UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
February
22, 2007
Date
of
Report (Date of earliest event reported)
_____________________
Huron
Consulting Group Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-50976
|
01-0666114
|
|
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
incorporation or organization)
|
File
Number)
|
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)
_____________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02. Results
of Operations and Financial Condition.
On
February 22, 2007, Huron Consulting Group Inc. issued a press release
announcing its financial results for the quarter and year ended
December 31, 2006. A copy of the press release is furnished as Exhibit 99.1
to this Current Report on Form 8-K and is incorporated in this report as
if
fully set forth herein.
Item
9.01. Financial
Statements and Exhibits.
|
(d)
|
Exhibits
|
|
|
99.1
|
Press
release, dated February 22,
2007
|
-
1
-
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 hereunto
duly authorized.
|
Huron
Consulting Group Inc.
|
|||
|
(Registrant)
|
|||
|
Date:
|
February 22,
2007
|
/s/
Gary L. Burge
|
|
|
Gary
L. Burge
|
|||
|
Vice
President,
|
|||
|
Chief
Financial Officer and
Treasurer
|
-
2
-
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
release, dated February 22, 2007
|
Exhibit
99.1
[Huron
Consulting Group Logo]
News
FOR
IMMEDIATE RELEASE
February
22, 2007
Huron
Consulting Group Reports
Fourth
Quarter and Full Year 2006 Financial Results
| · |
Revenues
of $83.4 million for Q4 2006 increased 50.0% from $55.6 million
in Q4
2005.
|
| · |
Full
year 2006 revenues of $288.6 million increased 39.3% from full
year 2005
revenues of $207.2 million.
|
| · |
Diluted
earnings per share for Q4 2006 was $0.46 compared to $0.27
in Q4
2005.
|
| · |
Diluted
earnings per share for the full year 2006 was $1.54 compared
to $1.05 for
the full year 2005.
|
| · |
Revenue-generating
professional headcount increased 33.2% to 842 at the end of
2006 compared
to 632 at the end of 2005.
|
CHICAGO
-
February 22, 2007 - Huron Consulting Group Inc. (NASDAQ: HURN), a leading
provider of financial and operational consulting services, today announced
financial results for the fourth quarter and full year ended December
31, 2006.
“We
are
pleased by Huron’s strong growth this year and we continue to see increased
demand across our service offerings. Our disputes and investigations
work
remained a driving force in our solid results during each quarter of
2006. Once
again, we were able to attract and retain top talent focused on superior
client service. We were particularly excited about the early success
in
cross-selling new product offerings from our acquisitions in the legal
channel,
which proved to be of interest to our general counsel and law firm clients
during the fourth quarter of 2006,” said Gary E. Holdren, chairman and chief
executive officer, Huron Consulting Group.
“We
remain very optimistic and excited about the marketplace demand entering
the new
year. We are looking forward to the contribution of the talented professionals
who recently joined us through the January acquisitions of Wellspring
Partners
LTD and Glass & Associates, Inc. They are a good fit for our business. Huron
is well-positioned for 2007 and longer-term growth,” added Holdren.
Fourth
Quarter 2006 Results
Revenues
of $83.4 million for the fourth quarter of 2006 increased 50.0% from
$55.6 million for the fourth quarter of 2005. The Company’s fourth quarter
2006 operating income increased 80.4% to $14.4 million compared to $8.0
million
in the fourth quarter of 2005. Net income was $8.0 million, or $0.46
per diluted
share, for the fourth quarter of 2006 compared to $4.5 million, or $0.27
per diluted share, for the comparable
quarter last year.
Fourth
quarter 2006 earnings before interest, taxes, depreciation and amortization
(“EBITDA”) (4)
increased 82.7% to $17.6 million, or 21.1% of revenues, compared to
$9.7 million, or 17.4% of revenues, in the comparable quarter last year.
Adjusted EBITDA (4),
which
excludes costs associated with a secondary offering of the Company’s common
stock and share-based compensation expense, increased 73.2% to $20.2
million in
the fourth quarter of 2006, or 24.3% of revenues, compared to $11.7 million,
or
21.0% of revenues, in the comparable quarter last year.
Headcount
of revenue-generating professionals increased 33.2% to 842 at December
31, 2006
compared to 632 at December 31, 2005. Billable consultant utilization
rate was
77.9% during the fourth quarter of 2006 compared with 77.4% during the
same
period last year. Average billing rate per hour increased 4.8% to $261
for the
fourth quarter of 2006 from $249 for the fourth quarter of 2005.
