Document
false--12-31Q3201900008879360100000000.0100000000.00.010.017500000075000000381470003762900038147000376290000.00986430373000373000000.010.015000000500000000P24M35000400012000380001700013000 0000887936 2019-01-01 2019-09-30 0000887936 2019-10-17 0000887936 2019-09-30 0000887936 2018-12-31 0000887936 2018-07-01 2018-09-30 0000887936 2018-01-01 2018-09-30 0000887936 2019-07-01 2019-09-30 0000887936 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0000887936 2018-01-01 2018-03-31 0000887936 us-gaap:CommonStockMember 2018-06-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0000887936 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0000887936 us-gaap:CommonStockMember 2018-09-30 0000887936 2018-04-01 2018-06-30 0000887936 us-gaap:RetainedEarningsMember 2018-03-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000887936 us-gaap:RetainedEarningsMember 2018-01-01 0000887936 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000887936 us-gaap:CommonStockMember 2017-12-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0000887936 2018-03-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000887936 us-gaap:RetainedEarningsMember 2018-06-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0000887936 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000887936 2018-01-01 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000887936 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000887936 2018-06-30 0000887936 2017-12-31 0000887936 us-gaap:RetainedEarningsMember 2017-12-31 0000887936 us-gaap:CommonStockMember 2018-03-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000887936 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000887936 us-gaap:RetainedEarningsMember 2018-09-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000887936 2018-09-30 0000887936 2019-04-01 2019-06-30 0000887936 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000887936 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000887936 us-gaap:CommonStockMember 2018-12-31 0000887936 2019-01-01 2019-03-31 0000887936 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000887936 us-gaap:RetainedEarningsMember 2019-09-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000887936 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000887936 2019-03-31 0000887936 us-gaap:CommonStockMember 2019-06-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000887936 us-gaap:CommonStockMember 2019-09-30 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000887936 us-gaap:CommonStockMember 2019-03-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000887936 us-gaap:RetainedEarningsMember 2018-12-31 0000887936 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000887936 us-gaap:RetainedEarningsMember 2019-03-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000887936 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000887936 us-gaap:RetainedEarningsMember 2019-06-30 0000887936 2019-06-30 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000887936 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000887936 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000887936 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000887936 us-gaap:AccountingStandardsUpdate201602Member 2018-12-31 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2019-09-30 0000887936 fcn:StockOptionsAndRestrictedSharesMember 2019-07-01 2019-09-30 0000887936 fcn:StockOptionsAndRestrictedSharesMember 2019-01-01 2019-09-30 0000887936 fcn:StockOptionsAndRestrictedSharesMember 2018-01-01 2018-09-30 0000887936 fcn:StockOptionsAndRestrictedSharesMember 2018-07-01 2018-09-30 0000887936 2019-10-01 2019-09-30 0000887936 2019-07-01 2019-09-30 0000887936 2019-01-01 2018-12-31 0000887936 fcn:AcquiredSoftwareMember 2019-09-30 0000887936 us-gaap:TradeNamesMember 2018-12-31 0000887936 us-gaap:CustomerRelationshipsMember 2018-12-31 0000887936 us-gaap:CustomerRelationshipsMember 2019-09-30 0000887936 us-gaap:TradeNamesMember 2019-09-30 0000887936 us-gaap:TradeNamesMember 2018-12-31 0000887936 fcn:AcquiredSoftwareMember 2018-12-31 0000887936 us-gaap:TradeNamesMember 2019-09-30 0000887936 fcn:StrategicCommunicationsMember 2018-12-31 0000887936 fcn:CorporateFinanceRestructuringMember 2018-12-31 0000887936 fcn:ForensicAndLitigationConsultingMember 2019-01-01 2019-09-30 0000887936 fcn:TechnologyMember 2019-01-01 2019-09-30 0000887936 fcn:AnderschAGMember 2019-07-01 2019-09-30 0000887936 fcn:ForensicAndLitigationConsultingMember 2018-12-31 0000887936 fcn:EconomicConsultingMember 2019-01-01 2019-09-30 0000887936 