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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 June 30, 2021
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)
 
  
Maryland52-1261113
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
555 12th Street NW
Washington,
DC20004
(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 classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueFCNNew 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 filerAccelerated filer
Non-accelerated filerSmaller 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. 
ClassOutstanding at July 22, 2021
Common Stock, $0.01 par value34,278,447



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
 
 June 30,December 31,
 20212020
(Unaudited)
Assets 
Current assets  
Cash and cash equivalents$256,875 $294,953 
 Accounts receivable, net846,121 711,357 
Current portion of notes receivable32,093 35,253 
Prepaid expenses and other current assets78,373 88,144 
Total current assets1,213,462 1,129,707 
Property and equipment, net117,477 101,642 
Operating lease assets223,618 156,645 
Goodwill1,240,057 1,234,879 
Intangible assets, net37,653 41,550 
Notes receivable, net55,675 61,121 
Other assets50,485 51,819 
Total assets$2,938,427 $2,777,363 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other$156,736 $170,066 
Accrued compensation368,882 455,933 
Billings in excess of services provided36,944 44,172 
Total current liabilities562,562 670,171 
Long-term debt, net391,581 286,131 
Noncurrent operating lease liabilities230,133 161,677 
Deferred income taxes169,009 158,342 
Other liabilities95,932 100,861 
Total liabilities1,449,217 1,377,182 
Commitments and contingencies (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 — 34,282 (2021) and 34,481 (2020)
343 345 
Additional paid-in capital4,270  
Retained earnings1,590,467 1,506,271 
Accumulated other comprehensive loss(105,870)(106,435)
Total stockholders' equity1,489,210 1,400,181 
Total liabilities and stockholders' equity$2,938,427 $2,777,363 
 
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 June 30,Six Months Ended June 30,
 2021202020212020
Revenues$711,486 $607,852 $1,397,763 $1,212,445 
Operating expenses
Direct cost of revenues490,722 413,011 959,146 815,258 
Selling, general and administrative expenses133,930 126,928 260,476 253,887 
Amortization of intangible assets2,854 2,314 5,655 4,645 
 627,506 542,253 1,225,277 1,073,790 
Operating income83,980 65,599 172,486 138,655 
Other income (expense)    
Interest income and other(912)2,202 122 7,219 
Interest expense(5,294)(5,157)(10,091)(10,018)
 (6,206)(2,955)(9,969)(2,799)
Income before income tax provision77,774 62,644 162,517 135,856 
Income tax provision14,992 14,470 35,239 30,935 
Net income$62,782 $48,174 $127,278 $104,921 
Earnings per common share — basic$1.88 $1.33 $3.80 $2.89 
Earnings per common share — diluted$1.77 $1.27 $3.61 $2.76 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax
expense of $0
$5,807 $9,568 $565 $(21,534)
Total other comprehensive income (loss), net of tax5,807 9,568 565 (21,534)
Comprehensive income$68,589 $57,742 $127,843 $83,387 
 
See accompanying notes to condensed consolidated financial statements
4


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(Unaudited)
 
Accumulated
Other
Comprehensive
Loss
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
 
 SharesAmountTotal
Balance at December 31, 202034,481 $345 $ $1,506,271 $(106,435)$1,400,181 
Net income— $— $— $64,496 $— $64,496 
Other comprehensive loss:
Cumulative translation adjustment— — — — (5,242)(5,242)
Issuance of common stock in connection with:
Exercise of options12 — 434 — — 434 
          Restricted share grants, less net
             settled shares of 63
157 1 (7,232)— — (7,231)
           Stock units issued under incentive
             compensation plan
— — 2,603 — — 2,603 
Purchase and retirement of common stock(422)(4)(3,047)(43,082)— (46,133)
Share-based compensation— — 7,242 — — 7,242 
Balance at March 31, 202134,228 $342 $ $1,527,685 $(111,677)$1,416,350 
Net income— $— $— $62,782 $— $62,782 
Other comprehensive income:
Cumulative translation adjustment— — — — 5,807 5,807 
Issuance of common stock in connection
with:
Exercise of options33 1 1,136 — — 1,137 
          Restricted share grants, less net
             settled shares of 13
21 — (1,814)— — (1,814)
Share-based compensation— — 4,948 — — 4,948 
Balance at June 30, 202134,282 $343 $4,270 $1,590,467 $(105,870)$1,489,210 
5


Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
 Common StockRetained
Earnings
 
 SharesAmountTotal
Balance at December 31, 201937,390 $374 $216,162 $1,413,453 $(140,847)$1,489,142 
Net income— $— $— $56,747 $— $56,747 
Other comprehensive loss:
Cumulative translation adjustment— — — — (31,102)(31,102)
Issuance of common stock in connection with:
Exercise of options34 1 1,206 — — 1,207 
Restricted share grants, less net
   settled shares of 58
136 1 (6,768)— — (6,767)
 Stock units issued under incentive
  compensation plan
— — 2,314 — — 2,314 
Purchase and retirement of common stock(450)(5)(50,306)— — (50,311)
Share-based compensation— — 7,454 — — 7,454 
Balance at March 31, 202037,110 $371 $170,062 $1,470,200 $(171,949)$1,468,684 
Net income— $— $— $48,174 $— $48,174 
Other comprehensive income:
Cumulative translation adjustment— — — — 9,568 9,568 
Issuance of common stock in connection
with:
Exercise of options33 — 1,191 — — 1,191 
Restricted share grants, less net
settled shares of 18
38 1 (2,155)— — (2,154)
Purchase and retirement of common stock(471)(5)(51,048)— — (51,053)
Share-based compensation— — 4,693 — — 4,693 
Balance at June 30, 202036,710 $367 $122,743 $1,518,374 $(162,381)$1,479,103 

See accompanying notes to condensed consolidated financial statements
6


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 Six Months Ended June 30,
20212020
Operating activities
Net income$127,278 $104,921 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation and amortization16,765 15,707 
Amortization and impairment of intangible assets5,655 4,645 
Acquisition-related contingent consideration(1,130)1,120 
Provision for expected credit losses8,236 11,624 
Share-based compensation12,190 12,147 
Amortization of debt discount and issuance costs and other5,685 6,000 
Deferred income taxes9,802 4,128 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled(138,838)(42,804)
Notes receivable8,921 5,993 
Prepaid expenses and other assets6,728 8,979 
Accounts payable, accrued expenses and other(13,518)2,230 
Income taxes6,695 (2,344)
Accrued compensation(88,024)(107,217)
Billings in excess of services provided(7,471)4,285 
Net cash provided by (used in) operating activities(41,026)29,414 
Investing activities  
Payments for acquisition of businesses, net of cash received(9,833) 
Purchases of property and equipment and other(27,696)(13,885)
Net cash used in investing activities(37,529)(13,885)
Financing activities  
Borrowings under revolving line of credit292,500 90,000 
Repayments under revolving line of credit(192,500)(55,000)
Purchase and retirement of common stock(46,133)(99,678)
Share-based compensation tax withholdings and other (7,475)(6,523)
Payments for business acquisition liabilities(7,496)(3,948)
Deposits602 5,098 
Net cash provided by (used in) financing activities39,498 (70,051)
Effect of exchange rate changes on cash and cash equivalents979 (10,645)
Net decrease in cash and cash equivalents(38,078)(65,167)
Cash and cash equivalents, beginning of period294,953 369,373 
Cash and cash equivalents, end of period$256,875 $304,206 
Supplemental cash flow disclosures
Cash paid for interest$4,854 $3,668 
Cash paid for income taxes, net of refunds$18,742 $29,150 
Non-cash investing and financing activities:
Issuance of stock units under incentive compensation plans$2,603 $2,314 
Purchase and retirement of common stock not yet paid$ $1,829 
Business acquisition liabilities not yet paid$1,093 $ 
Non-cash additions to property and equipment    $4,150 $1,501 
 
