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
November 9,
2005
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
November 9, 2005, Huron
Consulting Group Inc. issued a press release announcing its financial results
for the quarter and nine months ended September 30, 2005. 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.
-
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:
|
November 9,
2005
|
/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 November 9, 2005
|
EXHIBIT
99.1
FOR
IMMEDIATE RELEASE
November
9, 2005
Huron
Consulting Group Reports
Third
Quarter 2005 Financial Results
| · |
Revenues
of $54.3 million for Q3 2005 increased 46.3% from $37.1 million
in Q3
2004.
|
| · |
Diluted
earnings per share before certain charges were 26
cents for the quarter before deducting 2 cents for a write-off
of an
intangible asset and 2 cents for costs associated with a proposed
secondary offering, compared to 16 cents in the same period last
year
before deducting 10 cents for restructuring and severance
charges.
|
| · |
GAAP
diluted earnings per share were 22 cents in Q3 2005, compared with
6 cents
in Q3 2004.
|
| · |
Billable
headcount totaled 626 at September 30, 2005 compared to
489 at
September 30, 2004.
|
| · |
Utilization
rate increased to 76.2% during Q3 2005 from 66.3% during the same
period
last year.
|
CHICAGO
-
November 9, 2005 - Huron Consulting Group Inc. (NASDAQ: HURN), a leading
provider of financial and operational consulting services, today announced
its
financial results for the third quarter ended September 30, 2005.
Third
Quarter Results
Revenues
of $54.3 million for the third quarter of 2005 increased 46.3% from
$37.1 million for the third quarter of 2004. Excluding $3.5 million
of
revenues generated by Speltz & Weis LLC (“S&W”), organic revenue growth
from the prior year's quarter was 36.9%. The Company’s third quarter 2005
operating income was $7.2 million compared to $2.1 million
in the
third quarter of 2004. Net income attributable to common stockholders was
$3.8
million, or $0.22 per diluted share, for the third quarter of 2005 compared
to
$0.8 million, or $0.06 per diluted share, for the comparable
quarter
last year.
Net
income attributable to common stockholders in the third quarter of 2005 was
reduced by certain charges, which included:
| · |
Write-off
of an intangible asset related to a bankruptcy client contract
acquired as
part of Huron’s acquisition of S&W in May
2005.
|
| · |
Expenses
associated with the preparation for a secondary offering of Huron
shares
announced during the quarter.
|
The
cumulative effect of these factors was a reduction in net income of $0.7
million, or $0.04 per diluted share.
“Huron’s
operating performance in the third quarter was excellent,” said Gary E. Holdren,
chairman and chief executive officer, Huron Consulting Group. “Market demand for
our services remained very strong, with our core growth practices continuing
to
attract, serve and build client relationships.”
“In
addition, we continue to attract and retain talented, performance-oriented
consultants at all levels to serve Huron’s clients with a balanced and expanding
portfolio of services.”
Third
quarter 2005 earnings before interest, taxes, depreciation and amortization
(“EBITDA”) (5)
were
$9.8 million, or 18.1% of revenues, compared to $2.7 million,
or 7.4%
of revenues, in the comparable quarter last year. Adjusted
EBITDA (5)
-- which
excludes secondary offering costs discussed above, as well as stock-based
compensation expense, restructuring and severance charges recorded in 2004
--
totaled $12.1 million in the third quarter of 2005, or 22.2% of revenues,
compared to $5.4 million, or 14.7% of revenues, in the comparable
quarter
last year. During
the third quarter of 2005, the Company reduced bonuses that were accrued
in the
first and second quarters of 2005 by approximately $1.0 million. This
is in
response to unanticipated events and in line with the Company’s
performance-based goals. This reduction decreased senior management bonuses
while at the same time, the Company continued to accrue for staff bonuses
at
above target rates to reflect what has been strong 2005 performance-to-date
for
the majority of Huron’s operations.
Billable
consultant headcount totaled 626 at September 30, 2005 compared to 489 at
September 30, 2004, while the utilization rate increased to 76.2% during
the
third quarter of 2005 from 66.3% during the same period last year. Average
billing rate per hour increased $9, or 3.8%, to $244 for the third quarter
of
2005 from $235 for the third quarter of 2004. Net deferrals of $1.4 million
of performance-based fees for services rendered had the impact of reducing
our
average billing rate for the third quarter of 2005 by $6.
