fcn-20220630
false2022Q2000088793612/310.0098643http://fasb.org/us-gaap/2022#AccountsPayableAndAccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#AccountsPayableAndAccruedLiabilitiesCurrent00008879362022-01-012022-06-3000008879362022-07-21xbrli:shares00008879362022-06-30iso4217:USD00008879362021-12-31iso4217:USDxbrli:shares00008879362022-04-012022-06-3000008879362021-04-012021-06-3000008879362021-01-012021-06-300000887936us-gaap:CommonStockMember2021-12-310000887936us-gaap:AdditionalPaidInCapitalMember2021-12-310000887936us-gaap:RetainedEarningsMember2021-12-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000887936us-gaap:RetainedEarningsMember2022-01-012022-03-3100008879362022-01-012022-03-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000887936us-gaap:CommonStockMember2022-01-012022-03-310000887936us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000887936us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310000887936us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310000887936srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310000887936us-gaap:CommonStockMember2022-03-310000887936us-gaap:AdditionalPaidInCapitalMember2022-03-310000887936us-gaap:RetainedEarningsMember2022-03-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100008879362022-03-310000887936us-gaap:RetainedEarningsMember2022-04-012022-06-300000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000887936us-gaap:CommonStockMember2022-04-012022-06-300000887936us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000887936us-gaap:CommonStockMember2022-06-300000887936us-gaap:AdditionalPaidInCapitalMember2022-06-300000887936us-gaap:RetainedEarningsMember2022-06-300000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000887936us-gaap:CommonStockMember2020-12-310000887936us-gaap:AdditionalPaidInCapitalMember2020-12-310000887936us-gaap:RetainedEarningsMember2020-12-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100008879362020-12-310000887936us-gaap:RetainedEarningsMember2021-01-012021-03-3100008879362021-01-012021-03-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000887936us-gaap:CommonStockMember2021-01-012021-03-310000887936us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000887936us-gaap:CommonStockMember2021-03-310000887936us-gaap:AdditionalPaidInCapitalMember2021-03-310000887936us-gaap:RetainedEarningsMember2021-03-310000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100008879362021-03-310000887936us-gaap:RetainedEarningsMember2021-04-012021-06-300000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000887936us-gaap:CommonStockMember2021-04-012021-06-300000887936us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000887936us-gaap:CommonStockMember2021-06-300000887936us-gaap:AdditionalPaidInCapitalMember2021-06-300000887936us-gaap:RetainedEarningsMember2021-06-300000887936us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000008879362021-06-300000887936srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2022-01-010000887936srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2022-06-300000887936us-gaap:SeniorNotesMemberfcn:ConvertibleNoteDue2023Member2022-01-01xbrli:pure0000887936fcn:StockOptionsAndShareBasedAwardsMember2022-04-012022-06-300000887936fcn:StockOptionsAndShareBasedAwardsMember2021-04-012021-06-300000887936fcn:StockOptionsAndShareBasedAwardsMember2022-01-012022-06-300000887936fcn:StockOptionsAndShareBasedAwardsMember2021-01-012021-06-3000008879362022-07-012022-06-3000008879362022-01-012021-12-310000887936fcn:CorporateFinanceRestructuringMember2021-12-310000887936fcn:ForensicAndLitigationConsultingMember2021-12-310000887936fcn:EconomicConsultingMember2021-12-310000887936fcn:TechnologyMember2021-12-310000887936fcn:StrategicCommunicationsMember2021-12-310000887936fcn:CorporateFinanceRestructuringMember2022-01-012022-06-300000887936fcn:ForensicAndLitigationConsultingMember2022-01-012022-06-300000887936fcn:EconomicConsultingMember2022-01-012022-06-300000887936fcn:TechnologyMember2022-01-012022-06-300000887936fcn:StrategicCommunicationsMember2022-01-012022-06-300000887936fcn:CorporateFinanceRestructuringMember2022-06-300000887936fcn:ForensicAndLitigationConsultingMember2022-06-300000887936fcn:EconomicConsultingMember2022-06-300000887936fcn:TechnologyMember2022-06-300000887936fcn:StrategicCommunicationsMember2022-06-300000887936us-gaap:CustomerRelationshipsMember2022-06-300000887936us-gaap:CustomerRelationshipsMember2021-12-310000887936us-gaap:TrademarksMember2022-06-300000887936us-gaap:TrademarksMember2021-12-310000887936us-gaap:ComputerSoftwareIntangibleAssetMember2022-06-300000887936us-gaap:ComputerSoftwareIntangibleAssetMember2021-12-310000887936us-gaap:TrademarksMember2022-06-300000887936us-gaap:TrademarksMember2021-12-310000887936us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300000887936us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000887936us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000887936us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300000887936us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310000887936us