Fourth
Quarter 2006 Segment Performance
Huron
continues to demonstrate the success of its broad portfolio of service
offerings
with solid revenue growth based upon strong market demand.
Revenues
for the Financial Consulting segment were $37.3 million for the fourth
quarter
of 2006, increasing 22.3% from $30.5 million in the fourth quarter of
2005.
Segment operating income increased 63.4% to $17.7 million from $10.8
million in
the same quarter a year ago. As of the end of the quarter, the Financial
Consulting segment had 344 revenue-generating professionals, up 12.4%
from a
year ago. Billable consultant utilization rate for the quarter was 83.2%
compared to 81.4% a year ago. Average billing rate per hour for the segment
was
$282 for the fourth quarter of 2006, compared to $270 the same period
a year
ago.
Revenues
for the Operational Consulting segment were $46.2 million for the fourth
quarter
of 2006, increasing 83.6% from $25.2 million in the fourth quarter of
2005.
Segment operating income increased 58.8% to $14.6 million from $9.2 million
during the same period a year ago. As of the end of the quarter, the
Operational
Consulting segment had 498 revenue-generating professionals, up 52.8%
from a
year ago. Billable consultant utilization rate for the quarter was 73.9%
compared to 73.8% in the fourth quarter of 2005. Average billing rate
per hour
for the segment was $242 for the fourth quarter of 2006 compared to $226
in the
same period a year ago.
Full
Year 2006 Results
Revenues
of $288.6 million for the full year ended December 31, 2006 increased
39.3% from
$207.2 for the full year ended December 31, 2005. The
Company's operating income increased 50.4% to $47.5 million for the full
year
ended December 31, 2006 compared to $31.6 million for the same period
last year.
Net income was $26.7 million, or $1.54 per
diluted share, for the full year ended December 31, 2006 compared
to $17.8 million, or $1.05 per diluted share, for the comparable period
last
year.
Year-to-date
2006 earnings before interest, taxes, depreciation and amortization
(“EBITDA”) (4)
increased 54.3% to $58.9 million, or 20.4% of revenues, compared to
$38.2 million, or 18.4% of revenues, in the comparable period last year.
Adjusted
EBITDA (4),
which
excludes costs associated with a secondary offering of the Company’s common
stock and share-based compensation expense,
increased 52.0% to $69.3 million for the full year 2006, or 24.0% of
revenues,
compared to $45.6 million, or 22.0% of revenues, in the same period last
year.
Huron’s
billable consultant utilization rate was 77.8% during the full year 2006
up from
76.5% during the same period last year. Average billing rate per hour
increased
4.4% to $260 for the full year 2006 up from $249 in the same period of
2005.
Full
Year 2006 Segment Performance
Revenues
for the Financial Consulting segment were $138.5 million for
the
full year ended December 31, 2006,
increasing 17.2% from $118.2 million last year. Segment operating income
increased 24.3% to $58.0 million from $46.7 million a year ago. Billable
consultant utilization for the full year 2006 was 80.5% compared to 79.9%
a year
ago. Average billing rate per hour for the segment was $282 for the full
year
2006, compared to $275 in the same period a year ago.
Revenues
for the Operational Consulting segment were $150.0 million for the full
year
ended December 31, 2006, increasing 68.5% from $89.0 million last year.
Segment
operating income increased 64.1% to $52.0 million from $31.7 million
a year ago.
Billable consultant utilization rate for the full year 2006 was 75.6%
up from
73.1% for the full year 2005. Average billing rate per hour for the segment
increased 8.1% to $240 for the full year 2006 from $222 in 2005.
Acquisitions
of Wellspring
Partners LTD and Glass & Associates, Inc.
In
January 2007, Huron acquired Wellspring
Partners LTD, a leading management consulting firm specializing in integrated
performance improvement services for hospitals and health systems, and
Glass
& Associates, Inc., a leading turnaround and restructuring firm.
New
Operating Segments for 2007
In
response to Huron’s continued growth and acquisitions of complementary
businesses, the Company has reorganized its practice areas and service
lines to
better meet market demand and serve clients. Under the new organizational
structure, Huron will have four operating segments as follows: Legal
Financial
Consulting; Legal Operational Consulting; Health and Education Consulting;
and
Corporate Consulting. Effective January 1, 2007, the Company will begin
reporting financial results under the new operating segments.