Third
Quarter 2005 Segment Performance
Both
of
the Company’s segments - Financial Consulting and Operational Consulting -
continued to show strong improvements in demand and solid revenue growth.
Revenues
for the Financial Consulting segment were $33.3 million for the third quarter
of
2005 increasing 63.5% from $20.3 million in the third quarter of 2004. Excluding
$3.5 million of revenues generated by the recently acquired S&W, organic
revenue growth from the prior year’s quarter was 46.8%. Segment operating income
increased 109.1% to $13.4 million from $6.4 million in the same quarter a
year
ago. Operating margins increased to 40.3% in the quarter from 31.5% a year
ago.
As of the end of the quarter, the Financial Consulting segment had 308
consultants, up 9.2% from a year ago. Utilization for the quarter was 82.9%
compared to 64.0% a year ago reflecting very strong demand for services provided
by Huron’s Disputes and Investigations practice. Average bill rates for the
segment increased 10% to $274 from $249 a year ago.
Revenues
for the Operational Consulting segment were $21.1 million for the third quarter
of 2005, increasing 25.6% from $16.8 million in the third quarter of 2004.
Segment operating income increased 19.8% to $6.5 million from $5.4 million
a
year ago. Operating margins declined to 30.9% in the quarter from 32.4% a
year
ago. As of the end of the quarter, the Operational Consulting segment had
318
consultants, up 53.6% from a year ago. Utilization for the quarter was 69.6%
compared to 69.4% as a large number of new consultants were integrated into
the
practice. Average bill rates for the segment decreased 4.6% from the prior
year
to $209 from $219. The aforementioned net deferrals of $1.4 million
of
performance-based fees reduced this segment’s average bill rate for the third
quarter of 2005 by $14.
“Both
of
Huron’s segments continue to build a solid foundation for future growth,” said
Holdren.
Year-to-Date
Results
Revenues
increased $32.9 million, or 27.7%, to $151.6 million for the nine
months
ended September 30, 2005, from $118.7 million for the same period
last
year. Excluding the $6.6 million of revenues generated by S&W during
the period, organic revenue growth was 22.2%. Net income attributable to
common
stockholders was $13.3 million, or $0.79 per diluted share, for the nine
months
ended September 30, 2005, compared to net income of $7.5 million,
or
$0.53 per diluted share, for the comparable period last year.
For
the
first nine months of 2005, EBITDA (5)
was
$28.5 million, or 18.8% of revenues, compared to $16.8 million, or
14.2% of
revenues, for the same period last year. Adjusted EBITDA (5),
which
excludes secondary costs discussed above in third quarter results, as well
as
stock-based compensation expense, restructuring and severance charges recorded
in 2004, for the first nine months of 2005 totaled $33.9 million, or 22.4%
of
revenues, compared to $22.5 million, or 18.9% of revenues, in the
same
period last year.
Huron’s
utilization rate increased to 76.2% during the first nine months of 2005
from
70.5% during the same period last year. Average billing rate per
hour
increased 5.1% to $249 during the first nine months of 2005 from $237 in
the
same period of 2004.
Year-to-Date
Segment Performance
Revenues
for the Financial Consulting segment were $87.7 million for the nine months
ended September 30, 2005, representing a 26.5% increase from $69.3 million
for
the same period last year. Excluding $6.6 million of revenues generated by
S&W during the period, organic revenue growth was 17.0% from the prior year.
Segment operating income increased 40.1% to $35.8 million from $25.6 million
a
year ago. Operating margins increased to 40.9% from 36.9% a year ago.
Utilization for the period increased to 79.4% from 69.8% a year ago and average
bill rates increased 9.1% to $277 from $254 a year ago.
Revenues
for the Operational Consulting segment were $63.9 million for the nine months
ended September 30, 2005, representing a 29.4% increase from $49.4 million
for
the same period last year. Segment operating income increased 34.1% to $22.5
million from $16.8 million a year ago. Operating margins increased to 35.2%
from
34.0% a year ago. Utilization for the period increased to 72.9% from 71.4%
a
year ago, and average bill rates increased 1.4% to $220 from $217 a year
ago.
Net deferrals of $2.1 million of performance-based fees for services
rendered had the impact of reducing this segment’s average billing rate for the
nine months ended September 30, 2005 by $7.