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000887936us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000887936us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000887936fcn:ConvertibleNoteDue2023Member2022-06-300000887936fcn:ConvertibleNoteDue2023Member2021-12-310000887936us-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2018-08-200000887936fcn:ConvertibleNoteDue202ParValueMember2018-08-200000887936us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberfcn:ConvertibleNoteDue2023Member2018-08-202018-08-20fcn:trading_day0000887936us-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2018-08-202018-08-20fcn:business_day0000887936fcn:ConvertibleNoteDue2023Member2018-08-200000887936us-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2021-04-012021-06-300000887936us-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2022-04-012022-06-300000887936us-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2022-01-012022-06-300000887936us-gaap:ConvertibleDebtMemberfcn:ConvertibleNoteDue2023Member2021-01-012021-06-300000887936fcn:CreditFacilityMemberus-gaap:LineOfCreditMember2015-06-260000887936fcn:CreditFacilityMemberus-gaap:LineOfCreditMember2018-11-300000887936fcn:FederalFundsMember2018-11-300000887936us-gaap:LondonInterbankOfferedRateLIBORMember2018-11-300000887936srt:MinimumMemberfcn:CreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMember2018-11-012018-11-300000887936srt:MaximumMemberfcn:CreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMember2018-11-012018-11-300000887936srt:MinimumMemberus-gaap:BaseRateMemberfcn:CreditFacilityMemberus-gaap:LineOfCreditMember2018-11-012018-11-300000887936srt:MaximumMemberus-gaap:BaseRateMemberfcn:CreditFacilityMemberus-gaap:LineOfCreditMember2018-11-012018-11-300000887936srt:MinimumMemberfcn:CreditFacilityMemberus-gaap:LineOfCreditMember2022-01-012022-06-300000887936srt:MaximumMemberfcn:CreditFacilityMemberus-gaap:LineOfCreditMember2022-01-012022-06-300000887936fcn:CreditFacilityMemberus-gaap:LineOfCreditMember2022-06-300000887936fcn:CreditFacilityMemberus-gaap:LineOfCreditMember2021-12-310000887936us-gaap:LineOfCreditMember2022-06-300000887936srt:ScenarioForecastMember2024-01-012024-06-300000887936us-gaap:SeniorNotesMemberfcn:ConvertibleNoteDue2023Member2018-08-202018-08-20fcn:lease_option0000887936srt:MaximumMember2022-06-300000887936us-gaap:RestrictedStockMember2022-01-012022-06-300000887936us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-06-300000887936us-gaap:PerformanceSharesMember2022-01-012022-06-300000887936us-gaap:CostOfSalesMember2022-04-012022-06-300000887936us-gaap:CostOfSalesMember2021-04-012021-06-300000887936us-gaap:CostOfSalesMember2022-01-012022-06-300000887936us-gaap:CostOfSalesMember2021-01-012021-06-300000887936us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-300000887936us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-300000887936us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-06-300000887936us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-06-300000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2016-06-020000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2019-02-210000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2017-12-010000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2020-02-200000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2017-05-180000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2020-12-030000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2020-07-280000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2022-06-300000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2022-04-012022-06-300000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2021-04-012021-06-300000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2022-01-012022-06-300000887936fcn:TwoThousandSixteenStockRepurchaseProgramMember2021-01-012021-06-30fcn:segmentfcn:offering0000887936fcn:CorporateFinanceRestructuringMember2022-04-012022-06-300000887936fcn:CorporateFinanceRestructuringMember2021-04-012021-06-300000887936fcn:CorporateFinanceRestructuringMember2021-01-012021-06-300000887936fcn:ForensicAndLitigationConsultingMember2022-04-012022-06-300000887936fcn:ForensicAndLitigationConsultingMember2021-04-012021-06-300000887936fcn:ForensicAndLitigationConsultingMember2021-01-012021-06-300000887936fcn:EconomicConsultingMember2022-04-012022-06-300000887936fcn:EconomicConsultingMember2021-04-012021-06-300000887936fcn:EconomicConsultingMember2021-01-012021-06-300000887936fcn:TechnologyMember2022-04-012022-06-300000887936fcn:TechnologyMember2021-04-012021-06-300000887936fcn:TechnologyMember2021-01-012021-06-300000887936fcn:StrategicCommunicationsMember2022-04-012022-06-300000887936fcn:StrategicCommunicationsMember2021-04-012021-06-300000887936fcn:StrategicCommunicationsMember2021-01-012021-06-300000887936us-gaap:MaterialReconcilingItemsMember2022-04-012022-06-300000887936us-gaap:MaterialReconcilingItemsMember2021-04-012021-06-300000887936us-gaap:MaterialReconcilingItemsMember2022-01-012022-06-300000887936us-gaap:MaterialReconcilingItemsMember2021-01-012021-06-30