fcn:TechnologyMember 2019-09-30 0000887936 fcn:TechnologyMember 2018-12-31 0000887936 fcn:StrategicCommunicationsMember 2019-01-01 2019-09-30 0000887936 fcn:StrategicCommunicationsMember 2019-09-30 0000887936 fcn:CorporateFinanceRestructuringMember 2019-09-30 0000887936 fcn:EconomicConsultingMember 2018-12-31 0000887936 fcn:CorporateFinanceRestructuringMember 2019-01-01 2019-09-30 0000887936 fcn:EconomicConsultingMember 2019-09-30 0000887936 fcn:ForensicAndLitigationConsultingMember 2019-09-30 0000887936 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-09-30 0000887936 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-09-30 0000887936 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-09-30 0000887936 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-09-30 0000887936 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000887936 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000887936 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000887936 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2019-01-01 2019-09-30 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2018-01-01 2018-09-30 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2019-07-01 2019-09-30 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2018-07-01 2018-09-30 0000887936 us-gaap:LineOfCreditMember 2019-09-30 0000887936 fcn:CreditFacilityMember us-gaap:LineOfCreditMember 2019-09-30 0000887936 fcn:CreditFacilityMember us-gaap:LineOfCreditMember 2018-12-31 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2018-08-20 0000887936 fcn:CreditFacilityMember us-gaap:LineOfCreditMember 2015-06-26 0000887936 fcn:CreditFacilityMember us-gaap:LineOfCreditMember 2018-11-30 0000887936 fcn:ConvertibleNoteDue2023Member 2018-12-31 0000887936 fcn:ConvertibleNoteDue2023Member 2019-09-30 0000887936 fcn:ConvertibleNoteDue2023Member us-gaap:SeniorNotesMember 2018-08-20 2018-08-20 0000887936 srt:MinimumMember 2019-09-30 0000887936 srt:MaximumMember 2019-09-30 0000887936 srt:MaximumMember us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-09-30 0000887936 srt:MaximumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0000887936 srt:MaximumMember us-gaap:RestrictedStockMember 2019-01-01 2019-09-30 0000887936 srt:MaximumMember 2019-01-01 2019-09-30 0000887936 us-gaap:CostOfSalesMember 2019-07-01 2019-09-30 0000887936 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-07-01 2019-09-30 0000887936 us-gaap:CostOfSalesMember 2018-07-01 2018-09-30 0000887936 us-gaap:CostOfSalesMember 2018-01-01 2018-09-30 0000887936 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-09-30 0000887936 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-07-01 2018-09-30 0000887936 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-09-30 0000887936 us-gaap:CostOfSalesMember 2019-01-01 2019-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2018-07-01 2018-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2019-01-01 2019-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2019-07-01 2019-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2018-01-01 2018-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2016-06-02 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2019-09-30 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2019-02-21 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2017-12-01 0000887936 fcn:TwoThousandSixteenStockRepurchaseProgramMember 2017-05-18 0000887936 fcn:TechnologyMember 2018-07-01 2018-09-30 0000887936 fcn:CorporateFinanceRestructuringMember 2019-07-01 2019-09-30 0000887936 fcn:StrategicCommunicationsMember 2018-07-01 2018-09-30 0000887936 fcn:ForensicAndLitigationConsultingMember 2018-07-01 2018-09-30 0000887936 fcn:EconomicConsultingMember 2019-07-01 2019-09-30 0000887936 fcn:ForensicAndLitigationConsultingMember 2018-01-01 2018-09-30 0000887936 fcn:EconomicConsultingMember 2018-07-01 2018-09-30 0000887936 fcn:CorporateFinanceRestructuringMember 2018-01-01 2018-09-30 0000887936 fcn:CorporateFinanceRestructuringMember 2018-07-01 2018-09-30 0000887936 fcn:StrategicCommunicationsMember 2018-01-01 2018-09-30 0000887936 fcn:ForensicAndLitigationConsultingMember 2019-07-01 2019-09-30 0000887936 fcn:TechnologyMember 2018-01-01 2018-09-30 0000887936 fcn:EconomicConsultingMember 2018-01-01 2018-09-30 0000887936 fcn:TechnologyMember 2019-07-01 2019-09-30 0000887936 fcn:StrategicCommunicationsMember 2019-07-01 2019-09-30 xbrli:pure iso4217:USD xbrli:shares iso4217:USD xbrli:shares fcn:segment
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
Commission File Number: 001-14875
 