Outlook
for 2007
Based
on
currently available information, the Company expects
Q1 2007 revenues before reimbursable expenses in a range of $111 million
to $115
million, EBITDA in a range of $23 million to $25 million, operating
income in a
range of $16 million to $18 million, and between $0.49 and $0.53 in
diluted
earnings per share.
The
Company anticipates full year 2007 revenues before reimbursable expenses
in a
range of $470 million to $485 million, EBITDA in a range of $97 million
to $102
million, operating income in a range of $73 million to $78 million,
and between
$2.10 and $2.25 in diluted earnings per share.
Share-based
compensation expense of approximately $4 million and $19 million is
included in
the Q1 2007 and full year 2007 estimates, respectively. Weighted average
diluted
share counts for 2007 are estimated to be 17.8 million for Q1 2007
and 18.1
million for full year 2007.
Fourth
Quarter and Full Year 2006 Webcast
The
Company will host a webcast to discuss its financial results today at
11:00 a.m.
Eastern Time (10:00 a.m. Central Time). The webcast may be accessed at
www.huronconsultinggroup.com.
A
rebroadcast will be available approximately two hours after the end of
the
webcast and for 90 days thereafter.
About
Huron Consulting Group
Huron
Consulting Group helps clients effectively address complex challenges
that arise
in litigation, disputes, investigations, regulatory compliance, procurement,
financial distress, and other sources of significant conflict or change.
The
Company also helps clients deliver superior customer and capital market
performance through integrated strategic, operational, and organizational
change. Huron provides services to a wide variety of both financially
sound and
distressed organizations, including Fortune 500 companies, medium-sized
businesses, leading academic institutions, healthcare organizations,
and the law
firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.
Statements
in this press release, which are not historical in nature and concern
Huron
Consulting Group’s current expectations about the company’s reported results for
2006 and future results in 2007 are "forward-looking" statements as defined
in
Section 21E of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are identified
by
words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” or “continue.” These forward-looking statements reflect our current
expectation about our future results, performance or achievements, including
without limitation, that our business continues to grow at the current
expectations with
respect to, among other factors, utilization and billing rates, number
of
billable consultants, and number of other revenue-generating professionals;
that
we are able to expand our service offerings; that we successfully integrate
the
businesses we acquire; 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, performance
or
achievements to be materially different from any future results, performance
or
achievements expressed or implied by these forward-looking statements.
Therefore
you should not place undue reliance on these forward-looking statements.
Please
see “Risk Factors” in
our Form 10-K
and
in other documents we file with the Securities and Exchange Commission
for a
complete description of the material risks we face.
Media
Contact:
Jennifer
Frost Hennagir
312-880-3260
jfrost-hennagir@huronconsultinggroup.com
Investor
Contact:
Gary
L.
Burge, Chief Financial Officer
312-583-8722
garyburge@huronconsultinggroup.com
###
HURON
CONSULTING GROUP INC.
CONSOLIDATED
STATEMENTS OF INCOME
(In
thousands, except per share amounts)
(Unaudited)
|
Three
months ended
December 31,
|
Twelve
months ended
December 31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenues
and reimbursable expenses:
|
|||||||||||||
|
Revenues
|
$
|
83,438
|
$
|
55,627
|
$
|
288,588
|
$
|
207,213
|
|||||
|
Reimbursable
expenses
|
13,279
|
4,848
|
33,330
|
18,749
|
|||||||||
|
Total