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, 2022
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 21, 2022
Common Stock, $0.01 par value34,539,548



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,
 20222021
(Unaudited)
Assets 
Current assets  
Cash and cash equivalents$255,730 $494,485 
 Accounts receivable, net905,548 754,120 
Current portion of notes receivable29,773 30,256 
Prepaid expenses and other current assets100,668 91,166 
Total current assets1,291,719 1,370,027 
Property and equipment, net144,053 142,163 
Operating lease assets198,893 215,995 
Goodwill1,227,837 1,232,791 
Intangible assets, net28,613 31,990 
Notes receivable, net55,230 53,539 
Other assets56,823 54,404 
Total assets$3,003,168 $3,100,909 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other$165,455 $165,025 
Accrued compensation357,222 507,556 
Billings in excess of services provided48,217 45,535 
Total current liabilities570,894 718,116 
Long-term debt, net314,337 297,158 
Noncurrent operating lease liabilities218,001 236,026 
Deferred income taxes167,797 170,612 
Other liabilities101,520 95,676 
Total liabilities1,372,549 1,517,588 
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 34,540 (2022) and 34,333 (2021)
345 343 
Additional paid-in capital499 13,662 
Retained earnings1,805,485 1,698,156 
Accumulated other comprehensive loss(175,710)(128,840)
Total stockholders' equity1,630,619 1,583,321 
Total liabilities and stockholders' equity$3,003,168 $3,100,909 
 
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,
 2022202120222021
Revenues$754,992 $711,486 $1,478,612 $1,397,763 
Operating expenses
Direct cost of revenues520,080 490,722 1,013,184 959,146 
Selling, general and administrative expenses167,940 133,930 316,911 260,476 
Amortization of intangible assets2,737 2,854 5,005 5,655 
 690,757 627,506 1,335,100 1,225,277 
Operating income64,235 83,980 143,512 172,486 
Other income (expense)    
Interest income and other2,994 (912)2,647 122 
Interest expense(2,448)(5,294)(5,090)(10,091)
 546 (6,206)(2,443)(9,969)
Income before income tax provision64,781 77,774 141,069 162,517 
Income tax provision13,353 14,992 30,320 35,239 
Net income$51,428 $62,782 $110,749 $127,278 
Earnings per common share — basic$1.52 $1.88 $3.29 $3.80 
Earnings per common share — diluted$1.43 $1.77 $3.10 $3.61 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax
expense of $0
$(40,679)$5,807 $(46,870)$565 
Total other comprehensive income (loss), net of tax(40,679)5,807 (46,870)565 
Comprehensive income$10,749 $68,589 $63,879 $127,843 
 