 
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
  
Maryland
 
 
52-1261113
(State or Other Jurisdiction of
Incorporation or Organization)
 
 
(I.R.S. Employer
Identification No.)
 
 
 
 
555 12th Street NW
 


Washington,

 

DC
 
 
20004
(Address of Principal Executive Offices)
 
 
(Zip Code)
(202) 312-9100
(Registrant’s telephone number, including area code)
 
  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
FCN
 
New York Stock Exchange
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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
Class
Outstanding at October 17, 2019
Common Stock, $0.01 par value
37,630,823
 



FTI CONSULTING, INC. AND SUBSIDIARIES
INDEX
 
 
 
Page 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I—FINANCIAL INFORMATION
FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
Item 1.
Financial Statements
 
 
September 30,
 
December 31,
 
2019
 
2018
Assets
(Unaudited)
 
 
Current assets
 

 
 

Cash and cash equivalents
$
258,470

 
$
312,069

Accounts receivable:
 
 
 
Billed receivables
552,253

 
437,797

Unbilled receivables
455,342

 
319,205

Allowance for doubtful accounts and unbilled services
(268,132
)
 
(202,394
)
Accounts receivable, net
739,463

 
554,608

Current portion of notes receivable
32,368

 
29,228

Prepaid expenses and other current assets
65,849

 
69,448

Total current assets
1,096,150

 
965,353

Property and equipment, net
92,135

 
84,577

Operating lease assets
152,064

 

Goodwill
1,197,406

 
1,172,316

Other intangible assets, net
41,247

 
34,633

Notes receivable, net
78,800

 
84,471

Other assets
32,467

 
37,771

Total assets
$
2,690,269

 
$
2,379,121

Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
Accounts payable, accrued expenses and other
$
158,136

 
$
104,600

Accrued compensation
354,299

 
333,536

Billings in excess of services provided
34,349

 
44,434

Total current liabilities
546,784

 
482,570

Long-term debt, net
273,055

 
265,571

Noncurrent operating lease liabilities
171,410

 

Deferred income taxes
159,406

 
155,088

Other liabilities
78,380

 
127,067

Total liabilities
1,229,035

 
1,030,296

Commitments and contingent liabilities (Note 10)


 


Stockholders' equity
 
 
 
Preferred stock, $0.01 par value; shares authorized — 5,000; none
   outstanding

 

Common stock, $0.01 par value; shares authorized — 75,000;
   shares issued and outstanding — 37,629 (2019) and 38,147 (2018)
376

 
381

Additional paid-in capital
240,508

 
299,534

Retained earnings
1,384,392

 
1,196,727

Accumulated other comprehensive loss
(164,042
)
 
(147,817
)
Total stockholders' equity
1,461,234

 
1,348,825

Total liabilities and stockholders' equity
$
2,690,269

 
$
2,379,121

 
See accompanying notes to condensed consolidated financial statements

3


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenues
$
593,106

 
$
513,012

 
$
1,750,499

 
$
1,522,884

Operating expenses
 
 
 
 
 
 
 
Direct cost of revenues
380,892

 
336,477

 
1,116,224

 
987,912

Selling, general and administrative expenses
127,951

 
117,448

 
371,042

 
347,473

Amortization of other intangible assets
2,125

 
1,975

 
5,838

 
6,297

 
510,968

 
455,900

 
1,493,104

 
1,341,682

Operating income
82,138

 
57,112

 
257,395

 
181,202

Other income (expense)
 

 
 

 
 

 
 

Interest income and other
2,973

 
1,400

 
5,741

 
2,074

Interest expense
(4,832
)
 
(7,246
)
 
(14,371
)
 
(20,073
)
Gain on sale of business

 
13,031

 

 
13,031

 
(1,859
)
 
7,185

 
(8,630
)
 
(4,968
)
Income before income tax provision
80,279

 
64,297

 
248,765

 
176,234

Income tax provision
19,857

 
19,964

 
61,100

 
49,347

Net income
$
60,422

 
$
44,333

 
$
187,665

 
$
126,887

Earnings per common share — basic
$
1.65

 
$
1.19

 
$
5.09

 
$
3.43

Earnings per common share — diluted
$
1.59

 
$
1.14

 
$
4.92

 
$
3.32

Other comprehensive loss, net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax
   expense of $0, $373, $0 and $373
$
(16,633
)
 
$
(4,180
)
 
$
(16,225
)
 
$
(17,417
)
Total other comprehensive loss, net of tax
(16,633
)
 
(4,180
)
 
(16,225
)
 
(17,417
)
Comprehensive income
$
43,789

 
$
40,153

 
$
171,440

 
$
109,470

 
See accompanying notes to condensed consolidated financial statements

4


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
 
 
Shares
 
Amount
 
 
 
 
Total
Balance at December 31, 2018
38,147

 
$
381

 
$
299,534

 
$
1,196,727

 
$
(147,817
)
 
$
1,348,825

Net income

 
$

 
$

 
$
62,645

 
$

 
$
62,645

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
5,223

 
5,223

Issuance of common stock in
connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
55

 
1

 
2,211

 

 

