.
Operating
Income
Operating
income increased $1.5 million, or 17.5%, to $9.7 million for the three
months ended March 31, 2006 from $8.2 million for the three months
ended March 31, 2005. The increase in operating income was primarily due to
the increase in revenues, partially offset by the increases in direct costs,
selling, general and administrative expense and depreciation and intangible
assets amortization as discussed above. Operating margin, which is defined
as
operating income expressed as a percentage of revenues, decreased to 15.6%
in
the three months ended March 31, 2006 from 17.6% in the three months ended
March 31, 2005.
Net
Income
Net
income increased $0.8 million, or 15.9%, to $5.6 million for the three
months ended March 31, 2006 from $4.8 million for the three months ended
March 31, 2005. Diluted earnings per share increased to $0.33 for the three
months ended March 31, 2006 from $0.29 for the comparable period last year.
Segment
Results
Financial
Consulting
Revenues
Financial
Consulting segment revenues increased $10.6 million, or 43.4%, to $35.2 million
for the three months ended March 31, 2006 from $24.6 million for the three
months ended March 31, 2005. Revenues from time and expense engagements
increased $11.1 million, or 47.8%, to $34.3 million for the three months ended
March 31, 2006 from $23.2 million for the three months ended
March 31, 2005. Revenues from fixed fee engagements decreased $0.5 million,
or 35.7%, to $0.9 million for the three months ended March 31, 2006
from $1.4 million for the three months ended March 31, 2005. There were no
revenues from performance-based engagements for the
first
quarter of 2006 as compared to approximately $22,000 for the first quarter
of
2005.
Of
the
overall $10.6 million increase in revenues, $7.1 million was attributable
to an increase in the number of consultants and increased usage of independent
contractor hours, $3.1 million was attributable to an increase in the
utilization rate of our consultants, and $0.4 million was attributable to
an increase in the average billing rate per hour. These
increases were reflective of growing demand for our services from new and
existing clients.
The
average number of consultants increased to 307 for the three months ended
March 31, 2006 from 267 for the three months ended March 31, 2005.
Revenues generated by independent contractors totaled $0.5 million for the
first quarter of 2006 compared to approximately $25,000 for the comparable
quarter last year. The utilization rate for the Financial Consulting segment
increased to 83.6% for the three months ended March 31, 2006 from 74.3% for
the three months ended March 31, 2005. The average billing rate per hour
increased slightly to $277 for the three months ended March 31, 2006 from
$274 for the three months ended March 31, 2005.
Operating
Income
Financial
Consulting segment operating income increased $3.4 million, or 34.6%, to $13.4
million in the three months ended March 31, 2006 from $10.0 million in the
three months ended March 31, 2005. Segment operating margin, defined as
segment operating income expressed as a percentage of segment revenues,
decreased to 38.2% for the first quarter of 2006 from 40.7% in the same period
last year, primarily due to the increase in consultants and their related
compensation costs.
Operational
Consulting
Revenues
Operational
Consulting segment revenues increased $4.8 million, or 21.5%, to $27.0 million
for the three months ended March 31, 2006 from $22.2 million for the three
months ended March 31, 2005. Revenues from time and expense engagements
increased $5.0 million, or 33.3%, to $20.0 million for the three months ended
March 31, 2006 from $15.0 million for the comparable period last year.
Revenues from fixed fee engagements decreased $0.7 million, or 11.1%, to
$5.6 million for the three months ended March 31, 2006 from
$6.3 million for the three months ended March 31, 2005. Revenues from
performance-based engagements increased $0.5 million, or 55.6%, to $1.4 million
for the three months ended March 31, 2006 from $0.9 million for the three
months ended March 31, 2005.
Of
the
overall $4.8 million increase in revenues, $6.4 million was attributable to
an
increase in the number of consultants and growth in client engagements and
$0.3 million was attributable to an increase in the average billing rate
per hour. These increases were partially offset by a $1.9 million decrease
in
revenues attributable to a decrease in the utilization rate of our consultants.