revenues and reimbursable expenses
|
96,717
|
60,475
|
321,918
|
225,962
|
|||||||||
|
Direct
costs and reimbursable expenses
(exclusive
of depreciation and amortization shown in
operating expenses):
|
|||||||||||||
|
Direct
costs
|
47,170
|
32,474
|
163,569
|
117,768
|
|||||||||
|
Intangible
assets amortization
|
24
|
247
|
2,207
|
1,314
|
|||||||||
|
Reimbursable
expenses
|
13,266
|
4,917
|
33,506
|
18,982
|
|||||||||
|
Total
direct costs and reimbursable expenses
|
60,460
|
37,638
|
199,282
|
138,064
|
|||||||||
|
Operating
expenses:
|
|||||||||||||
|
Selling,
general and administrative
|
18,648
|
13,432
|
65,926
|
51,035
|
|||||||||
|
Depreciation
and amortization
|
3,203
|
1,421
|
9,201
|
5,282
|
|||||||||
|
Total
operating expenses
|
21,851
|
14,853
|
75,127
|
56,317
|
|||||||||
|
Operating
income
|
14,406
|
7,984
|
47,509
|
31,581
|
|||||||||
|
Other
income (expense):
|
|||||||||||||
|
Interest
income (expense), net
|
(338
|
)
|
159
|
(703
|
)
|
472
|
|||||||
|
Other
income (expense)
|
16
|
(1
|
)
|
16
|
(37
|
)
|
|||||||
|
Total
other income (expense)
|
(322
|
)
|
158
|
(687
|
)
|
435
|
|||||||
|
Income
before provision for income taxes
|
14,084
|
8,142
|
46,822
|
32,016
|
|||||||||
|
Provision
for income taxes
|
6,056
|
3,623
|
20,133
|
14,247
|
|||||||||
|
Net
income
|
$
|
8,028
|
$
|
4,519
|
$
|
26,689
|
$
|
17,769
|
|||||
|
Earnings
per share:
|
|||||||||||||
|
Basic
|
$
|
0.48
|
$
|
0.28
|
$
|
1.63
|
$
|
1.13
|
|||||
|
Diluted
|
$
|
0.46
|
$
|
0.27
|
$
|
1.54
|
$
|
1.05
|
|||||
|
Weighted
average shares used in calculating earnings per share:
|
|||||||||||||
|
Basic
|
16,616
|
15,990
|
16,359
|
15,741
|
|||||||||
|
Diluted
|
17,607
|
17,027
|
17,317
|
16,858
|
|||||||||
HURON
CONSULTING GROUP INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share and per share amounts)
(Unaudited)
|
December
31,
2006
|
December 31,
2005
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
16,572
|
$
|
31,820
|
|||
|
Receivables
from clients, net
|
41,848
|
29,164
|
|||||
|
Unbilled
services, net
|
22,627
|
18,187
|
|||||
|
Income
tax receivable
|
3,637
|
232
|
|||||
|
Deferred
income taxes
|
15,290
|
12,553
|
|||||
|
Other
current assets
|
6,435
|
5,799
|
|||||
|
Total
current assets
|
106,409
|
97,755
|
|||||
|
Property
and equipment, net
|
27,742
|
13,162
|
|||||
|
Deferred
income taxes
|
5,433
|
2,154
|
|||||
|
Deposits
and other assets
|
2,294
|
1,147
|
|||||
|
Intangible
assets, net
|
4,238
|
844
|
|||||
|
Goodwill
|
53,328
|
14,637
|
|||||
|
Total
assets
|
$
|
199,444
|
$
|
129,699
|
|||
|
Liabilities
and stockholders’ equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
2,684
|
$
|
2,671
|
|||
|
Accrued
expenses
|
12,712
|
4,357
|
|||||
|
Accrued
payroll and related benefits
|
41,649
|
32,073
|
|||||
|
Income
tax payable
|
¾
|
491
|
|||||
|
Deferred
revenues
|
4,035
|
4,609
|
|||||
|
Borrowings
|
8,000
|
¾
|
|||||
|
Current
portion of notes payable and capital lease obligations
|
1,282
|
1,282
|
|||||
|
Total
current liabilities
|
70,362
|
45,483
|
|||||
|
Non-current
liabilities:
|
|||||||
|
Deferred
compensation and other liabilities
|
1,169
|
274
|
|||||
|
Notes
payable and capital lease obligations, net of current
portion
|
1,000
|
2,127
|
|||||
|
Deferred
lease incentives
|
10,333
|
6,283
|
|||||
|
Total
non-current liabilities
|
12,502
|
8,684
|
|||||
|
Commitments
and contingencies
|
¾
|
¾
|
|||||
|
Stockholders’
equity
|
|||||||
|
Common
stock; $0.01 par value; 500,000,000 shares authorized; 18,470,623
and
17,397,312 shares issued at
December 31, 2006 and 2005, respectively
|
178
|
174
|
|||||
|
Treasury
stock, at cost, 398,783 and 148,933 shares at December 31, 2006
and
2005, respectively
|
(9,396
|
)
|
(3,061
|
)
|
|||
|
Additional
paid-in capital
|
79,598
|
58,908
|
|||||
|
Retained
earnings
|
46,200
|
19,511
|
|||||
|
Total
stockholders’ equity
|
116,580
|
75,532
|
|||||
|
Total
liabilities and stockholders equity
|
$
|
199,444
|
$
|
129,699
|
|||
HURON
CONSULTING GROUP INC.