 
2,212

           Restricted share grants, less net
             settled shares of 38
153

 
1

 
(2,740
)
 

 

 
(2,739
)
           Stock units issued under incentive
             compensation plan

 

 
1,346

 

 

 
1,346

Purchase and retirement of common
stock
(328
)
 
(3
)
 
(21,880
)
 

 

 
(21,883
)
Share-based compensation

 

 
6,393

 

 

 
6,393

Balance at March 31, 2019
38,027

 
$
380

 
$
284,864

 
$
1,259,372

 
$
(142,594
)
 
$
1,402,022

Net income

 
$

 
$

 
$
64,598

 
$

 
$
64,598

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
(4,815
)
 
(4,815
)
Issuance of common stock in
  connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
87

 
1

 
3,075

 

 

 
3,076

           Restricted share grants, less net
             settled shares of 17
78

 
1

 
(1,352
)
 

 

 
(1,351
)
Purchase and retirement of common
   stock
(580
)
 
(6
)
 
(48,326
)
 

 

 
(48,332
)
Share-based compensation

 

 
3,814

 

 

 
3,814

Balance at June 30, 2019
37,612

 
$
376

 
$
242,075

 
$
1,323,970

 
$
(147,409
)
 
$
1,419,012

Net income

 
$

 
$

 
$
60,422

 
$

 
$
60,422

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
(16,633
)
 
(16,633
)
Issuance of common stock in
  connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
94

 
1

 
3,568

 

 

 
3,569

           Restricted share grants, less net
             settled shares of 13
14

 

 
(1,322
)
 

 

 
(1,322
)
           Stock units issued under incentive
             compensation plan

 

 
67

 

 

 
67

Purchase and retirement of common
   stock
(91
)
 
(1
)
 
(7,733
)
 

 

 
(7,734
)
Share-based compensation

 

 
3,853

 

 

 
3,853

Balance at September 30, 2019
37,629

 
$
376

 
$
240,508

 
$
1,384,392

 
$
(164,042
)
 
$
1,461,234



5


 
Common Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
 
 
Shares
 
Amount
 
 
 
 
Total
Balance at December 31, 2017
37,729

 
$
377

 
$
266,035

 
$
1,045,774

 
$
(120,215
)
 
$
1,191,971

Net income

 
$

 
$

 
$
38,945

 
$

 
$
38,945

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
10,446

 
10,446

Issuance of common stock in connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
153

 
1

 
5,793

 

 

 
5,794

Restricted share grants, less net
settled shares of 35
175

 
2

 
(1,581
)
 

 

 
(1,579
)
Stock units issued under incentive
   compensation plan

 

 
1,059

 

 

 
1,059

Purchase and retirement of common stock
(337
)
 
(3
)
 
(14,217
)
 

 

 
(14,220
)
Cumulative effect due to adoption of new accounting standard

 

 

 
342

 

 
342

Share-based compensation

 

 
4,676

 

 

 
4,676

Balance at March 31, 2018
37,720

 
$
377

 
$
261,765

 
$
1,085,061

 
$
(109,769
)
 
$
1,237,434

Net income

 
$

 
$

 
$
43,609

 
$

 
$
43,609

Other comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
(23,683
)
 
(23,683
)
Issuance of common stock in connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
360

 
4

 
14,802

 

 

 
14,806

Restricted share grants, less net settled shares of 4
99

 
1

 
(253
)
 

 

 
(252
)
Share-based compensation

 

 
3,887

 

 

 
3,887

Balance at June 30, 2018
38,179

 
$
382

 
$
280,201

 
$
1,128,670

 
$
(133,452
)
 
$
1,275,801

Net income

 
$

 
$

 
$
44,333

 
$

 
$
44,333

Other comprehensive income loss:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
(4,180
)
 
(4,180
)
Issuance of common stock in connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
340

 
4

 
13,565

 

 

 
13,569

Restricted share grants, less net settled shares of 12
33

 

 
(835
)
 

 

 
(835
)
Purchase and retirement of common stock
(196
)
 
(2
)
 
(14,998
)
 

 

 
(15,000
)
Conversion feature of convertible senior notes due 2023, net

 

 
34,131

 

 

 
34,131

Share-based compensation

 

 
3,656

 

 

 
3,656

Balance at September 30, 2018
38,356

 
$
384

 
$
315,720

 
$
1,173,003

 
$
(137,632
)
 
$
1,351,475


 
See accompanying notes to condensed consolidated financial statements

6


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 
Nine Months Ended September 30,
Operating activities
2019
 