The average number of consultants increased to 332 for the three months ended
March 31, 2006 from 231 for the three months ended March 31, 2005, as
we added a significant number of consultants over the past year. The average
billing rate per hour increased slightly to $230 for the first quarter of 2006
from $228 for the comparable period last year. The
utilization rate for the Operational Consulting segment decreased to 71.9%
for
the three months ended March 31, 2006 from 78.6% for the three months ended
March 31, 2005.
Operating
Income
Operational
Consulting segment operating income increased $1.1 million, or 13.5%, to
$9.9 million for the three months ended March 31, 2006 from
$8.8 million for the three months ended March 31, 2005. Segment
operating margin decreased to 36.8% for the first quarter of 2006 from 39.4%
in
the same period last year, primarily due to the increase in consultants and
their related compensation costs.
LIQUIDITY
AND CAPITAL RESOURCES
Our
primary sources of liquidity are cash flows from operations, existing cash
and
cash equivalents and debt capacity available under our credit facility. Cash
and
cash equivalents, consisting of demand deposits and short-term commercial paper,
decreased $15.6 million from $31.8 million at December 31, 2005
to $16.2 million at March 31, 2006 primarily due to purchases of
property and equipment and the payment of bonuses.
Cash
flows used in operating activities totaled $10.0 million for the three
months ended March 31, 2006 and $6.5 million for the same period last
year. Our operating assets and liabilities consist primarily of receivables
from
billed and unbilled services, accounts payable and accrued expenses, and accrued
payroll and related benefits. The volume of billings and timing of collections
and payments affect these account balances. Cash used for operations during
the
three months ended March 31, 2006 primarily consisted of cash payments for
bonuses, payroll and related benefits that were accrued for at December 31,
2005. Receivables from clients and unbilled services increased $9.1 million
during the three months ended March 31, 2006, primarily due to increased
revenues generated and billed.
Cash
used
in investing activities was $7.6 million for the three months ended
March 31, 2006 and $1.0 million for the same period last year. The use of
cash in the first quarter of 2006 primarily related to leasehold improvements
and construction in progress at our office in New York City.
We
have a
bank credit agreement that originally expired on February 10, 2006. On
January 17, 2006, the Company extended the credit agreement for ninety days
to May 10, 2006. On March 28, 2006, the Company further extended the
credit agreement for another sixty days to July 10, 2006, and also amended
certain terms of the original agreement. Under the terms of the current
agreement, the Company may borrow up to $35.0 million.
Borrowings under the agreement are limited by any outstanding letters of credit,
bear interest at LIBOR plus 1.25%, and are secured by substantially all of
the
Company’s assets. The bank credit agreement includes covenants for minimum
equity and maximum annual capital expenditures, as well as covenants restricting
our ability to incur additional indebtedness or engage in certain types of
transactions outside of the ordinary course of business. As of
March 31,
2006,
we were in compliance with the bank credit
agreement debt covenants and had no borrowings outstanding. The balance
available under the agreement was $28.5 million after a reduction of
$6.5 million for letters of credit outstanding at March 31,
2006.
Future
Needs
Our
primary financing need has been to fund our growth. Our growth strategy includes
hiring additional consultants and expanding our service offerings through
existing consultants, new hires or acquisitions. We intend to fund such growth
over the next twelve months with funds generated from operations and borrowings
under our credit agreement. Because we expect that our future annual growth
rate
in revenues and related percentage increases in working capital balances will
moderate, we believe cash generated from operations, supplemented as necessary
by borrowings under our credit facility, will be adequate to fund this growth.
Over the longer term, we expect that cash flow from operations, supplemented
by
short-term and long-term financing, as necessary, will be adequate to fund
day-to-day operations and capital expenditure requirements. Our ability to
secure short-term and long-term financing in the future will depend on several
factors, including our future profitability, the quality of our accounts
receivable and unbilled services, our relative levels of debt and equity and
overall condition of the credit markets.