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, 202134,333 $343 $13,662 $1,698,156 $(128,840)$1,583,321 
Net income— $— $— $59,321 $— $59,321 
Other comprehensive loss:
Cumulative translation adjustment— — — — (6,191)(6,191)
Issuance of common stock in connection with:
Exercise of options26 — 923 — — 923 
Restricted share grants, less net
             settled shares of 54
134 2 (7,836)— — (7,834)
Stock units issued under incentive
             compensation plan
— — 1,664 — — 1,664 
Purchase and retirement of common stock(22)— (3,098)— — (3,098)
 Cumulative effect due to adoption of new accounting standard— — (34,131)22,078 — (12,053)
 Conversion of convertible senior notes due 2023— — (2)— — (2)
Share-based compensation— — 5,967 — — 5,967 
 Reclassification of negative additional paid-in capital— — 22,851 (22,851)—  
Balance at March 31, 202234,471 $345 $ $1,756,704 $(135,031)$1,622,018 
Net income— — — 51,428 — 51,428 
Other comprehensive loss:
Cumulative translation adjustment— — — — (40,679)(40,679)
Issuance of common stock in connection
with:
Exercise of options22 — 687 — — 687 
Restricted share grants, less net
settled shares of 55
47 — (8,907)— — (8,907)
Conversion of convertible senior notes
   due 2023
— — (11)— — (11)
Share-based compensation— — 6,083 — — 6,083 
 Reclassification of negative additional paid-in capital— — 2,647 (2,647)—  
Balance at June 30, 202234,540 $345 $499 $1,805,485 $(175,710)$1,630,619 
5


Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
 Common StockRetained
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 

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,
20222021
Operating activities
Net income$110,749 $127,278 
Adjustments to reconcile net income to net cash used in operating activities:  
Depreciation and amortization18,095 16,765 
Amortization and impairment of intangible assets5,005 5,655 
Acquisition-related contingent consideration133 (1,130)
Provision for expected credit losses8,752 8,236 
Share-based compensation12,050 12,190 
Amortization of debt discount and issuance costs and other1,068 5,685 
Deferred income taxes2,713 9,802 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, billed and unbilled(180,737)(138,838)
Notes receivable(1,985)8,921 
Prepaid expenses and other assets(810)6,728 
Accounts payable, accrued expenses and other13,854 (13,518)
Income taxes(14,834)6,695 
Accrued compensation(147,209)(88,024)
Billings in excess of services provided4,425 (7,471)
Net cash used in operating activities(168,731)(41,026)
Investing activities  
Payments for acquisition of businesses, net of cash received(6,698)(9,833)
Purchases of property and equipment and other(25,637)(27,696)
Net cash used in investing activities(32,335)(37,529)
Financing activities  
Borrowings under revolving line of credit165,000 292,500 
Repayments under revolving line of credit(165,000)(192,500)
Purchase and retirement of common stock(3,098)(46,133)
Share-based compensation tax withholdings and other (14,827)(7,475)
Payments for business acquisition liabilities(4,161)(7,496)
Deposits and other4,887 602 
Net cash provided by (used in) financing activities(17,199)39,498 
Effect of exchange rate changes on cash and cash equivalents(20,490)979 
Net decrease in cash and cash equivalents(238,755)(38,078)
Cash and cash equivalents, beginning of period494,485 294,953 
Cash and cash equivalents, end of period$255,730 $256,875 
Supplemental cash flow disclosures
Cash paid for interest$4,279 $4,854 
Cash paid for income taxes, net of refunds$42,440 $18,742 
Non-cash investing and financing activities:
Issuance of stock units under incentive compensation plans$1,664 $2,603 
Business acquisition liabilities not yet paid$5,370 $1,093 
Non-cash additions to property and equipment    $3,695 $4,150 
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, 2021 filed with the SEC. 
2. New Accounting Standards
Recently Adopted Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06 ("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. On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective method and recorded a cumulative-effect adjustment of approximately $22.1 million to the beginning balance of retained earnings at the date of adoption and a $16.4 million net increase to "Long-term debt, net" on the Condensed Consolidated Balance Sheets. As permitted by the guidance, prior comparative periods were not adjusted under this method.
Pursuant to ASU 2020-06, we are no longer permitted to separately account for the liability and equity components of convertible debt instruments. As such, the carrying amount of our 2.0% convertible senior notes due 2023 ("2023 Convertible Notes") is recognized as a liability as of June 30, 2022 on the Condensed Consolidated Balance Sheets. The ASU 2020-06 adoption also resulted in the derecognition of the embedded conversion option, net of tax effects, of approximately $34.1 million, which is included in “Additional paid-in capital,” as well as the derecognition of the related deferred tax liabilities of approximately $4.3 million on the Condensed Consolidated Balance Sheets.
The net effect of the adoption in the current and future periods as compared to prior periods is to reduce non-cash interest expense, or increase net income, as there is no longer a discount from the separation of the conversion feature within equity. The discount from recognition of debt issuance costs will be amortized over the effective life of the 2023 Convertible Notes using the effective interest method.
ASU 2020-06 also no longer allows the use of the treasury stock method for convertible instruments for purposes of calculating diluted earnings per share and instead requires application of the if-converted method. Under that method, diluted earnings per share will generally be calculated assuming that all of the convertible debt instruments were converted solely into shares of common stock at the beginning of the reporting period unless the result would be anti-dilutive. Effective January 1, 2022, pursuant to the terms of the indenture, dated as of August 20, 2018, as amended by the first supplemental indenture, dated as of January 1, 2022 (the "First Supplemental Indenture"), between us and U.S. Bank National Association, as trustee (as so amended, the "Indenture"), the principal amount of the 2023 Convertible Notes being converted is required to be paid in cash and only the premium due upon conversion, if any, is permitted to be settled in shares, cash or a combination of shares and cash. Consequently, the if-converted method produces a similar result as the treasury stock method, which was used prior to the adoption of ASU 2020-06 for the 2023 Convertible Notes.
8