2018
Net income
$
187,665

 
$
126,887

Adjustments to reconcile net income to net cash provided by operating
   activities:
 
 
 
Depreciation and amortization
22,384

 
24,548

Amortization and impairment of other intangible assets
5,838

 
6,297

Acquisition-related contingent consideration
717

 
355

Provision for doubtful accounts
13,552

 
11,951

Share-based compensation
14,060

 
12,219

Amortization of debt discount and issuance costs
8,666

 
2,604

Gain on sale of business

 
(13,031
)
Other
248

 
751

Changes in operating assets and liabilities, net of effects from
   acquisitions:
 
 
 
Accounts receivable, billed and unbilled
(191,644
)
 
(130,369
)
Notes receivable
2,521

 
2,659

Prepaid expenses and other assets
(5,817
)
 
(174
)
Accounts payable, accrued expenses and other
(7,332
)
 
16,150

Income taxes
30,777

 
28,922

Accrued compensation
5,156

 
7,207

Billings in excess of services provided
(9,925
)
 
(10,704
)
Net cash provided by operating activities
76,866

 
86,272

Investing activities
 
 
 
Proceeds from sale of business

 
50,283

Payments for acquisition of businesses, net of cash received
(18,791
)
 

Purchases of property and equipment
(27,026
)
 
(27,841
)
Other
55

 
741

Net cash provided by (used in) investing activities
(45,762
)
 
23,183

Financing activities
 
 
 
Repayments under revolving line of credit, net

 
(100,000
)
Proceeds from issuance of convertible notes

 
316,250

Payments of debt issue costs

 
(8,048
)
Deposits
535

 
2,327

Purchase and retirement of common stock
(77,949
)
 
(29,220
)
Net issuance of common stock under equity compensation plans
3,176

 
31,241

Payments for business acquisition liabilities
(2,282
)
 
(3,029
)
Net cash provided by (used in) financing activities
(76,520
)
 
209,521

Effect of exchange rate changes on cash and cash equivalents
(8,183
)
 
(3,070
)
Net increase (decrease) in cash and cash equivalents
(53,599
)
 
315,906

Cash and cash equivalents, beginning of period
312,069

 
189,961

Cash and cash equivalents, end of period
$
258,470

 
$
505,867

Supplemental cash flow disclosures
 
 
 
Cash paid for interest
$
7,264

 
$
13,428

Cash paid for income taxes, net of refunds
$
29,885

 
$
20,324

Non-cash investing and financing activities:
 
 
 
Issuance of stock units under incentive compensation plans
$
1,413

 
$
1,059

Business acquisition liabilities not yet paid
$
14,004

 
$

 
See accompanying notes to condensed consolidated financial statements

7


FTI Consulting, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollar and share amounts in tables in thousands, except per share data)
(Unaudited)
 
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), presented herein, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC.  
Leases
As of January 1, 2019, the Company adopted Accounting Standards Update ("ASU") 2016-02, Leases, which was amended in some respects by subsequent ASUs (collectively Accounting Standards Codification (“ASC") 842 ("ASC 842")) and supersedes existing lease guidance. The standard requires us to record right-of-use ("ROU") assets and corresponding lease liabilities on the balance sheet and disclose key quantitative and qualitative information about our lease contracts.
Under ASC 842, we determine if a contract is a leasing arrangement at inception. ROU assets represent our right to control the use of an identified asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use the incremental borrowing rate on the commencement date in determining the present value of our lease payments. We recognize operating lease expense for our operating leases on a straight-line basis over the lease term, which may include renewal or termination options that are reasonably certain of exercise.
Lease and non-lease components are accounted for together as a single lease component for operating leases associated with our office space and our equipment leases. We apply a portfolio approach for certain equipment leases to effectively account for the operating lease ROU assets and liabilities.
2. New Accounting Standards
 Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases, which was amended in some respects by subsequent ASUs. We adopted ASC 842 using the modified retrospective basis for reporting. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward the historical lease classification for existing leases on the adoption date, and allowed us not to reassess whether an existing contract contains a lease or initial direct costs. As permitted by the guidance, prior comparative periods will not be adjusted under this method.
See Note 1, "Basis of Presentation and Significant Accounting Policies" for a description of the significant accounting policies for our operating leases. See Note 9, "Leases" for the disclosures required under ASC 842. The adoption of this standard resulted in recognition of ROU assets in the amount of $148.5 million and lease liabilities in the amount of $206.7 million for operating leases on our Condensed Consolidated Balance Sheets as of January 1, 2019. Our existing deferred rent and cease-use liabilities were $62.3 million as of December 31, 2018 and were included as a reduction to the initial measurement of our operating lease assets. Our existing prepaid rent balance was $4.1 million as of December 31, 2018 and was included as a reduction to the initial measurement of our operating lease liabilities. There was no material impact on the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Stockholders’ Equity or Condensed Consolidated Statements of Cash Flows.

