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fcn-20210930

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, 2021


☐			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 21, 2021
Common Stock, $0.01 par value			34,288,467

FTI CONSULTING, INC. AND SUBSIDIARIES

INDEX


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets—September 30, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Comprehensive Income—Three and Nine Months Ended September 30, 2021 and 2020	4

	Condensed Consolidated Statements of Stockholders’ Equity—Three and Nine Months Ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	44

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

SIGNATURES		48

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,
	2021		2020
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	342,527	$	294,953




Accounts receivable, net	809,878		711,357
Current portion of notes receivable	32,823		35,253
Prepaid expenses and other current assets	83,266		88,144
Total current assets	1,268,494		1,129,707
Property and equipment, net	132,857		101,642
Operating lease assets	224,961		156,645
Goodwill	1,234,023		1,234,879
Intangible assets, net	34,504		41,550
Notes receivable, net	59,123		61,121
Other assets	52,962		51,819
Total assets	$	3,006,924	$	2,777,363
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other	$	157,794	$	170,066
Accrued compensation	451,549		455,933
Billings in excess of services provided	36,279		44,172

Total current liabilities	645,622		670,171
Long-term debt, net	319,355		286,131
Noncurrent operating lease liabilities	232,390		161,677
Deferred income taxes	168,232		158,342
Other liabilities	97,022		100,861
Total liabilities	1,462,621		1,377,182
Commitments and contingencies (Note 11)
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 — 34,295 (2021) and 34,481 (2020)	343		345
Additional paid-in capital	8,490		—
Retained earnings	1,659,947		1,506,271
Accumulated other comprehensive loss	(124,477)		(106,435)
Total stockholders' equity	1,544,303		1,400,181
Total liabilities and stockholders' equity	$	3,006,924	$	2,777,363

See accompanying notes to condensed consolidated financial statements

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,
	2021		2020		2021		2020
Revenues	$	702,228	$	622,249	$	2,099,991	$	1,834,694
Operating expenses
Direct cost of revenues	472,235		417,179		1,431,381		1,232,437
Selling, general and administrative expenses	138,600		122,102		399,076		375,989
Special charges	—		7,103		—		7,103

Amortization of intangible assets	2,860		2,795		8,515		7,440
	613,695		549,179		1,838,972		1,622,969
Operating income	88,533		73,070		261,019		211,725
Other income (expense)
Interest income and other	5,175		(3,340)		5,297		3,879
Interest expense	(5,073)		(5,151)		(15,164)		(15,169)

	102		(8,491)		(9,867)		(11,290)
Income before income tax provision	88,635		64,579		251,152		200,435
Income tax provision	19,155		14,407		54,394		45,342
Net income	$	69,480	$	50,172	$	196,758	$	155,093
Earnings per common share — basic	$	2.07	$	1.41	$	5.88	$	4.30
Earnings per common share — diluted	$	1.96	$	1.35	$	5.58	$	4.11
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax expense of $0	$	(18,607)	$	21,330	$	(18,042)	$	(204)
Total other comprehensive income (loss), net of tax	(18,607)		21,330		(18,042)		(204)
Comprehensive income	$	50,873	$	71,502	$	178,716	$	154,889

See accompanying notes to condensed consolidated financial statements

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(Unaudited)


								Accumulated Other Comprehensive Loss
	Common Stock			Additional Paid-in Capital		Retained Earnings
	Shares	Amount								Total
Balance at December 31, 2020	34,481	$	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 options	12	—		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, 2021	34,228	$	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 options	33	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, 2021	34,282	$	343	$	4,270	$	1,590,467	$	(105,870)	$	1,489,210
Net income	—	$	—	$	—	$	69,480	$	—	$	69,480
Other comprehensive loss:
Cumulative translation adjustment	—	—		—		—		(18,607)		(18,607)
Issuance of common stock in connection with:
Exercise of options	4	—		126		—		—		126
Restricted share grants, less net settled shares of 6	9	—		(866)		—		—		(866)


Share-based compensation	—	—		4,960		—		—		4,960
Balance at September 30, 2021	34,295	$	343	$	8,490	$	1,659,947	$	(124,477)	$	1,544,303