SEGMENT
OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
|
Three
Months Ended
December 31,
|
Twelve
Months Ended
December 31,
|
||||||||||||
|
Segment
Operating Results (in thousands):
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
Revenues
and reimbursable expenses:
|
|||||||||||||
|
Financial
Consulting
|
$
|
37,269
|
$
|
30,476
|
$
|
138,543
|
$
|
118,178
|
|||||
|
Operational
Consulting
|
46,169
|
25,151
|
150,045
|
89,035
|
|||||||||
|
Total
revenues
|
83,438
|
55,627
|
288,588
|
207,213
|
|||||||||
|
Total
reimbursable expenses
|
13,279
|
4,848
|
33,330
|
18,749
|
|||||||||
|
Total
revenues and reimbursable expenses
|
$
|
96,717
|
$
|
60,475
|
$
|
321,918
|
$
|
225,962
|
|||||
|
Operating
income:
|
|||||||||||||
|
Financial
Consulting
|
$
|
17,700
|
$
|
10,832
|
$
|
58,016
|
$
|
46,676
|
|||||
|
Operational
Consulting
|
14,577
|
9,181
|
51,985
|
31,680
|
|||||||||
|
Total
segment operating income
|
$
|
32,277
|
$
|
20,013
|
$
|
110,001
|
$
|
78,356
|
|||||
|
Other
Operating Data:
|
|||||||||||||
|
Number
of revenue-generating professionals (at
period end)
(1):
|
|||||||||||||
|
Financial
Consulting - Billable Consultants
|
344
|
306
|
|||||||||||
|
Operational
Consulting - Billable Consultants
|
450
|
326
|
|||||||||||
|
Operational
Consulting - Other Professionals
|
48
|
¾
|
|||||||||||
|
Total
|
842
|
632
|
|||||||||||
|
Average
number of revenue-generating professionals (for the period)
(1):
|
|||||||||||||
|
Financial
Consulting - Billable Consultants
|
337
|
306
|
316
|
286
|
|||||||||
|
Operational
Consulting - Billable Consultants
|
440
|
326
|
382
|
278
|
|||||||||
|
Operational
Consulting - Other Professionals
|
49
|
¾
|
18
|
¾
|
|||||||||
|
Total
|
826
|
632
|
716
|
564
|
|||||||||
|
Billable
consultant utilization rate (2):
|
|||||||||||||
|
Financial
Consulting
|
83.2
|
%
|
81.4
|
%
|
80.5
|
%
|
79.9
|
%
|
|||||
|
Operational
Consulting
|
73.9
|
%
|
73.8
|
%
|
75.6
|
%
|
73.1
|
%
|
|||||
|
Total
|
77.9
|
%
|
77.4
|
%
|
77.8
|
%
|
76.5
|
%
|
|||||
|
Average
billing rate per hour (3):
|
|||||||||||||
|
Financial
Consulting
|
$
|
282
|
$
|
270
|
$
|
282
|
$
|
275
|
|||||
|
Operational
Consulting
|
$
|
242
|
$
|
226
|
$
|
240
|
$
|
222
|
|||||
|
Total
|
$
|
261
|
$
|
249
|
$
|
260
|
$
|
249
|
|||||
| (1) |
Revenue-generating
professionals consist of our billable consultants and other professionals.
Billable consultants generate revenues primarily based on number
of hours
worked while our other professionals generate revenues based on
number of
hours worked and units produced, such as pages reviewed and data
processed. Revenue-generating professionals exclude interns and
independent contractors.
|
| (2) |
We
calculate the utilization rate for our billable consultants by
dividing
the number of hours all our billable consultants worked on client
assignments during a period by the total available working hours
for all
of our billable consultants during the same period, assuming a
forty-hour
work week, less paid holidays and vacation
days.
|
| (3) |
For
engagements where revenues are based on number of hours worked
by our
billable consultants, 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.
|
HURON
CONSULTING GROUP INC.