8


Accounting Standards Not Yet Adopted
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements. The guidance promotes a framework to help improve the effectiveness of disclosures in the notes to the financial statements and is effective for annual and interim periods beginning after December 15, 2019, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires the Company to capitalize implementation costs of a hosting arrangement that is a service contract and expense those costs over the term of the hosting arrangement. The guidance is effective for annual and interim periods beginning after December 15, 2019 although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
3. Earnings Per Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjusts basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and restricted shares, each using the treasury stock method.
Because we expect to settle the principal amount of the outstanding 2.0% convertible senior notes due 2023 ("2023 Convertible Notes") in cash, we use the treasury stock method for calculating the potential dilutive effect of the conversion feature on earnings per common share, if applicable. The conversion feature had a dilutive impact on earnings per common share for the three and nine months ended September 30, 2019, as the average market price per share of our common stock for the period exceeded the conversion price of $101.38 per share. See Note 8, "Debt" for additional information about the 2023 Convertible Notes.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Numerator — basic and diluted
 
 
 
 
 
 
 
Net income
$
60,422

 
$
44,333

 
$
187,665

 
$
126,887

Denominator
 
 
 
 
 
 
 
Weighted average number of common shares outstanding — basic
36,617

 
37,318

 
36,851

 
37,008

Effect of dilutive convertible notes
21

 

 
7

 

Effect of dilutive stock options
471

 
639

 
454

 
500

Effect of dilutive restricted shares
829

 
799

 
795

 
706

Weighted average number of common shares outstanding — diluted
37,938

 
38,756

 
38,107

 
38,214

Earnings per common share — basic
$
1.65

 
$
1.19

 
$
5.09

 
$
3.43

Earnings per common share — diluted
$
1.59

 
$
1.14

 
$
4.92

 
$
3.32

Antidilutive stock options and restricted shares
1

 
4

 
24

 
221


4. Revenues
We generate the majority of our revenues by providing consulting services to our clients. Most of our consulting service contracts are based on one of the following types of arrangements:
Time and expense arrangements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date.
Fixed-fee arrangements require the client to pay a pre-established fee in exchange for a predetermined set of professional services. We recognize revenues for these arrangements based on the proportional performance related to

9


individual performance obligations within each arrangement; however, these arrangements generally have one performance obligation.
Performance-based or contingent arrangements represent forms of variable consideration. In these arrangements, our fees are based on the attainment of contractually defined objectives with our client, such as completing a business transaction or assisting the client in achieving a specific business objective. We recognize revenues earned to date by applying the proportional performance method.
Revenues are recognized when we satisfy a performance obligation by transferring services promised in a contract to a customer and in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligations in our contracts represent distinct or separate services that we provide to our customers.
Revenues recognized during the current period may include revenues from performance obligations satisfied or partially satisfied in previous periods. This primarily occurs when the estimated transaction price has changed based on our current probability assessment over whether the agreed-upon outcome for our performance-based and contingent arrangements will be achieved. The aggregate amount of revenues recognized related to a change in the transaction price in the current period, which related to performance obligations satisfied or partially satisfied in a prior period was $7.0 million and $23.5 million for the three and nine months ended September 30, 2019, respectively, and $8.7 million and $12.9 million for the three and nine months ended September 30, 2018, respectively.
Unfulfilled performance obligations represent the remaining contract transaction prices allocated to the performance obligations that are unsatisfied. Unfulfilled performance obligations primarily consist of fees not yet recognized on a proportional performance basis for fixed-fee arrangements and performance-based and contingent arrangements. As of September 30, 2019 and December 31, 2018, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $3.0 million and $8.8 million, respectively. We expect to recognize the majority of the related revenues over the next 24 months.
Contract assets are defined as assets for which we have recorded revenue but are not yet entitled to receive our fees because certain events, such as completion of the measurement period or client approval, must occur. The contract asset balance was $3.4 million as of September 30, 2019 and $2.4 million as of December 31, 2018.
Contract liabilities are defined as liabilities incurred when we have received consideration but have not yet performed the agreed upon services. This may occur when clients pay us upfront fees before we begin work for them. The contract liability balance was immaterial as of September 30, 2019 and December 31, 2018.
5. Accounts Receivable and Allowance for Doubtful Accounts
Timing of revenue recognition often differs from the timing of billing to our customers. Generally, we transfer goods or services to a customer before the customer pays consideration or payment is due. If we have an unconditional right to invoice and receive payment for goods or services already provided, we record billed and unbilled receivables on our Condensed Consolidated Balance Sheets. Our contract terms generally include a requirement of payment within 30 days when no contingencies exist. Payment terms and conditions vary depending on the jurisdiction, market and type of service, and whether regulatory or other third-party approvals are required. In addition, contracts may be negotiated per the client’s request; or at times we are asked to execute contracts in a form provided by customers that might include different terms.
We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenues when there are changes in estimates of fee reductions, such as those fee reductions imposed by bankruptcy courts and other regulatory institutions for both billed and unbilled receivables. The allowance for doubtful accounts and unbilled services is also adjusted after the related work has been billed to the client and we discover that collectability is not reasonably assured. These adjustments are recorded to “Selling, general and administrative expenses” ("SG&A") on the Condensed Consolidated Statements of Comprehensive Income. Our bad debt expense totaled $7.3 million and $13.6 million for the three and nine months ended September 30, 2019, respectively, and $3.2 million and $12.0 million for the three and nine months ended September 30, 2018, respectively.