				Additional Paid-in Capital				Accumulated Other Comprehensive Loss
	Common Stock					Retained Earnings
	Shares	Amount								Total
Balance at December 31, 2019	37,390	$	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 options	34	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, 2020	37,110	$	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 options	33	—		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, 2020	36,710	$	367	$	122,743	$	1,518,374	$	(162,381)	$	1,479,103
Net income	—	$	—	$	—	$	50,172	$	—	$	50,172
Other comprehensive income:
Cumulative translation adjustment	—	—		—		—		21,330		21,330
Issuance of common stock in connection with:
Exercise of options	43	—		1,536		—		—		1,536
Restricted share grants, less net settled shares of 2	24	—		(207)		—		—		(207)

Purchase and retirement of common stock	(749)	(7)		(82,859)		—		—		(82,866)
Share-based compensation	—	—		5,429		—		—		5,429
Balance at September 30, 2020	36,028	$	360	$	46,642	$	1,568,546	$	(141,051)	$	1,474,497

See accompanying notes to condensed consolidated financial statements

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Operating activities
Net income	$	196,758	$	155,093
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,631		23,655
Amortization and impairment of intangible assets	8,515		7,440
Acquisition-related contingent consideration	(1,014)		4,652
Provision for expected credit losses	14,816		15,608
Share-based compensation	17,150		17,576
Amortization of debt discount and issuance costs and other	8,551		9,073

Deferred income taxes	5,128		(1,658)

Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled	(115,544)		(86,491)
Notes receivable	4,392		3,346
Prepaid expenses and other assets	1,145		8,294
Accounts payable, accrued expenses and other	(22,745)		7,713
Income taxes	18,025		(14,635)
Accrued compensation	2,803		(18,985)
Billings in excess of services provided	(7,691)		10,296
Net cash provided by operating activities	155,920		140,977
Investing activities

Payments for acquisition of businesses, net of cash received	(9,833)		(25,271)
Purchases of property and equipment and other	(52,441)		(25,105)


Net cash used in investing activities	(62,274)		(50,376)
Financing activities
Borrowings under revolving line of credit	377,500		149,500

Repayments under revolving line of credit	(352,500)		(124,500)

Purchase and retirement of common stock	(46,133)		(175,832)
Share-based compensation tax withholdings and other	(8,277)		(5,195)
Payments for business acquisition liabilities	(7,496)		(3,948)
Deposits	1,928		4,561

Net cash used in financing activities	(34,978)		(155,414)
Effect of exchange rate changes on cash and cash equivalents	(11,094)		98
Net increase (decrease) in cash and cash equivalents	47,574		(64,715)
Cash and cash equivalents, beginning of period	294,953		369,373
Cash and cash equivalents, end of period	$	342,527	$	304,658
Supplemental cash flow disclosures
Cash paid for interest	$	8,756	$	7,115
Cash paid for income taxes, net of refunds	$	31,240	$	61,636
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	$	—	$	8,540
Business acquisition liabilities not yet paid	$	—	$	3,460
Non-cash additions to property and equipment	$	4,435	$	1,203

See accompanying notes to condensed consolidated financial statements

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 events. 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 10, 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 nine months ended September 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 9, "Debt" for additional information about the 2023 Convertible Notes.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator — basic and diluted
Net income	$	69,480	$	50,172	$	196,758	$	155,093
Denominator
Weighted average number of common shares outstanding — basic	33,495		35,639		33,478		36,073
Effect of dilutive restricted shares	662		708		697		774
Effect of dilutive stock options	363		402		369		436
Effect of dilutive convertible notes	842		337		721		425
Weighted average number of common shares outstanding — diluted	35,362		37,086		35,265		37,708
Earnings per common share — basic	$	2.07	$	1.41	$	5.88	$	4.30
Earnings per common share — diluted	$	1.96	$	1.35	$	5.58	$	4.11
Antidilutive stock options and restricted shares	2		83		5		50

4. Special Charges

There were no special charges recorded during the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, we recorded a special charge of $7.1 million, which consists of the following components:

•$4.7 million of lease abandonment and other relocation costs associated with the consolidation of office space in New York, New York; and

•$2.4 million of severance and other employee-related costs in our Forensic and Litigation Consulting ("FLC") segment.