Accounting Standards Not Yet Adopted
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance, which requires entities to provide disclosures on significant government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard is effective for annual periods beginning after December 15, 2021 and impacts only annual financial statement footnote disclosures. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.
3. Earnings per Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjusts basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and share-based awards (restricted share awards, restricted stock units and performance stock units), each using the treasury stock method.
For the three and six months ended June 30, 2022, we used the if-converted method for calculating the potential dilutive effect of the conversion feature of the principal amount of the 2023 Convertible Notes on earnings per common share, as required by the adoption of ASU 2020-06. Prior to the adoption of ASU 2020-06, we used the treasury stock method for calculating the potential dilutive effect of the conversion feature of the principal amount of the 2023 Convertible Notes on earnings per common share because we had the ability and intent to settle the principal amount of the outstanding 2023 Convertible Notes in cash. The conversion feature had a dilutive impact on earnings per common share for the three and six months ended June 30, 2022 and 2021, 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.
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Numerator — basic and diluted    
Net income$51,428 $62,782 $110,749 $127,278 
Denominator
Weighted average number of common shares outstanding — basic
33,790 33,458 33,705 33,470 
Effect of dilutive share-based awards586 668 639 714 
Effect of dilutive stock options331 376 334 373 
Effect of dilutive convertible notes1,202 872 1,100 661 
Weighted average number of common shares outstanding — diluted
35,909 35,374 35,778 35,218 
Earnings per common share — basic$1.52 $1.88 $3.29 $3.80 
Earnings per common share — diluted$1.43 $1.77 $3.10 $3.61 
Antidilutive stock options and share-based awards23 2 15 5 
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).
9


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 or 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 revenues 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 $11.6 million and $13.1 million for the three and six months ended June 30, 2022, respectively, and $17.9 million and $16.7 million for the three and six months ended June 30, 2021, 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, 2022 and December 31, 2021, the aggregate amount of the remaining contract transaction price allocated to unfulfilled performance obligations was $3.4 million and $3.7 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 $1.5 million as of June 30, 2022 and $3.8 million as of December 31, 2021.
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, 2022 and December 31, 2021.
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,
2022
December 31,
2021
Accounts receivable:
Billed receivables$616,761 $542,056 
Unbilled receivables328,836 248,681 
Allowance for expected credit losses(40,049)(36,617)
Accounts receivable, net$905,548 $754,120 
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
10