10


6. Goodwill and Other Intangible Assets
Goodwill
The table below summarizes the changes in the carrying amount of goodwill by reportable segment:   
 
Corporate
Finance &
Restructuring
 
Forensic and
Litigation
Consulting
 
Economic
Consulting
 
Technology
 
Strategic
Communications
 
Total
Balance at December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Goodwill
$
450,997

 
$
231,537

 
$
268,547

 
$
96,723

 
$
318,651

 
$
1,366,455

Accumulated goodwill impairment

 

 

 

 
(194,139
)
 
(194,139
)
Goodwill, net at December 31, 2018
450,997


231,537


268,547


96,723


124,512


1,172,316

Acquisitions
30,807

 

 

 

 

 
30,807

Foreign currency translation adjustment and other
(1,740
)
 
(1,228
)
 
(270
)
 
(45
)
 
(2,434
)
 
(5,717
)
Balance at September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Goodwill
480,064


230,309


268,277


96,678

 
316,217

 
1,391,545

Accumulated goodwill impairment

 

 

 

 
(194,139
)
 
(194,139
)
Goodwill, net at September 30, 2019
$
480,064


$
230,309


$
268,277


$
96,678


$
122,078


$
1,197,406


During the three months ended September 30, 2019, we acquired Andersch AG ("Andersch"), a leading German restructuring advisory firm, within our Corporate Finance & Restructuring segment. We recorded $30.8 million in goodwill based on a preliminary purchase price allocation as a result of the acquisition. We have included the results of the acquired business’s operations in the Corporate Finance & Restructuring segment since its acquisition date.  
Other Intangible Assets
Other intangible assets were as follows:  
 
 
September 30, 2019
 
December 31, 2018
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships (1)
 
$
98,082

 
$
73,317

 
$
24,765

 
$
99,080

 
$
71,036

 
$
28,044

Trade names (1)
 
10,281

 
253

 
10,028

 

 

 

Acquired software and other (1)
 
3,254

 
1,900

 
1,354

 
3,107

 
1,618

 
1,489

 
 
111,617

 
75,470

 
36,147

 
102,187

 
72,654

 
29,533

Non-amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
Trade names
 
5,100

 

 
5,100

 
5,100

 

 
5,100

Total
 
$
116,717

 
$
75,470

 
$
41,247

 
$
107,287

 
$
72,654

 
$
34,633

 
(1) 
During the three months ended September 30, 2019, we acquired Andersch and its related intangible assets within our Corporate Finance & Restructuring segment.
Other intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $2.1 million and $5.8 million for the three and nine months ended September 30, 2019, respectively, and $2.0 million and $6.3 million for the three and nine months ended September 30, 2018, respectively.