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
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, 2020 filed with the SEC. 
2. New Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2021, 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 November 2020, the SEC issued Rule 33-10890, “Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information” to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K. The amendment enhances and clarifies the disclosure requirements for liquidity and capital resources, eliminates the requirement to present five years of Selected Financial Data, amends the requirement to present two years of tabular selected quarterly financial data so that registrants only need to disclose when there are material retrospective changes and eliminates the tabular disclosure of contractual obligations. The final rules were effective on February 20, 2021 and registrants are required to apply the amended rules for the first fiscal year ending on or after August 9, 2021. The Company is in the process of evaluating the impact of this amendment on its related disclosures.
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 (restricted share awards, restricted stock units and performance stock units), 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 six months ended June 30, 2021 and 2020, as the average market price per share of our common stock for the periods exceeded the conversion price of $101.38 per share. See Note 8, "Debt" for additional information about the 2023 Convertible Notes.
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 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Numerator — basic and diluted    
Net income$62,782 $48,174 $127,278 $104,921 
Denominator
Weighted average number of common shares outstanding — basic
33,458 36,169 33,470 36,292 
Effect of dilutive restricted shares668 732 714 806 
Effect of dilutive stock options376 444 373 453 
Effect of dilutive convertible notes872 507 661 470 
Weighted average number of common shares outstanding — diluted
35,374 37,852 35,218 38,021 
Earnings per common share — basic$1.88 $1.33 $3.80 $2.89 
Earnings per common share — diluted$1.77 $1.27 $3.61 $2.76 
Antidilutive stock options and restricted shares2 54 5 33 
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 contract 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 contract 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. When a time and expense arrangement has a not-to-exceed or "cap" amount and we expect to perform work in excess of the cap, we recognize revenues up to the cap amount specified by the client, based on the efforts or hours incurred as a percentage of total efforts or hours expected to be incurred (i.e., proportional performance method).
Fixed-fee arrangements require the client to pay a fixed 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.
Certain fees in our time and materials arrangements may be subject to approval by a third-party, such as a bankruptcy court and other regulatory agency. In such cases, we record revenues based on the amount we estimate we will be entitled to in exchange for our services and only to the extent a significant reversal of revenue is not likely to occur when the uncertainty associated with the estimate is subsequently resolved. Potential fee reductions imposed by bankruptcy courts and other regulatory agencies or negotiated with specific clients are estimated on a specific identification basis. Our estimates may vary depending on the nature of the engagement, client economics, historical experience and other appropriate factors. When there are changes in our estimates of potential fee reductions, we record such changes to revenues with a corresponding offset to our billed and unbilled accounts receivable.
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 $17.9 million and $16.7 million for the three and six months ended June 30, 2021, respectively, and $8.3 million and $14.1 million for the three and six months ended June 30, 2020, respectively.
Unfulfilled performance obligations primarily consist of fees not yet recognized on certain fixed-fee arrangements and performance-based and contingent arrangements. As of June 30, 2021 and December 31, 2020, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $4.4 million and $8.5 million,
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respectively. We expect to recognize the majority of the related revenues over the next 24 months. We elected to utilize the optional exemption to exclude from this disclosure fixed-fee and performance-based and contingent arrangements with an original expected duration of one year or less and to exclude our time and expense arrangements for which revenues are recognized using the right-to-invoice practical expedient.
Contract assets are defined as assets for which we have recorded revenues 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 $1.4 million as of June 30, 2021 and $2.6 million as of December 31, 2020.