Speltz
& Weis LLC
Revenues
from Speltz & Weis LLC (“S&W”), an entity acquired in May 2005, were
$3.5 million in the three months and $6.6 million in the nine months ended
September 30, 2005. S&W incurred a loss of 6 cents per diluted share for
both the three and nine months ended September 30, 2005 (which includes the
intangible asset write-off described above). Results for S&W are included
in Huron’s Financial Consulting segment.
On
July
5, 2005, a client of S&W filed for bankruptcy. On October 28, 2005, an
application to authorize Huron’s retention during the bankruptcy process was
approved on an interim basis by the bankruptcy court. In connection with
the
application, new financial terms and conditions of the engagement, including
billing terms and rates for the Company’s services were renegotiated and agreed
upon with the client and other interested parties retroactive to July 5,
2005.
In connection with this matter, the Company incurred legal and other costs
associated with the bankruptcy process and incurred a charge to write off
the
intangible asset associated with the value of this client contract. Results
for
S&W reflect these renegotiated billing terms and rates, legal costs, and the
write-off of intangible assets.
“While
the client’s bankruptcy provided us with challenges during the quarter, we are
pleased that we have been approved by the court to continue to assist them
on an
interim basis. Huron will continue to provide interim management, bankruptcy
advisory, and other consulting services to this client to help them manage
through the bankruptcy process,” said Holdren. “In addition, the S&W
professionals continue to attract significant assignments in the healthcare
marketplace, and we believe that their opportunities remain
strong.”
Outlook
for the Remainder of 2005
The
Company expects
its results to be at the lower end of the previously announced 2005 outlook
ranges of $205 to $208 million in revenues and diluted earnings per share
of
$1.07 to $1.12 due to an expected reduction
in diluted earnings per share of approximately 3 or 4 cents from S&W's
operations in the fourth quarter, which includes the bankruptcy
engagement
changes
discussed above. The EPS guidance is before considering the costs associated
with the proposed secondary offering.
“In
summary, we are very pleased with the third quarter results, and are optimistic
that 2005 will finish with a solid fourth quarter. Huron is well positioned
for
2006 and beyond,” said Holdren.
Third
Quarter Webcast
The
Company will host a webcast to discuss its financial results today at 5:00
p.m.
Eastern Time (4:00 p.m. Central Time). The webcast may be accessed at
www.huronconsultinggroup.com and will be available for replay for 90 days.
For
additional information refer to Huron’s third quarter 2005 Form 10-Q filed with
the Securities and Exchange Commission.
About
Huron Consulting Group Inc.
Huron
Consulting Group Inc. is the parent company of Huron Consulting Services
LLC.
Huron helps
clients effectively address complex challenges that arise from litigation,
disputes, investigations, regulation, financial distress, and other sources
of
significant conflict or change. We also help clients improve the overall
efficiency and effectiveness of their operations, reduce costs, manage
regulatory compliance, and maximize procurement efficiency. 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 future results are
"forward-looking" statements as defined in Section 21 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, 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 2004 annual
report on Form 10-K 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
September 30,
|
Nine
months ended
September 30,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Revenues
and reimbursable expenses:
|
|||||||||||||
|
Revenues
|
$
|
54,309
|
$
|
37,109
|
$
|
151,586
|
$
|
118,713
|
|||||
|
Reimbursable
expenses
|
4,840
|
3,225
|
13,901
|
10,315
|
|||||||||
|
Total
revenues and reimbursable expenses
|
59,149
|
40,334
|
165,487
|
129,028
|
|||||||||
|
Direct
costs and reimbursable expenses (exclusive