11


We estimate our future amortization expense for our intangible assets with finite lives to be as follows: 
Year
As of
September 30, 2019 (1)
2019 (remaining)
$
2,362

2020
9,436

2021
8,924

2022
7,156

2023
3,730

Thereafter
4,539

 
$
36,147


(1) 
Actual amortization expense to be reported in future periods could differ from these estimates because of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes.
7. Financial Instruments
The following table presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of September 30, 2019 and December 31, 2018:
 
September 30, 2019
 
 
 
Hierarchy Level
(Fair Value)
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
Acquisition-related contingent consideration, including
current portion (1)(2)
$
16,584

 
$

 
$

 
$
16,584

Long-term debt (3)
273,055

 

 
380,362

 

Total
$
289,639

 
$

 
$
380,362

 
$
16,584

 
December 31, 2018
 
 
 
Hierarchy Level
(Fair Value)
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
Acquisition-related contingent consideration, including
current portion (1)
$
2,960

 
$

 
$

 
$
2,960

Long-term debt (3)
265,571

 

 
291,837

 

Total
$
268,531

 
$

 
$
291,837

 
$
2,960

 
(1) 
The short-term portion is included in “Accounts payable, accrued expenses and other,” and the long-term portion is included in “Other liabilities” on the Condensed Consolidated Balance Sheets.  
(2) 
During the three months ended September 30, 2019, we acquired Andersch within our Corporate Finance & Restructuring segment and recorded an acquisition-related contingent consideration liability of $14.4 million, including accretion for the time value of money.
(3) 
The carrying values include unamortized deferred debt issue costs and debt discount.
The fair values of financial instruments not included in the table above are estimated to be equal to their carrying values as of September 30, 2019 and December 31, 2018.
We estimate the fair value of our 2023 Convertible Notes based on their last actively traded prices. The fair value of our debt is classified within Level 2 of the fair value hierarchy because it is traded in less active markets.

12


We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted discounted cash flow model or a Monte Carlo simulation. These fair value estimates represent Level 3 measurements as they are based on significant inputs not observed in the market and reflect our own assumptions. The significant unobservable inputs used in the fair value measurements of our acquisition-related contingent consideration include measures of discount rates, future cash flows, volatility and the cost of debt. Significant increases (decreases) in these unobservable inputs in isolation would result in a significantly lower (higher) fair value. The fair value of our contingent consideration is reassessed at each reporting period by the Company based on additional information as it becomes available.
Any change in the fair value of an acquisition’s contingent consideration liability results in a remeasurement gain or loss that is recorded in “Selling, general and administrative expenses” on the Consolidated Statements of Comprehensive Income. During the three and nine months ended September 30, 2019 and 2018, there was no change in the estimated fair value of future expected contingent consideration payments.
8. Debt
The table below summarizes the components of the Company’s debt: 
 
September 30,
2019
 
December 31,
2018
2023 Convertible Notes
$
316,250

 
$
316,250

Total debt
316,250

 
316,250

Less: deferred debt discount
(37,588
)
 
(43,998
)
Less: deferred debt issue costs
(5,607
)
 
(6,681
)
Long-term debt, net (1)
$
273,055

 
$
265,571

Additional paid-in capital
$
35,306

 
$
35,306

Discount attribution to equity
(1,175
)
 
(1,175
)
Equity component, net
$
34,131

 
$
34,131

 
(1) 
There were no current portions of long-term debt as of September 30, 2019 and December 31, 2018.
2023 Convertible Notes
On August 20, 2018, we issued the 2023 Convertible Notes in an aggregate principal amount of $316.3 million. The 2023 Convertible Notes bear interest at a fixed rate of 2.0% per year, payable semiannually in arrears on February 15th and August 15th of each year and will mature on August 15, 2023, unless earlier converted or repurchased. The 2023 Convertible Notes are senior unsecured obligations of the Company.
The 2023 Convertible Notes are convertible at an initial conversion rate of 9.8643 shares of our common stock per $1,000 principal amount of the 2023 Convertible Notes (equivalent to an initial conversion price of approximately $101.38 per share of common stock). The circumstances required to allow the holders to convert their 2023 Convertible Notes were not met as of September 30, 2019.
The excess of the principal amount of the liability over its carrying amount ("debt discount") is amortized to interest expense over the term of the 2023 Convertible Notes using the effective interest rate method.
We incurred debt issue costs and allocated the total amount to the liability and equity components of the 2023 Convertible Notes based on their relative values. The debt issue costs attributable to the liability component are amortized to interest expense over the term of the 2023 Convertible Notes using the effective interest rate method. Issuance costs attributable to the equity component were netted with the equity component in stockholders' equity.

13


The table below summarizes the amount of interest cost recognized by us for both the contractual interest expense and amortization of the debt discount for the 2023 Convertible Notes:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Contractual interest expense
$
1,581

 
$
720

 
$
4,743

 
$
720

Amortization of debt discount (1)
2,166

 
938

 
6,411

 
938

Total
$
3,747

 
$
1,658

 
$
11,154

 
$
1,658

 
(1) 
The effective interest rate of the liability component was 5.45% as of September 30, 2019. 
Credit Facility