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,
2022202120222021
Provision for expected credit losses (1)
$3,894 $3,404 $8,752 $8,236 
Write-offs$3,249 $2,802 $6,040 $9,718 
(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.
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, 2021$501,046 $237,929 $268,858 $96,811 $128,147 $1,232,791 
Acquisitions (3)
11,095     11,095 
Foreign currency translation
adjustment and other
(5,375)(3,001)(723)(148)(6,802)(16,049)
Balance at June 30, 2022$506,766 $234,928 $268,135 $96,663 $121,345 $1,227,837 
(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, 2022 and December 31, 2021.
(2)    Amounts for our Strategic Communications segment include gross carrying values of $315.5 million and $322.3 million as of June 30, 2022 and December 31, 2021, respectively, and accumulated impairment losses of $194.1 million as of June 30, 2022 and December 31, 2021.
(3)    During the six months ended June 30, 2022, we acquired a business that was assigned to the Corporate Finance segment. We recorded $11.1 million in goodwill based on a preliminary purchase price allocation as a result of the acquisition. We have included the results of the acquired business’s operations in the Corporate Finance segment since its acquisition date.
11


Intangible Assets
Intangible assets were as follows:
 June 30, 2022December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortizing intangible assets      
Customer relationships (1)
$82,099 $64,093 $18,006 $83,101 $63,124 $19,977 
Trademarks (1)
10,482 5,563 4,919 10,965 4,732 6,233 
Acquired software and other (1)
980 392 588 3,114 2,434 680 
93,561 70,048 23,513 97,180 70,290 26,890 
Non-amortizing intangible assets
Trademarks 5,100 — 5,100 5,100 — 5,100 
Total$98,661 $70,048 $28,613 $102,280 $70,290 $31,990 
(1)During the six months ended June 30, 2022, we acquired a business, and its related intangible assets were assigned to the Corporate Finance segment.
Intangible assets with finite lives are amortized over their estimated useful lives. We recorded amortization expense of $2.7 million and $5.0 million for the three and six months ended June 30, 2022, respectively, and $2.9 million and $5.7 million for the three and six months ended June 30, 2021, respectively.
We estimate our future amortization expense for our intangible assets with finite lives to be as follows:
Year
As of
June 30, 2022 (1)
2022 (remaining)$4,728 
20236,127 
20243,859 
20253,164 
20262,028 
Thereafter3,607 
 $23,513 
(1)Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, impairments, changes in useful lives, or other relevant factors or changes.
12


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, 2022 and December 31, 2021:
June 30, 2022
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3
Liabilities
Acquisition-related contingent consideration (1)(2)
$13,363 $ $ $13,363 
2023 Convertible Notes (3)
314,337  568,551  
Total$327,700 $ $568,551 $13,363 
December 31, 2021
Hierarchy Level
(Fair Value)
Carrying
Amount
Level 1Level 2Level 3
Liabilities   
Acquisition-related contingent consideration (1)
$15,110 $ $ $15,110 
2023 Convertible Notes (3)
297,158  466,619  
Total$312,268 $ $466,619 $15,110 
(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 six months ended June 30, 2022, we acquired a business that was assigned to our Corporate Finance segment and recorded an acquisition-related contingent consideration liability.
(3)The carrying value as of June 30, 2022 includes unamortized deferred debt issuance costs. The carrying value as of December 31, 2021 includes unamortized deferred debt issuance 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, 2022 and December 31, 2021.
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 pricing model. 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.
13


The change in our liability for acquisition-related contingent consideration for our Level 3 financial instruments is as follows:
Contingent Consideration
Balance at December 31, 2021$15,110 
Additions5,370 
Accretion expense (1)
(979)
Payments(4,430)
Foreign currency translation adjustment (2)
(115)
Balance at March 31, 2022$14,956 
Accretion expense (1)
1,112 
Payments(2,240)
Foreign currency translation adjustment (2)
(465)
Balance at June 30, 2022$13,363 
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 
(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)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.
14