RECONCILIATION
OF OPERATING INCOME TO ADJUSTED EARNINGS BEFORE INTEREST,
TAXES,
DEPRECIATION AND AMORTIZATION (4)
(in
thousands)
|
Three
months ended
December
31,
|
Twelve
months ended
December 31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Revenues
|
$
|
83,438
|
$
|
55,627
|
$
|
288,588
|
$
|
207,213
|
|||||
|
Operating
income
|
$
|
14,406
|
$
|
7,984
|
$
|
47,509
|
$
|
31,581
|
|||||
|
Add
back:
|
|||||||||||||
|
Depreciation
and amortization
|
3,227
|
1,668
|
11,408
|
6,596
|
|||||||||
|
Earnings
before interest, taxes, depreciation and
amortization (EBITDA) (4)
|
17,633
|
9,652
|
58,917
|
38,177
|
|||||||||
|
Add
back:
|
|||||||||||||
|
Share-based
compensation
|
2,616
|
1,950
|
9,839
|
6,943
|
|||||||||
|
Secondary
offering costs
|
¾
|
90
|
567
|
474
|
|||||||||
|
Total
adjusted items
|
2,616
|
2,040
|
10,406
|
7,417
|
|||||||||
|
Adjusted
EBITDA (4)
|
$
|
20,249
|
$
|
11,692
|
$
|
69,323
|
$
|
45,594
|
|||||
|
Adjusted
EBITDA as a percentage of revenues
|
24.3
|
%
|
21.0
|
%
|
24.0
|
%
|
22.0
|
%
|
|||||
RECONCILIATION
OF NET INCOME TO NET INCOME BEFORE SECONDARY OFFERING
COSTS
AND
ADJUSTED NET INCOME (4)
(in
thousands)
|
Three
months ended
December 31,
|
Twelve
months ended
December 31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Net
income
|
$
|
8,028
|
$
|
4,519
|
$
|
26,689
|
$
|
17,769
|
|||||
|
Diluted
earnings per share
|
$
|
0.46
|
$
|
0.27
|
$
|
1.54
|
$
|
1.05
|
|||||
|
Add
back secondary offering costs, net of tax
|
¾
|
90
|
567
|
474
|
|||||||||
|
Net
income before secondary offer costs (4)
|
$
|
8,028
|
$
|
4,609
|
$
|
27,256
|
18,243
|
||||||
|
Diluted
earnings per share before secondary offering
costs
(4)
|
$
|
0.46
|
$
|
0.27
|
$
|
1.57
|
$
|
1.08
|
|||||
|
Add
back other adjustments:
|
|||||||||||||
|
Write-off
of intangible asset (5)
|
¾
|
¾
|
¾
|
557
|
|||||||||
|
Amortization
of intangible assets
|
1,030
|
386
|
4,547
|
1,674
|
|||||||||
|
Share-based
compensation
|
2,616
|
1,950
|
9,839
|
6,943
|
|||||||||
|
Tax
effect
|
(1,491
|
)
|
(985
|
)
|
(5,884
|
)
|
(3,789
|
)
|
|||||
|
Total
adjustments, net of tax
|
2,155
|
1,351
|
8,502
|
5,385
|
|||||||||
|
Adjusted
net income (4)
|
$
|
10,183
|
$
|
5,960
|
$
|
35,758
|
$
|
23,628
|
|||||
|
Adjusted
diluted earnings per share (4)
|
$
|
0.58
|
$
|
0.35
|
$
|
2.06
|
$
|
1.40
|
|||||
| (4) |
In
evaluating the Company’s financial performance, management uses earnings
before interest, taxes, depreciation and amortization (“EBITDA”), adjusted
EBITDA, net income before secondary offering costs, and adjusted
net
income, which are non-GAAP measures. Management believes that
the use of
such measures, as supplements to operating income, net income
and other
GAAP measures, are useful indicators of the Company’s financial
performance and its ability to generate cash flows from operations
that
are available for taxes and capital expenditures. Additionally,
these
measures exclude certain items to provide better comparability
from period
to period. Investors should recognize that these non-GAAP measures
might
not be comparable to similarly titled measures of other companies.
These
measures should be considered in addition to, and not as a substitute
for
or superior to, any measure of performance, cash flows or liquidity
prepared in accordance with accounting principles generally accepted
in
the United States.
|
| (5) | During the third quarter of 2005, one of the Company’s clients filed for bankruptcy. The client filed an application with the Bankruptcy Court to authorize the retention of the Company during the bankruptcy process. The Bankruptcy Court approved the Company’s retention. In connection with the retention, the Company wrote-off an intangible asset and recorded a charge of $0.6 million. |