CONTRACTUAL
OBLIGATIONS
The
following table represents our obligations and commitments to make future
payments under contracts, such as lease agreements, and under contingent
commitments as of December 31, 2005 (in thousands).
|
|
Less
than 1 Year
|
|
1
to 3 Years
|
|
4
to 5 Years
|
|
After
5 Years
|
|
Total
|
|
Notes
payable
|
|
$
|
1,000
|
|
$
|
2,000
|
|
$
|
¾
|
|
$
|
¾
|
|
$
|
3,000
|
|
Interest
on notes payable
|
|
|
120
|
|
|
120
|
|
|
¾
|
|
|
¾
|
|
|
240
|
|
Capital
lease obligations
|
|
|
282
|
|
|
127
|
|
|
¾
|
|
|
¾
|
|
|
409
|
|
Operating
lease obligations
|
|
|
7,003
|
|
|
27,010
|
|
|
14,916
|
|
|
25,629
|
|
|
74,558
|
|
Purchase
obligations
|
|
|
997
|
|
|
322
|
|
|
¾
|
|
|
¾
|
|
|
1,319
|
|
Total
contractual obligations
|
|
$
|
9,402
|
|
$
|
29,579
|
|
$
|
14,916
|
|
$
|
25,629
|
|
$
|
79,526
|
|
We
lease
our facilities and certain equipment under operating lease arrangements expiring
on various dates through 2016, with various renewal options. We lease office
facilities under noncancelable operating leases that include fixed or minimum
payments plus, in some cases, scheduled base rent increases over the term of
the
lease. Certain leases provide for monthly payments of real estate taxes,
insurance and other operating expense applicable to the property. Some of the
leases contain provisions whereby the future rental payments may be adjusted
for
increases in operating expense above the specified amount.
Purchase
obligations include sponsorships, subscriptions to research tools and other
commitments to purchase services where we cannot cancel or would be required
to
pay a termination fee in the event of cancellation.
OFF
BALANCE SHEET ARRANGEMENTS
We
have
not entered into any off-balance sheet arrangements.
SUBSEQUENT
EVENT
On
April 3, 2006, the Company acquired substantially all of the assets of
MSGalt & Company, LLC (“Galt”), a specialized advisory firm consisting
of 25 consultants that designs and implements corporate-wide programs to improve
shareholder returns, for $20.4 million. The Company financed this
acquisition with cash on hand and borrowings of $6.5 million under our bank
credit agreement in the second quarter of 2006. Additional purchase
consideration may be payable if specific performance targets are met over a
four-year period. Such amounts will be recorded as an adjustment to goodwill
if
payable. Also, additional payments may be made based on the amount of revenues
the Company receives from referrals made by Galt employees. Such amounts will
be
recorded as an expense if payable. The acquisition will be accounted for under
the purchase method of accounting. It was
consummated
on April 3, 2006 and the results of
operations of Galt will be included within the Operational Consulting segment
beginning on that date.
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
We
are
exposed to market risks related to changes in interest rates and changes in
the
market value of our investments. We do not enter into interest rate swaps,
caps
or collars or other hedging instruments.
Our
exposure to changes in interest rates is limited to borrowings under our bank
credit agreement, which has a variable interest rate tied to the LIBOR. We
had
no borrowings outstanding under the credit agreement as of March 31, 2006;
therefore, any change in interest rates would not have an effect on our
financial position or operating results.
At
March 31, 2006, we had notes payable totaling $3.0 million that are
payable in three equal installments beginning on May 8, 2006. We are not
exposed to interest rate risks in respect to these notes as they bear a fixed
interest rate at 4% per annum.
From
time
to time, we invest excess cash in marketable securities. These investments
principally consist of overnight sweep accounts and short-term commercial paper.
Due to the short maturity of our investments, we have concluded that we do
not
have material market risk exposure.
ITEM
4. CONTROLS
AND PROCEDURES
Our
management, with the participation of the Company’s Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) as of March 31, 2006. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of March 31,
2006, our disclosure controls and procedures were effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by us in the reports we file or submit under the Exchange Act
and such information is accumulated and communicated to management as
appropriate to allow timely decisions regarding required
disclosure.