8. Debt
The table below presents the components of the Company’s debt: 
June 30,
2022
December 31, 2021
2023 Convertible Notes
$316,222 $316,245 
Total debt316,222 316,245 
Less: deferred debt discount (1)
 (16,724)
Less: deferred debt issuance costs(1,885)(2,363)
Long-term debt, net (1)(2)
$314,337 $297,158 
Additional paid-in capital$ $35,304 
Discount attribution to equity (1,175)
Equity component, net (1)
$— $34,129 
(1)Pursuant to the adoption of ASU 2020-06, we derecognized the conversion option of $34.1 million, net of tax, previously attributable to the equity component of the 2023 Convertible Notes. Similarly, the related debt discount is no longer amortized into income as interest expense over the life of the instrument; therefore, we recorded a $16.4 million increase to "Long-term debt, net" on the Condensed Consolidated Balance Sheet as of June 30, 2022.
(2)There were no current portions of long-term debt as of June 30, 2022 and December 31, 2021.
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 15 and August 15 of each year. The 2023 Convertible Notes will mature on August 15, 2023, unless earlier converted or repurchased. As of December 31, 2021, upon conversion, the 2023 Convertible Notes could be settled, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock. Effective January 1, 2022, pursuant to the terms of the Indenture, the principal amount of the 2023 Convertible Notes being converted is required to be paid in cash and only the premium due upon conversion, if any, is permitted to be settled at our election in shares, cash or a combination of shares and cash. 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). 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 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the 2023 Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate in effect on each such trading day; or (3) upon the occurrence of specified corporate events. On or after May 15, 2023, until the close of business on the business day immediately preceding the maturity date of August 15, 2023, holders may convert their 2023 Convertible Notes at any time, regardless of the foregoing circumstances.
The 2023 Convertible Notes were convertible in each of the quarters ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022. The number of shares issued upon conversion of the 2023 Convertible Notes in each period was immaterial. The circumstances required to allow the holders to convert their 2023 Convertible Notes prior to maturity were met as of June 30, 2022; therefore, holders may convert their notes at any time beginning on July 1, 2022 and ending on September 30, 2022. Based on the Company's stock price on June 30, 2022, the if-converted value of the 2023 Convertible Notes exceeded the principal amount by $247.9 million.

