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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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Emerging growth company
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Class
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Outstanding at April 23, 2020
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Common Stock, $0.01 par value
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Page
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Item 1.
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Financial Statements
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March 31,
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December 31,
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2020
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2019
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|||||
(Unaudited)
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Assets
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||||||
Current assets
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Cash and cash equivalents
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$
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$
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Accounts receivable:
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Billed receivables
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Unbilled receivables
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Allowance for doubtful accounts and unbilled services
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(
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)
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(
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)
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|||
Accounts receivable, net
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Current portion of notes receivable
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Prepaid expenses and other current assets
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Total current assets
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Property and equipment, net
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Operating lease assets
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Goodwill
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Other intangible assets, net
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Notes receivable, net
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Other assets
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Total assets
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$
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$
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Liabilities and Stockholders' Equity
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|||||||
Current liabilities
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|||||||
Accounts payable, accrued expenses and other
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$
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$
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Accrued compensation
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Billings in excess of services provided
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Total current liabilities
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Long-term debt, net
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Noncurrent operating lease liabilities
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Deferred income taxes
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Other liabilities
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Total liabilities
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Commitments and contingent liabilities (Note 10)
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Stockholders' equity
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Preferred stock, $0.01 par value; shares authorized — 5,000; none
outstanding
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Common stock, $0.01 par value; shares authorized — 75,000;
shares issued and outstanding — 37,110 (2020) and 37,390 (2019)
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive loss
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(
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)
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(
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)
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Total stockholders' equity
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Total liabilities and stockholders' equity
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$
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$
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Three Months Ended March 31,
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|||||||
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2020
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2019
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||||||
Revenues
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$
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$
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||
Operating expenses
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||||||||
Direct cost of revenues
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||||
Selling, general and administrative expenses
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Amortization of other intangible assets
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Operating income
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Other income (expense)
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Interest income and other
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Interest expense
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(
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)
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(
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)
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||||
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(
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)
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||||
Income before income tax provision
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Income tax provision
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Net income
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$
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$
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Earnings per common share — basic
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$
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$
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Earnings per common share — diluted
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$
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$
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Other comprehensive income (loss), net of tax
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||||||||
Foreign currency translation adjustments, net of tax
expense of $0
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$
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(
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)
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$
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Total other comprehensive income (loss), net of tax
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(
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)
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Comprehensive income
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$
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$
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Common Stock
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Additional
Paid-in
Capital
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Retained
Earnings
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Accumulated
Other
Comprehensive
Loss
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|||||||||||||||||
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Shares
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Amount
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Total
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|||||||||||||||||||
Balance at December 31, 2019
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$
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$
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$
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$
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(
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)
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$
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|||||
Net income
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—
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$
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—
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$
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—
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$
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$
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—
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$
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|||||
Other comprehensive loss:
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||||||||||||||||||||||
Cumulative translation adjustment
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—
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—
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—
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—
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(
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)
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(
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)
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||||||||||
Issuance of common stock in
connection with: |
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Exercise of options
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—
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—
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||||||||||
Restricted share grants, less net
settled shares of 58
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(
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)
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—