of depreciation and amortization shown in operating expenses):
|
|||||||||||||
|
Direct
costs
|
29,194
|
22,267
|
81,653
|
69,672
|
|||||||||
|
Stock-based
compensation
|
1,402
|
144
|
3,641
|
330
|
|||||||||
|
Intangible
assets amortization
|
682
|
¾
|
1,067
|
¾
|
|||||||||
|
Reimbursable
expenses
|
4,974
|
3,161
|
14,065
|
10,226
|
|||||||||
|
Total
direct costs and reimbursable expenses
|
36,252
|
25,572
|
100,426
|
80,228
|
|||||||||
|
Operating
expenses:
|
|||||||||||||
|
Selling,
general and administrative
|
13,289
|
10,631
|
36,251
|
28,411
|
|||||||||
|
Stock-based
compensation
|
485
|
53
|
1,352
|
113
|
|||||||||
|
Depreciation
and amortization
|
1,905
|
607
|
3,861
|
1,682
|
|||||||||
|
Restructuring
charges
|
¾
|
1,336
|
¾
|
3,475
|
|||||||||
|
Total
operating expenses
|
15,679
|
12,627
|
41,464
|
33,681
|
|||||||||
|
Operating
income
|
7,218
|
2,135
|
23,597
|
15,119
|
|||||||||
|
Other
(income) expense:
|
|||||||||||||
|
Interest
(income) expense, net
|
(84
|
)
|
219
|
(313
|
)
|
735
|
|||||||
|
Other
expense
|
37
|
1
|
36
|
¾
|
|||||||||
|
Total
other (income) expense
|
(47
|
)
|
220
|
(277
|
)
|
735
|
|||||||
|
Income
before provision for income taxes
|
7,265
|
1,915
|
23,874
|
14,384
|
|||||||||
|
Provision
for income taxes
|
3,499
|
805
|
10,624
|
6,042
|
|||||||||
|
Net
income
|
3,766
|
1,110
|
13,250
|
8,342
|
|||||||||
|
Accrued
dividends on 8% preferred stock
|
¾
|
299
|
¾
|
857
|
|||||||||
|
Net
income attributable to common stockholders
|
$
|
3,766
|
$
|
811
|
$
|
13,250
|
$
|
7,485
|
|||||
|
Net
income attributable to common stockholders
per
share:
|
|||||||||||||
|
Basic
|
$
|
0.24
|
$
|
0.06
|
$
|
0.85
|
$
|
0.57
|
|||||
|
Diluted
|
$
|
0.22
|
$
|
0.06
|
$
|
0.79
|
$
|
0.53
|
|||||
|
Weighted
average shares used in calculating net income
attributable
to common stockholders per share:
|
|||||||||||||
|
Basic
|
15,777
|
12,180
|
15,657
|
12,068
|
|||||||||
|
Diluted
|
16,950
|
13,149
|
16,801
|
13,045
|
|||||||||
HURON
CONSULTING GROUP INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share and per share amounts)
|
September
30,
2005
(Unaudited)
|
December 31,
2004
(Audited)
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
21,875
|
$
|
28,092
|
|||
|
Receivables
from clients, net
|
27,388
|
21,750
|
|||||
|
Unbilled
services, net
|
20,850
|
10,830
|
|||||
|
Income
tax receivable
|
682
|
494
|
|||||
|
Deferred
income taxes
|
10,030
|
7,919
|
|||||
|
Other
current assets
|
3,933
|
3,053
|
|||||
|
Total
current assets
|
84,758
|
72,138
|
|||||
|
Property
and equipment, net
|
11,855
|
8,975
|
|||||
|
Deferred
income taxes
|
2,855
|
1,450
|
|||||
|
Deposits
|
541
|
656
|
|||||
|
Intangible
assets, net
|
756
|
¾
|
|||||
|
Goodwill
|
14,637
|
¾
|
|||||
|
Total
assets
|
$
|
115,402
|
$
|
83,219
|
|||
|
Liabilities
and stockholders’ equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
3,011
|
$
|
2,809
|
|||
|
Accrued
expenses
|
4,173
|
2,384
|
|||||
|
Accrued
payroll and related benefits
|
24,607
|
20,494
|
|||||
|
Income
tax payable
|
335
|
950
|
|||||
|
Deferred
revenue
|
5,291
|
2,603
|
|||||
|
Current
portion of notes payable
|
1,000
|
¾
|
|||||
|
Total
current liabilities
|
38,417
|
29,240
|
|||||
|
Non-current
liabilities:
|
|||||||
|
Accrued
expenses
|
353
|
598
|
|||||
|
Deferred
lease incentives
|
5,025
|
4,148
|
|||||
|
Notes
payable, net of current portion
|
2,000
|
¾
|
|||||
|
Total
non-current liabilities
|
7,378
|
4,746
|
|||||
|
Commitments
and contingencies
|
¾
|
¾
|
|||||
|
Stockholders’
equity
|
|||||||
|
Common
stock; $0.01 par value; 500,000,000 shares authorized; 17,276,585
shares
issued at September 30, 2005 and 16,364,574 shares issued
and
outstanding at December 31, 2004
|
173
|
164
|
|||||
|
Treasury
stock, 62,150 shares at September 30, 2005, at cost
|
(1,044
|
)
|
¾
|
||||
|
Additional
paid-in capital
|
76,172
|
59,608
|
|||||
|
Deferred
stock-based compensation
|
(20,686
|
)
|
(12,281
|
)
|
|||
|
Retained
earnings
|
14,992
|
1,742
|
|||||
|
Total
stockholders’ equity
|
69,607
|
49,233
|
|||||
|
Total
liabilities and stockholders equity
|
$
|
115,402
|
$
|
83,219
|
|||
HURON
CONSULTING GROUP INC.