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 fees before work begins. The contract liability balance was immaterial as of June 30, 2021 and December 31, 2020.
5. Accounts Receivable and Allowance for Expected Credit Losses
The following table summarizes the components of "Accounts receivable, net" as presented on the Condensed Consolidated Balance Sheets:
June 30,
2021
December 31, 2020
Accounts receivable:
Billed receivables$598,624 $513,459 
Unbilled receivables287,040 236,285 
Allowance for expected credit losses(39,543)(38,387)
Accounts receivable, net$846,121 $711,357 
We maintain an allowance for expected credit losses, which represents the estimated aggregate amount of credit risk arising from the inability or unwillingness of specific clients to pay our fees or disputes that may affect our ability to fully collect our billed accounts receivable. We record our estimate of lifetime expected credit losses concurrently with the initial recognition of the underlying receivable. Accounts receivable, net of the allowance for expected credit losses, represents the amount we expect to collect. At each reporting date, we adjust the allowance for expected credit losses to reflect our current estimate.
The following table summarizes the total provision for expected credit losses and write-offs:
 Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Provision for expected credit losses (1)
$3,404 $7,752 $8,236 $11,624 
Write-offs$2,802 $7,459 $9,718 $13,525 
(1)    Adjustments to the allowance for expected credit losses are recorded to selling, general & administrative ("SG&A") expenses on the Condensed Consolidated Statements of Comprehensive Income.
We estimate the current-period provision for expected credit losses on a specific identification basis. Our judgments regarding a specific client’s credit risk considers factors such as the counterparty’s creditworthiness, knowledge of the specific client’s circumstances and historical collection experience for similar clients. Other factors include, but are not limited to, current economic conditions and forward-looking estimates. Our actual experience may vary from our estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional provisions for expected credit losses in future periods. The risk of credit losses may be mitigated to the extent that we received a retainer from some of our clients prior to performing services. Our provision for expected credit losses includes recoveries, direct write-offs and charges to other accounts. Billed accounts receivables are written off when the potential for recovery is considered remote.
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6. Goodwill and Intangible Assets
Goodwill
The table below summarizes the changes in the carrying amount of goodwill by reportable segment:
Corporate
Finance &
  Restructuring (1)
Forensic and Litigation Consulting (1)
Economic
Consulting (1)
Technology (1)
Strategic
Communications (2)
Total
Balance at December 31, 2020$506,072 $233,374 $269,087 $96,821 $129,525 $1,234,879 
Acquisitions 5,493    5,493 
Foreign currency translation
adjustment and other
(1,560)315 38 30 862 (315)
Balance at June 30, 2021$504,512 $239,182 $269,125 $96,851 $130,387 $1,240,057 
(1)    There were no accumulated impairment losses for the Corporate Finance & Restructuring ("Corporate Finance"), Forensic and Litigation Consulting ("FLC"), Economic Consulting or Technology segments as of June 30, 2021 and December 31, 2020, respectively.
(2)    Amounts for our Strategic Communications segment include gross carrying values of $324.5 million and $323.7 million as of June 30, 2021 and December 31, 2020, respectively, and accumulated impairment losses of $194.1 million as of June 30, 2021 and December 31, 2020.
During the three months ended June 30, 2021, we acquired certain assets of a leading construction consulting firm that were assigned to the FLC segment. We recorded $5.5 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 FLC segment since its acquisition date.
Intangible Assets
Intangible assets were as follows:
 June 30, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortizing intangible assets      
Customer relationships (1)
$113,937 $89,837 $24,100 $111,556 $85,180 $26,376 
Trademarks11,476 3,814 7,662 11,809 2,768 9,041 
Acquired software and other 3,507 2,716 791 3,618 2,585 1,033 
128,920 96,367 32,553 126,983 90,533 36,450 
Non-amortizing intangible assets
Trademarks 5,100 — 5,100 5,100 — 5,100 
Total$134,020 $96,367 $37,653 $132,083 $90,533 $41,550 
(1)     During the three months ended June 30, 2021, we acquired certain assets of a leading construction consulting firm, and its related intangible assets were assigned to the FLC segment.
Intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $2.9 million and $5.7 million for the three and six months ended June 30, 2021, respectively, and $2.3 million and $4.6 million for the three and six months ended June 30, 2020, respectively.