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—
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(
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)
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||||||||||
Stock units issued under incentive
compensation plan
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—
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—
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—
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—
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Purchase and retirement of common
stock |
(
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)
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(
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)
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(
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)
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—
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—
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(
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)
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||||||||||
Share-based compensation
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—
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—
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—
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—
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Balance at March 31, 2020
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$
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$
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$
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$
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(
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)
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$
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Common Stock
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Additional
Paid-in
Capital
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Retained
Earnings
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Accumulated
Other
Comprehensive
Loss
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Shares
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Amount
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Total
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|||||||||||||||||||
Balance at December 31, 2018
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$
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$
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|
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$
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$
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(
|
)
|
$
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|
|||||
Net income
|
—
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|
$
|
—
|
|
$
|
—
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$
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|
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$
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—
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$
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|
|||||
Other comprehensive income:
|
||||||||||||||||||||||
Cumulative translation adjustment
|
—
|
|
—
|
|
—
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|
—
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|
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|
|
|
||||||||||
Issuance of common stock in connection with:
|
||||||||||||||||||||||
Exercise of options
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—
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|
—
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|
|
|
||||||||||
Restricted share grants, less net
settled shares of 38 |
|
|
|
|
(
|
)
|
—
|
|
—
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|
(
|
)
|
||||||||||
Stock units issued under incentive
compensation plan |
—
|
|
—
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|
|
|
—
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|
—
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|
|
|
||||||||||
Purchase and retirement of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
—
|
|
—
|
|
(
|
)
|
||||||||||
Share-based compensation
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—
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|
—
|
|
|
|
—
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|
—
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|
|
||||||||||
Balance at March 31, 2019
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|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
|
Three Months Ended March 31,
|
||||||
2020
|
2019
|
||||||
Operating activities
|
|||||||
Net income
|
$
|
|
|
$
|
|
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
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|
|||||
Depreciation and amortization
|
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|
|||
Amortization and impairment of other intangible assets
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|
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|
|||
Acquisition-related contingent consideration
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|
|||
Provision for doubtful accounts
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|
|||
Share-based compensation
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|
|
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|
|||
Amortization of debt discount and issuance costs
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|
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|
|||
Deferred income taxes
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|
|
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|
|||
Other
|
|
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(
|
)
|
|||
Changes in operating assets and liabilities, net of effects from
acquisitions:
|
|||||||
Accounts receivable, billed and unbilled
|
(
|
)
|
(
|
)
|
|||
Notes receivable
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|
|
|
|
|||
Prepaid expenses and other assets
|
|
|
|
|
|||
Accounts payable, accrued expenses and other
|
|
|
(
|
)
|
|||
Income taxes
|
(
|
)
|
|
|
|||
Accrued compensation
|
(
|
)
|
(
|
)
|
|||
Billings in excess of services provided
|
|
|
|
|
|||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
|||
Investing activities
|
|
|
|||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
|||
Other
|
|
|
|
|
|||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
|||
Financing activities
|
|
|
|||||
Borrowings under revolving line of credit
|
|
|
|
|
|||
Repayments under revolving line of credit
|
(
|
)
|
|
|
|||
Purchase and retirement of common stock
|
(
|
)
|
(
|
)
|
|||
Net issuance of common stock under equity compensation plans
|
(
|
)
|
(
|
)
|
|||
Payments for business acquisition liabilities
|
|
|
(
|
)
|
|||
Deposits and other
|
|
|
|
|
|||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(
|
)
|
|
|
|||
Net decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
|||
Cash and cash equivalents, beginning of period
|
|
|
|
|
|||
Cash and cash equivalents, end of period
|
$
|
|
|
$
|
|
|
|
Supplemental cash flow disclosures
|
|||||||
Cash paid for interest
|
$
|
|
|
$
|
|
|
|
Cash paid for income taxes, net of refunds
|
$
|
|
|
$
|
|
|
|
Non-cash investing and financing activities:
|
|||||||
Issuance of stock units under incentive compensation plans
|
$
|
|
|
$
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
2019
|
|||||
Numerator — basic and diluted
|
|
|
|||||
Net income
|
$
|
|
|
$
|
|
|
|
Denominator
|
|||||||
Weighted average number of common shares outstanding — basic
|
|
|
|
|
|||
Effect of dilutive convertible notes
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|
|
|||
Effect of dilutive stock options
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|
|
|
|
|||
Effect of dilutive restricted shares
|
|
|
|
|
|||
Weighted average number of common shares outstanding — diluted
|
|
|
|
|
|||
Earnings per common share — basic
|
$
|
|
|
$
|
|
|
|
Earnings per common share — diluted
|
$
|
|
|
$
|
|
|
|
Antidilutive stock options and restricted shares
|
|
|
|
|
•
|
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 earned to date by applying the proportional performance method. Generally, these arrangements 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 in an amount that is probable not to reverse and by applying the proportional performance method when the criteria for over time revenue recognition are met.
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Corporate
Finance &
Restructuring
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Forensic and
Litigation
Consulting
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Economic
Consulting
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Technology
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Strategic
Communications
|
Total
|
||||||||||||||||||
Balance at December 31, 2019
|
|
|
|
|
|
|
|||||||||||||||||
Goodwill
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
Accumulated goodwill impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
(
|
)
|
(
|
)
|
|||||||||||
Goodwill, net at December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||
Balance at March 31, 2020
|
|||||||||||||||||||||||
Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accumulated goodwill impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
(
|
)
|
(
|
)
|
|||||||||||
Goodwill, net at March 31, 2020
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
March 31, 2020
|
December 31, 2019
|
||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||||||||
Amortizing intangible assets
|
|
|
|
|
|
|
||||||||||||||||||
Customer relationships
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||
Trademarks
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired software and other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Non-amortizing intangible assets
|
||||||||||||||||||||||||
Trademarks
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
||||||||||||
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Year
|
As of
March 31, 2020
(1)
|
||
2020 (remaining)
|
$
|
|
|
2021
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2024
|
|
|
|
Thereafter
|
|
|
|
|
$
|
|
|
|
(1)
|
Actual amortization expense to be reported in future periods could differ from these estimates because of new intangible asset acquisitions, impairments, changes in useful lives, or other relevant factors or changes.