We may not redeem the 2023 Convertible Notes prior to the maturity date.
15


If we undergo a fundamental change (as defined in the Indenture), subject to certain conditions, holders may require us to repurchase for cash all or part of their 2023 Convertible Notes in principal amounts of $1,000 or a multiple thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the 2023 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, in certain circumstances, we may be required to increase the conversion rate for any 2023 Convertible Notes converted in connection with a make-whole fundamental change (as defined in the Indenture).
Prior to the adoption of ASU 2020-06, the Company separated the 2023 Convertible Notes into liability and equity components. The debt discount and debt issuance costs attributable to the liability component were amortized to interest expense over the term of the 2023 Convertible Notes using the effective interest rate method. The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method, which resulted in accounting for the 2023 Convertible Notes as a single liability and the debt discount is no longer amortized into income as interest expense. See Note 2, “New Accounting Standards” for additional information about the adoption of ASU 2020-06.
Contractual interest expense for the 2023 Convertible Notes was $1.6 million and $3.2 million for the three and six months ended June 30, 2022 and 2021, respectively. Amortization of the debt discount on the 2023 Convertible Notes prior to the adoption of ASU 2020-06 was $2.4 million and $4.7 million for the three and six months ended June 30 2021, respectively.
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 agreement to the Original Credit Facility (the "Amended and Restated Credit Facility"), to, among other things, extend the maturity to November 30, 2023 and incurred an additional $1.7 million of debt issuance costs. On February 4, 2022, we entered into the first amendment to the Amended and Restated Credit Facility (the "First Amendment to the Amended and Restated Credit Facility," and together with the Amended and Restated Credit Facility, the “Credit Facility”). At the Company’s option, borrowings under the Credit Facility in United States dollars ("USD"), euro ("EUR") and British pound ("GBP") will bear interest at either one- or three-month London Interbank Offered Rate ("LIBOR") or, in the case of USD borrowings, an alternative base rate, in each case plus the applicable margin. Due to the cessation by the ICE Benchmark Administration Limited of the publication on a representative basis of EUR LIBOR and GBP LIBOR as of December 31, 2021, EUR LIBOR is no longer available under our Credit Agreement and one-, three- and six-month GBP LIBOR is available under a "synthetic" methodology until December 31, 2022. The Credit Agreement permits the Company and Bank of America, N.A., as administrative agent thereunder, to agree to a new benchmark rate to replace EUR LIBOR and GBP LIBOR, subject to the negative consent of the Required Lenders (as defined therein). Prior to the incurrence of any borrowings under the Credit Facility in EUR or, after December 31, 2022, GBP, we will need to agree to a replacement benchmark rate for each applicable currency in accordance with the terms of the Credit Agreement. The alternative base rate means a fluctuating rate per annum equal to the highest of (1) the rate of interest in effect for such day as the prime rate announced by Bank of America, (2) the federal funds rate plus the sum of 50 basis points, and (3) the one-month USD LIBOR plus 100 basis points. Borrowings under the Credit Facility in Canadian dollars bear interest at an annual rate equal to the Canadian Dealer Offered Rate plus an applicable margin. Borrowings under the Credit Facility in Australian dollars bear interest at an annual rate equal to the Bank Bill Swap Reference Bid Rate plus an applicable margin. The applicable margin will fluctuate between 1.25% per annum and 2.00% per annum, in the case of LIBOR borrowings, or between 0.25% per annum and 1.00% per annum, in the case of base rate borrowings, in each case, based upon the Company’s Consolidated Total Net Leverage Ratio (as defined in the Credit Facility) at such time. The lenders under the Credit Facility have a security interest in substantially all of the assets of the Company and substantially all of its domestic subsidiaries.
Under the Credit Facility, we are required to pay a commitment fee rate that fluctuates between 0.20% and 0.35% per annum and a letter of credit fee rate that fluctuates between 1.25% and 2.00% per annum, in each case, based upon the Company’s Consolidated Total Net Leverage Ratio.
There were no borrowings outstanding under the Credit Facility as of June 30, 2022 and December 31, 2021. As of June 30, 2022, $0.4 million of the borrowing limit under the Credit Facility was utilized (and, therefore, unavailable) for letters of credit.
There were $0.6 million and $0.9 million of unamortized debt issuance costs related to the Credit Facility as of June 30, 2022 and December 31, 2021, respectively. These amounts are included in “Other assets” on our Condensed Consolidated Balance Sheets.
16


Long-Term Debt Maturities
Our maturity analysis for our remaining future undiscounted cash flows for the principal portion of our long-term debt assumes that payments will be made based on the current payment schedule and excludes any additional revolving line of credit borrowings or repayments subsequent to June 30, 2022 and prior to the November 30, 2023 maturity date of our Credit Facility. We estimate future undiscounted cash flows for the principal portion of our long-term debt to be $316.2 million in 2023.
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 Condensed Consolidated Balance Sheets 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 up 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 table below summarizes the carrying amount of our operating lease assets and liabilities:
LeasesClassificationJune 30, 2022December 31, 2021
Assets
  Operating lease assetsOperating lease assets$198,893 $215,995 
Total lease assets$198,893 $215,995 
Liabilities
Current
  Operating lease liabilities
Accounts payable, accrued expenses and other$33,253 $30,828 
Noncurrent
  Operating lease liabilitiesNoncurrent operating lease liabilities218,001 236,026 
Total lease liabilities$251,254 $266,854 
The table below summarizes total lease costs:
Three Months Ended June 30,Six Months Ended June 30,
Lease Cost2022202120222021
Operating lease costs$12,092 $14,407 $24,453 $26,489 
Short-term lease costs727 473 1,132 962 
Variable lease costs2,749 2,748 5,977 6,211 
Sublease income(196)(1,048)(386)(