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We estimate our future amortization expense for our intangible assets with finite lives to be as follows:
Year
As of
June 30, 2021 (1)
2021 (remaining)$5,207 
20228,887 
20235,192 
20243,745 
20253,051 
Thereafter6,471 
 $32,553 
(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.
7. Financial Instruments
The table below presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of June 30, 2021 and December 31, 2020:
June 30, 2021
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3
Liabilities
Acquisition-related contingent consideration, including
current portion (1)(2)
$14,611 $ $ $14,611 
2023 Convertible Notes (3)
291,581  446,725  
Total$306,192 $ $446,725 $14,611 
December 31, 2020
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3
Liabilities   
Acquisition-related contingent consideration, including
current portion (1)
$20,118 $ $ $20,118 
2023 Convertible Notes (3)
286,131  396,982  
Total$306,249 $ $396,982 $20,118 
(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 June 30, 2021, we acquired certain assets of a leading construction consulting firm that were assigned to the FLC segment and recorded an acquisition-related contingent consideration liability.
(3)The carrying values include unamortized deferred debt issue costs and debt discount.
The fair values of financial instruments not included in the tables above are estimated to be equal to their carrying values as of June 30, 2021 and December 31, 2020.
We estimate the fair value of our 2023 Convertible Notes based on their last actively traded prices. The fair value of our 2023 Convertible Notes is classified within Level 2 of the fair value hierarchy because it is traded in less active markets.
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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. Significant increases (or decreases) in these unobservable inputs in isolation would result in significantly lower (or higher) fair values. We reassess the fair value of our acquisition-related contingent consideration at each reporting period based on additional information as it becomes available.
The table below presents the change in our liability for acquisition-related contingent consideration for our Level 3 financial instruments:
Contingent Consideration
Balance at December 31, 2020$20,118 
Accretion expense (1)
1,289 
Payments(1,000)
Foreign currency translation adjustment (2)
(612)
Balance at March 31, 2021$19,795 
Additions (3)
1,093 
Accretion expense (1)
676 
Payments(4,122)
Foreign currency translation adjustment (2)
264 
Remeasurement gain (4)
(3,095)
Balance at June 30, 2021$14,611 
Contingent Consideration
Balance at December 31, 2019$14,826 
Accretion expense (1)
506 
Foreign currency translation adjustment (2)
(148)
Balance at March 31, 2020$15,184 
Accretion expense (1)
614 
Payments(4,692)
Foreign currency translation adjustment (2)
88 
Balance at June 30, 2020$11,194 
(1)Accretion expense is included in SG&A 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.
(3)During the three months ended June 30, 2021, we acquired certain assets of a business that were assigned to the FLC segment and recorded an acquisition-related contingent consideration liability.
(4)Remeasurement gain or loss resulting from a change in the fair value of an acquisition's contingent consideration liability is recorded in SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income.
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8. Debt
The table below presents the components of the Company’s debt: 
June 30,
2021
December 31, 2020
2023 Convertible Notes$316,250 $316,250 
Credit Facility100,000  
Total debt416,250 316,250 
Less: deferred debt discount(21,582)(26,310)
Less: deferred debt issue costs(3,087)(3,809)
Long-term debt, net (1)
$391,581 $286,131 
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 June 30, 2021 and December 31, 2020.
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 maturity at a conversion rate of 9.8643 shares of our common stock per $1,000 principal amount of the 2023 Convertible Notes (equivalent to a conversion price of approximately $101.38 per share of common stock). Subject to the conditions set forth in the indenture governing the 2023 Convertible Notes, holders may convert their 2023 Convertible Notes at any time prior to the close of business on the business day immediately preceding May 15, 2023. The circumstances required to allow the holders to convert their 2023 Convertible Notes prior to maturity were met as of June 30, 2021, therefore, holders may convert their notes at any time beginning on July 1, 2021 and ending on September 30, 2021. We continue to classify the net carrying amount of the 2023 Convertible Notes as long-term debt based on our intent and ability to refinance the principal portion of our debt on a long-term basis.