|
March 31, 2020
|
|||||||||||||||
Hierarchy Level
(Fair Value)
|
|||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Liabilities
|
|||||||||||||||
Acquisition-related contingent consideration, including
current portion
(1)
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
2023 Convertible Notes
(2)
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
December 31, 2019
|
|||||||||||||||
Hierarchy Level
(Fair Value)
|
|||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Liabilities
|
|
|
|
||||||||||||
Acquisition-related contingent consideration, including
current portion
(1)
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
2023 Convertible Notes
(2)
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
(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)
|
The carrying values include unamortized deferred debt issue costs and debt discount.
|
Liability for Acquisition-Related Contingent Consideration
|
|||
Balance at December 31, 2019
|
$
|
|
|
Accretion for time value of money
(1)
|
|
|
|
Foreign currency translation adjustment
(2)
|
(
|
)
|
|
Balance at March 31, 2020
|
$
|
|
|
Liability for Acquisition-Related Contingent Consideration
|
|||
Balance at December 31, 2018
|
$
|
|
|
Accretion for time value of money
(1)
|
|
|
|
Balance at March 31, 2019
|
$
|
|
|
(1)
|
Accretion for the time value of money is included in "Selling, general and administrative expenses" on the Condensed Consolidated Statements of Comprehensive Income.
|
(2)
|
Foreign currency translation adjustments are included in "Other comprehensive income (loss), net of tax" on the Condensed Consolidated Statements of Comprehensive Income.
|
March 31,
2020 |
December 31,
2019 |
||||||
2023 Convertible Notes
|
$
|
|
|
$
|
|
|
|
Credit Facility
|
|
|
|
|
|||
Total debt
|
|
|
|
|
|||
Less: deferred debt discount
|
(
|
)
|
(
|
)
|
|||
Less: deferred debt issue costs
|
(
|
)
|
(
|
)
|
|||
Long-term debt, net
(1)
|
$
|
|
|
$
|
|
|
|
Additional paid-in capital
|
$
|
|
|
$
|
|
|
|
Discount attribution to equity
|
(
|
)
|
(
|
)
|
|||
Equity component, net
|
$
|
|
|
$
|
|
|
(1)
|
There were
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
2019
|
|||||
Contractual interest expense
|
$
|
|
|
$
|
|
|
|
Amortization of debt discount
(1)
|
|
|
|
|
|||
Total
|
$
|
|
|
$
|
|
|
(1)
|
|
Leases
|
Classification
|
As of
March 31,
2020
|
As of
December 31,
2019
|
|||||||
Assets
|
||||||||||
Operating lease assets
|
Operating lease assets
|
$
|
|
|
$
|
|
|
|||
Total lease assets
|
$
|
|
|
$
|
|
|
||||
Liabilities
|
||||||||||
Current
|
||||||||||
Operating lease liabilities
|
Accounts payable, accrued expenses and other
|
$
|
|
|
$
|
|
|
|||
Noncurrent
|
||||||||||
Operating lease liabilities
|
Noncurrent operating lease liabilities
|
|
|
|
|
|||||
Total lease liabilities
|
$
|
|
|
$
|
|
|
Three months ended March 31,
|
|||||||
Lease Cost
|
2020
|
2019
|
|||||
Operating lease costs
|
$
|
|
|
$
|
|
|
|
Short-term lease costs
|
|
|
|
|
|||
Variable lease costs
|
|
|
|
|
|||
Sublease income
|
(
|
)
|
(
|
)
|
|||
Total lease cost
|
$
|
|
|
$
|
|
|
|
As of
March 31, 2020
|
||
2020 (remaining)
|
$
|
|
|
2021
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2024
|
|
|
|
Thereafter
|
|
|
|
Total future lease payments
|
|
|
|
Less: imputed interest
|
(
|
)
|
|
Total
|
$
|
|
|