SEGMENT
OPERATING RESULTS AND OTHER OPERATING DATA (1)
(Unaudited)
|
Three
Months Ended
September 30,
|
Nine
Months Ended
September
30,
|
||||||||||||
|
Segment
Operating Results (in thousands):
|
2005
|
2004
|
2005
|
2004
|
|||||||||
|
Revenues
and reimbursable expenses:
|
|||||||||||||
|
Financial
Consulting
|
$
|
33,259
|
$
|
20,346
|
$
|
87,702
|
$
|
69,345
|
|||||
|
Operational
Consulting
|
21,050
|
16,763
|
63,884
|
49,368
|
|||||||||
|
Total
revenues
|
54,309
|
37,109
|
151,586
|
118,713
|
|||||||||
|
Total
reimbursable expenses
|
4,840
|
3,225
|
13,901
|
10,315
|
|||||||||
|
Total
revenues and reimbursable expenses
|
$
|
59,149
|
$
|
40,334
|
$
|
165,487
|
$
|
129,028
|
|||||
|
Operating
income:
|
|||||||||||||
|
Financial
Consulting
|
$
|
13,400
|
$
|
6,408
|
$
|
35,844
|
$
|
25,590
|
|||||
|
Operational
Consulting
|
6,511
|
5,437
|
22,499
|
16,781
|
|||||||||
|
Total
segment operating income
|
$
|
19,911
|
$
|
11,845
|
$
|
58,343
|
$
|
42,371
|
|||||
|
Other
Operating Data:
|
|||||||||||||
|
Number
of consultants (at period end)
(2):
|
|||||||||||||
|
Financial
Consulting
|
308
|
282
|
|||||||||||
|
Operational
Consulting
|
318
|
207
|
|||||||||||
|
Total
|
626
|
489
|
|||||||||||
|
Average
number of consultants (for the period):
|
|||||||||||||
|
Financial
Consulting
|
297
|
280
|
280
|
281
|
|||||||||
|
Operational
Consulting
|
298
|
213
|
263
|
204
|
|||||||||
|
Total
|
595
|
493
|
543
|
485
|
|||||||||
|
Utilization
rate (3):
|
|||||||||||||
|
Financial
Consulting
|
82.9
|
%
|
64.0
|
%
|
79.4
|
%
|
69.8
|
%
|
|||||
|
Operational
Consulting
|
69.6
|
%
|
69.4
|
%
|
72.9
|
%
|
71.4
|
%
|
|||||
|
Total
|
76.2
|
%
|
66.3
|
%
|
76.2
|
%
|
70.5
|
%
|
|||||
|
Average
billing rate per hour (4):
|
|||||||||||||
|
Financial
Consulting
|
$
|
274
|
$
|
249
|
$
|
277
|
$
|
254
|
|||||
|
Operational
Consulting
|
$
|
209
|
$
|
219
|
$
|
220
|
$
|
217
|
|||||
|
Total
|
$
|
244
|
$
|
235
|
$
|
249
|
$
|
237
|
|||||
| (1) |
The
Company periodically reclassifies certain revenues and expenses
among the
segments to align them with the changes in the Company’s internal
organizational structure. Beginning January 1, 2005, the Forensic
Technology and Discovery Services group was moved from the Financial
Consulting segment to the Operational Consulting segment to improve
marketing synergies with our Legal Business Consulting practice.