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.
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 June 30,Six Months Ended June 30,
 2021202020212020
Contractual interest expense$1,581 $1,581 $3,162 $3,162 
Amortization of debt discount (1)
2,380 2,255 4,728 4,480 
Total $3,961 $3,836 $7,890 $7,642 
(1)The effective interest rate of the liability component is 5.45%.
Credit Facility
On June 26, 2015, we entered into a credit agreement, which provides for a $550.0 million senior secured bank revolving credit facility (“Original Credit Facility”) maturing on June 26, 2020. In November 2018, we amended and restated the credit
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agreement to the Original Credit Facility, to, among other things, extend the maturity to November 30, 2023 and incurred an additional $1.7 million of debt issuance costs (the Original Credit Facility as amended and restated, the “Credit Facility”).
The Company classified the borrowings under the Company’s Credit Facility as long-term debt in the accompanying Condensed Consolidated Balance Sheets, as amounts due under the Credit Facility are not contractually required or expected to be liquidated for more than one year from the applicable balance sheet date. As of June 30, 2021, $1.1 million of the borrowing limit under the Credit Facility was utilized (and, therefore, unavailable) for letters of credit.
There were $1.1 million and $1.3 million of unamortized debt issue costs related to the Credit Facility as of June 30, 2021 and December 31, 2020, respectively. These amounts are included in “Other assets” on our Condensed Consolidated Balance Sheets.
9. Leases
We lease office space and equipment under non-cancelable operating leases. We recognize operating lease expense on a straight-line basis over the lease term, which may include renewal or termination options that are reasonably certain of exercise. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are expensed on a straight-line basis. Most leases include one or more options to renew, with renewal terms that can extend the lease term from six months to seven years. The exercise of lease renewal options is at our sole discretion. Certain of our lease agreements include rental payments that are adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The current period disclosures below reflect our new principal office space in New York, New York, as we accepted possession of the premises on April 1, 2021.
The table below summarizes the carrying amount of our operating lease assets and liabilities:
LeasesClassificationJune 30, 2021December 31, 2020
Assets
  Operating lease assetsOperating lease assets$223,618 $156,645 
Total lease assets$223,618 $156,645 
Liabilities
Current
  Operating lease liabilities
Accounts payable, accrued expenses and other$35,214 $42,716 
Noncurrent
  Operating lease liabilitiesNoncurrent operating lease liabilities230,133 161,677 
Total lease liabilities$265,347 $204,393 
The table below summarizes total lease costs:
Three Months Ended June 30,Six Months Ended June 30,
Lease Cost2021202020212020
Operating lease costs$14,407 $11,800 $26,489 $23,599 
Short-term lease costs473 487 962 1,009 
Variable lease costs2,748 2,846 6,211 5,832 
Sublease income(1,048)(1,041)(2,095)(2,130)
Total lease cost, net$16,580 $14,092 $31,567 $28,310 
We sublease certain of our leased office spaces to third parties. Our sublease portfolio consists of leases of office space that we have vacated before the lease term expiration. Operating lease expense on vacated office space is reduced by sublease rental income, which is recorded to SG&A expenses on the Condensed Consolidated Statements of Comprehensive Income. Our sublease arrangements do not contain renewal options or restrictive covenants. We estimate future sublease rental income to be $2.1 million in the remainder of 2021, $0.8 million in 2022, $0.6 million in 2023, $0.6 million in 2024 and $0.3 million in 2025. There is no future sublease rental income estimated for the years beyond 2025.
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The maturity analysis below summarizes the remaining future undiscounted cash flows for our operating leases and includes a reconciliation to operating lease liabilities reported on the Condensed Consolidated Balance Sheets:
 As of
June 30, 2021
2021 (remaining)$5,623 
202249,443 
202345,999 
202440,781 
202534,871 
Thereafter172,048 
   Total future lease payments348,765 
   Less: imputed interest(83,418)
Total$265,347 

The table below includes cash paid for our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount rate:
Six Months Ended June 30,
 20212020
Cash paid for amounts included in the measurement of operating lease liabilities$31,050$26,986
Operating lease assets obtained in exchange for lease liabilities$85,221$11,954
Weighted average remaining lease term (years)
   Operating leases8.86.3
Weighted average discount rate
   Operating leases
5.5 %5.5 %
10.