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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 September 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 October 21, 2021
Common Stock, $0.01 par value34,288,467



FTI CONSULTING, INC. AND SUBSIDIARIES
INDEX
 
  
Page 
   
  
 
  
 
  
 
  
 
  
 
  
  
  
 
  
  
  
  
  
  
  
 
2


PART I—FINANCIAL INFORMATION
FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
Item 1.Financial Statements
 
 September 30,December 31,
 20212020
(Unaudited)
Assets 
Current assets  
Cash and cash equivalents$342,527 $294,953 
 Accounts receivable, net809,878 711,357 
Current portion of notes receivable32,823 35,253 
Prepaid expenses and other current assets83,266 88,144 
Total current assets1,268,494 1,129,707 
Property and equipment, net132,857 101,642 
Operating lease assets224,961 156,645 
Goodwill1,234,023 1,234,879 
Intangible assets, net34,504 41,550 
Notes receivable, net59,123 61,121 
Other assets52,962 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 compensation451,549 455,933 
Billings in excess of services provided36,279 44,172 
Total current liabilities645,622 670,171 
Long-term debt, net319,355 286,131 
Noncurrent operating lease liabilities232,390 161,677 
Deferred income taxes168,232 158,342 
Other liabilities97,022 100,861 
Total liabilities1,462,621 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 capital8,490  
Retained earnings1,659,947 1,506,271 
Accumulated other comprehensive loss(124,477)(106,435)
Total stockholders' equity1,544,303 1,400,181 
Total liabilities and stockholders' equity$3,006,924 $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 September 30,Nine Months Ended September 30,
 2021202020212020
Revenues$702,228 $622,249 $2,099,991 $1,834,694 
Operating expenses
Direct cost of revenues472,235 417,179 1,431,381 1,232,437 
Selling, general and administrative expenses138,600 122,102 399,076 375,989 
Special charges 7,103  7,103 
Amortization of intangible assets2,860 2,795 8,515 7,440 
 613,695 549,179 1,838,972 1,622,969 
Operating income88,533 73,070 261,019 211,725 
Other income (expense)    
Interest income and other5,175 (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 provision88,635 64,579 251,152 200,435 
Income tax provision19,155 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
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 
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 options4 — 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, 202134,295 $343 $8,490 $1,659,947 $(124,477)$1,544,303 
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 
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 options43 — 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, 202036,028 $360 $46,642 $1,568,546 $(141,051)$1,474,497 

See accompanying notes to condensed consolidated financial statements
6


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 Nine Months Ended September 30,
20212020
Operating activities
Net income$196,758 $155,093 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization25,631 23,655 
Amortization and impairment of intangible assets8,515 7,440 
Acquisition-related contingent consideration(1,014)4,652 
Provision for expected credit losses14,816 15,608 
Share-based compensation17,150 17,576 
Amortization of debt discount and issuance costs and other8,551 9,073 
Deferred income taxes5,128 (1,658)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled(115,544)(86,491)
Notes receivable4,392 3,346 
Prepaid expenses and other assets1,145 8,294 
Accounts payable, accrued expenses and other(22,745)7,713 
Income taxes18,025 (14,635)
Accrued compensation2,803 (18,985)
Billings in excess of services provided(7,691)10,296 
Net cash provided by operating activities155,920 140,977 
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 credit377,500 149,500 
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)
Deposits1,928 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 equivalents47,574 (64,715)
Cash and cash equivalents, beginning of period294,953 369,373 
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
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 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.
8


 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
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 shares662 708 697 774 
Effect of dilutive stock options363 402 369 436 
Effect of dilutive convertible notes842 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 shares2 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
$2.4 million of severance and other employee-related costs in our Forensic and Litigation Consulting ("FLC") segment.
The following table details the special charge by segment:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Corporate Finance & Restructuring$ $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 
9


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.
10


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 receivables290,352 236,285 
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,
2021202020212020
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.
11


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, 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)
$112,818 $91,069 $21,749 $111,556 $85,180 $26,376 
Trademarks11,245 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.
12


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 
20228,824 
20235,122 
20243,693 
20253,014 
Thereafter6,426 
 $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 1Level 2Level 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 1Level 2Level 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.
13


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 
Additions1,093 
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)
(159)
Balance at September 30, 2021$14,568 
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 
Additions3,460 
Accretion expense (1)
3,532 
Foreign currency translation adjustment (2)
359 
Balance at September 30, 2020$18,545