Previously reported segment information has been revised to reflect
this
change.
|
| (2) |
Consultants
consist of our billable professionals, excluding interns and
independent
contractors.
|
| (3) |
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.
|
| (4) |
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 (5)
(in
thousands)
|
Three
months ended
September 30,
|
Nine
months ended
September 30,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Revenues
|
$ |
54,309
|
$ |
37,109
|
$ |
151,586
|
$ |
118,713
|
|||||
|
Operating
income
|
$
|
7,218
|
$
|
2,135
|
$
|
23,597
|
$
|
15,119
|
|||||
|
Add
back:
|
|||||||||||||
|
Depreciation
and amortization (6)
|
2,587
|
607
|
4,928
|
1,682
|
|||||||||
|
Earnings
before interest, taxes, depreciation
and
amortization (EBITDA) (5)
|
9,805
|
2,742
|
28,525
|
16,801
|
|||||||||
|
Add
back:
|
|||||||||||||
|
Stock-based
compensation expense
|
1,887
|
197
|
4,993
|
443
|
|||||||||
|
Secondary
offering costs
|
384
|
¾
|
384
|
¾
|
|||||||||
|
Restructuring
charges
|
¾
|
1,336
|
¾
|
3,475
|
|||||||||
|
Severance
charges
|
¾
|
1,168
|
¾
|
1,772
|
|||||||||
|
Total
adjusted items
|
2,271
|
2,701
|
5,377
|
5,690
|
|||||||||
|
Adjusted
EBITDA (5)
|
$ |
12,076
|
$ |
5,443
|
$ |
33,902
|
$ |
22,491
|
|||||
|
Adjusted
EBITDA as a percentage of revenues
|
22.2
|
%
|
14.7
|
%
|
22.4
|
%
|
18.9
|
%
|
|||||
RECONCILIATION
OF NET INCOME TO NET INCOME BEFORE CERTAIN CHARGES AND ADJUSTED NET INCOME
BEFORE CERTAIN CHARGES (5)
(in
thousands)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Net
income
|
$
|
3,766
|
$
|
811
|
$
|
13,250
|
$
|
7,485
|
|||||
|
Diluted
earnings per share
|
$
|
0.22
|
$
|
0.06
|
$
|
0.79
|
$
|
0.53
|
|||||
|
Add
back certain charges:
|
|||||||||||||
|
Write-off
of intangible asset (6)
|
557
|
¾
|
557
|
¾
|
|||||||||
|
Secondary
offering costs
|
384
|
¾
|
384
|
¾
|
|||||||||
|
Restructuring
and severance charges
|
¾
|
2,504
|
¾
|
5,247
|
|||||||||
|
Tax
effect
|
(228
|
)
|
(1,007
|
)
|
(228
|
)
|
(2,110
|
)
|
|||||
|
Total
certain charges, net of tax
|
713
|
1,497
|
713
|
3,137
|
|||||||||
|
Net
income before certain charges (5)
|
$
|
4,479
|
$
|
2,308
|
$
|
13,963
|
$
|
10,622
|
|||||
|
Diluted
earnings per share before certain charges (5)
|
$
|
0.26
|
$
|
0.16
|
$
|
0.83
|
$
|
0.75
|
|||||
|
Add
back other adjustments:
|
|||||||||||||
|
Amortization
of intangible assets
|
810
|
¾
|
1,287
|
¾
|
|||||||||
|
Stock-based
compensation expense
|
1,887
|
197
|
4,993
|
443
|
|||||||||
|
Tax
effect
|
(1,104
|
)
|
(79
|
)
|
(2,572
|
)
|
(178
|
)
|
|||||
|
Total
adjustments, net of tax
|
1,593
|
118
|
3,708
|
265
|
|||||||||
|
Adjusted
net income before certain charges (5)
|
$
|
6,072
|
$
|
2,426
|
$
|
17,671
|
$
|
10,887
|
|||||
|
Adjusted
diluted earnings per share before certain charges (5)
|
$
|
0.36
|
$
|
0.17
|
$
|
1.05
|
$
|
0.77
|
|||||
| (5) |
In
evaluating the Company’s financial performance, management uses earnings
before interest, taxes, depreciation and amortization (“EBITDA”), adjusted
EBITDA 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.
|
| (6) |
On
July 5, 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. At a
hearing held
on October 28, 2005, the Bankruptcy Court approved on
an interim
basis the Company’s retention. In connection with the retention, the
Company wrote-off an intangible asset and recorded a charge of
$0.6 million.
|