The following table details the special charge by segment:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Corporate Finance & Restructuring	$	—	$	861	$	—	$	861
FLC	—		3,484		—		3,484
Economic Consulting	—		35		—		35
Technology	—		276		—		276
Strategic Communication	—		2,074		—		2,074
Segment special charge	—		6,730		—		6,730
Unallocated Corporate	—		373		—		373
Total	$	—	$	7,103	$	—	$	7,103

5. 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 $11.5 million and $23.0 million for the three and nine months ended September 30, 2021, respectively, and $2.6 million and $15.1 million for the three and nine months ended September 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 September 30, 2021 and December 31, 2020, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $4.1 million and $8.5 million, 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 $1.3 million as of September 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 September 30, 2021 and December 31, 2020, respectively.

6. 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:


	September 30, 2021		December 31, 2020
Accounts receivable:
Billed receivables	$	560,046	$	513,459
Unbilled receivables	290,352		236,285
Allowance for expected credit losses	(40,520)		(38,387)
Accounts receivable, net	$	809,878	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Provision for expected credit losses (1)	$	6,580	$	3,984	$	14,816	$	15,608
Write-offs	$	5,746	$	6,182	$	15,464	$	19,707

(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.

7. Goodwill and Intangible Assets

Goodwill

The table below summarizes the changes in the carrying amount of goodwill by reportable segment:


	Corporate Finance & Restructuring (1)		FLC (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	(4,149)		(680)		(168)		(11)		(1,341)		(6,349)
Balance at September 30, 2021	$	501,923	$	238,187	$	268,919	$	96,810	$	128,184	$	1,234,023

(1) There were no accumulated impairment losses for the Corporate Finance & Restructuring ("Corporate Finance"), FLC, Economic Consulting or Technology segments as of September 30, 2021 and December 31, 2020, respectively.

(2) Amounts for our Strategic Communications segment include gross carrying values of $322.3 million and $323.7 million as of September 30, 2021 and December 31, 2020, respectively, and accumulated impairment losses of $194.1 million as of September 30, 2021 and December 31, 2020.

During the nine months ended September 30, 2021, we acquired certain assets of a business that were assigned to the FLC segment. We recorded $5.5 million in goodwill as a result of the acquisition and 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:


	September 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets
Customer relationships (1)	$	112,818	$	91,069	$	21,749	$	111,556	$	85,180	$	26,376
Trademarks	11,245		4,292		6,953		11,809		2,768		9,041
Acquired software and other	3,461		2,759		702		3,618		2,585		1,033
	127,524		98,120		29,404		126,983		90,533		36,450
Non-amortizing intangible assets
Trademarks	5,100		—		5,100		5,100		—		5,100
Total	$	132,624	$	98,120	$	34,504	$	132,083	$	90,533	$	41,550

(1) During the nine months ended September 30, 2021, we acquired certain assets of a business, 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 $8.5 million for the three and nine months ended September 30, 2021, respectively, and $2.8 million and $7.4 million for the three and nine months ended September 30, 2020, respectively.

We estimate our future amortization expense for our intangible assets with finite lives to be as follows:


Year	As of September 30, 2021 (1)
2021 (remaining)	$	2,325
2022	8,824
2023	5,122
2024	3,693
2025	3,014
Thereafter	6,426
	$	29,404

(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.

8. Financial Instruments

The table below presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of September 30, 2021 and December 31, 2020:


	September 30, 2021
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)	$	14,568	$	—	$	—	$	14,568
2023 Convertible Notes (3)	294,355		—		444,957		—
Total	$	308,923	$	—	$	444,957	$	14,568


	December 31, 2020
			Hierarchy Level (Fair Value)
	Carrying Amount		Level 1		Level 2		Level 3
Liabilities
Acquisition-related contingent consideration, including current portion (1)(2)	$	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 nine months ended September 30, 2021, we acquired certain assets of a business 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 September 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.

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	1,093
Accretion expense (1)	676
Payments	(4,122)
Foreign currency translation adjustment (2)	264
Remeasurement gain (3)	(3,095)
Balance at June 30, 2021	$	14,611

Accretion expense (1)	116

Foreign currency translation adjustment (2)	(