There
has
been no change in our internal control over financial reporting (as such term
is
defined in Rules 13a-15(f) and 15d-15(f) under the “Exchange Act”) that occurred
during the quarter ended March 31, 2006 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II ¾
OTHER INFORMATION
ITEM
1. LEGAL
PROCEEDINGS
From
time
to time, the Company is involved in various legal matters arising out of the
ordinary course of business. Although the outcome of these matters cannot
presently be determined, in the opinion of management, disposition of these
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
ITEM
1A. RISK
FACTORS
See
“Risk
Factors” in the Company’s 2005 annual report on Form 10-K for a complete
description of the material risks it faces. There have been no material changes
to our business risk factors since December 31, 2005.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our
2004
Omnibus Stock Plan permits the netting of common stock upon vesting of
restricted stock awards to satisfy individual tax withholding requirements.
During the quarter ended March 31, 2006, the Company redeemed such shares
as presented in the table below.
Period
|
|
Total
Number of Shares Redeemed to Satisfy Employee Tax Withholding
Requirements
|
|
Weighted-Average
Fair Market Value Per Share Redeemed
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
|
February 2006
|
|
|
31,922
|
|
$
|
27.08
|
|
|
N/A
|
|
|
N/A
|
|
N/A
- Not
applicable.
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. OTHER
INFORMATION
None.
ITEM
6. EXHIBITS
(a) The
following exhibits are filed as part of this Quarterly Report on
Form 10-Q.
Exhibit
Number
|
|
Exhibit
|
|
|
|
10.24
|
|
Executive
Officers’ Compensation for 2005 and 2006 Summary Sheet.
|
|
|
|
10.30
|
|
Amended
and Restated Limited Liability Company Agreement of Speltz & Weis LLC,
dated May 17, 2005.
|
|
|
|
10.31
|
|
Joinder
Agreement, dated May 17, 2005, between Huron Consulting Group Inc.,
Huron Consulting Services LLC, Speltz & Weis LLC and LaSalle Bank,
N.A.
|
|
|
|
10.32
|
|
Fourth
Amended and Restated Secured Revolving Line of Credit Note, dated
May 17, 2005, between Huron Consulting Group Inc., Huron Consulting
Services LLC, Speltz & Weis LLC and LaSalle Bank,
N.A.
|
|
|
|
10.33
|
|
Fifth
Amended and Restated Secured Revolving Line of Credit Note, dated
January 17, 2006, between Huron Consulting Group Inc., Huron
Consulting Services LLC, Speltz & Weis LLC and LaSalle Bank,
N.A.
|
|
|
|
10.34
|
|
First
Amendment to Amended and Restated Loan and Security Agreement between
Huron Consulting Group, Inc., Huron Consulting Services LLC, Speltz
&
Weis LLC and LaSalle Bank, N.A., dated as of January 17,
2006.
|
|
|
|
10.35
|
|
Sixth
Amended and Restated Secured Revolving Line of Credit Note, dated
March 28, 2006, between Huron Consulting Group Inc., Huron Consulting
Services LLC, Speltz & Weis LLC and LaSalle Bank,
N.A.
|
|
|
|
10.36
|
|
Second
Amendment to Amended and Restated Loan and Security Agreement between
Huron Consulting Group, Inc., Huron Consulting Services LLC, Speltz
&
Weis LLC and LaSalle Bank, N.A., dated as of March 28,
2006.
|
|
|
|
31.1
|
|
Certification
of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
31.2
|
|
Certification
of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.1
|
|
Certification
of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.2
|
|
Certification
of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
|
|
Huron
Consulting Group Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date:
|
April 27,
2006
|
|
/s/
Gary L. Burge
|
|
|
|
Gary
L. Burge
|
|
|
|
Vice
President,
|
|
|
|
Chief
Financial Officer and Treasurer
|