UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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 No.
Navigant Consulting, Inc.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.001 par |
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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 |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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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. YES ☐ NO ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
As of June 30, 2019,
2
INDEX
3
Forward-Looking Statements
Statements included in this report which are not historical in nature are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may generally be identified by words such as “anticipate,” “believe,” “may,” “should,” “could,” “intend,” “estimate,” “expect,” “likely,” “continue,” “plan,” “projects,” “positioned,” “outlook” and similar expressions. These statements are based upon management’s current expectations and speak only as of the date of this report. The Company cautions readers that there may be events in the future that the Company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those contained in or implied by the forward-looking statements including, without limitation: the satisfaction of the conditions precedent to the consummation of the proposed merger, including, without limitation, the receipt of stockholder and regulatory approvals; unanticipated difficulties or expenditures relating to the proposed merger; legal proceedings, judgments or settlements, including those that may be instituted against the Company, the Company’s board of directors, executive officers and others following the announcement of the proposed merger; disruptions of current plans and operations caused by the announcement and pendency of the proposed merger; potential difficulties in employee retention due to the announcement and pendency of the proposed merger; the response of customers, suppliers, business partners and regulators to the announcement of the proposed merger; the risk of unanticipated costs, liabilities or an adverse impact on the Company’s business operations arising from the Company’s provision of post-divestiture transition services and support in connection with the sale of the Company’s Disputes, Forensics and Legal Technology segment and the transaction advisory services practice within the Company’s Financial Services Advisory and Compliance segment; the execution of the Company’s long-term growth objectives and margin improvement initiatives; risks inherent in international operations, including foreign currency fluctuations; ability to make acquisitions and divestitures and complete such acquisitions and divestitures in the time anticipated; pace, timing and integration of acquisitions; operational risks associated with new or expanded service areas, including business process management services; impairments; changes in accounting standards or tax rates, laws or regulations; management of professional staff, including dependence on key personnel, recruiting, retention, attrition and the ability to successfully integrate new consultants into the Company’s practices; utilization rates; conflicts of interest; potential loss of clients or large engagements and the Company’s ability to attract new business; brand equity; competition; accurate pricing of engagements, particularly fixed fee and multi-year engagements; clients’ financial condition and their ability to make payments to the Company; risks inherent with litigation; higher risk client assignments; government contracting; professional liability; information security; the adequacy of our business, financial and information systems and technology; maintenance of effective internal controls; potential legislative and regulatory changes; continued and sufficient access to capital; compliance with covenants in our credit agreement; interest rate risk; and market and general economic and political conditions. Further information on these and other potential factors that could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and elsewhere in the Company’s filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website or at investors.navigant.com. The Company cannot guarantee any future results, levels of activity, performance or achievement and undertakes no obligation to update any of its forward-looking statements.
4
PART I – FINANCIAL INFORMATION
Item 1. |
Financial Statements. |
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
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June 30, |
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December 31, |
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2019 |
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2018 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable, net and contract assets |
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Prepaid expenses and other current assets |
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Total current assets |
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Non-current assets: |
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Property and equipment, net |
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Operating lease right-of-use assets |
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- |
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Intangible assets, net |
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Goodwill |
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Other assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued liabilities |
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Accrued compensation-related costs |
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Income tax payable |
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Operating lease liabilities |
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- |
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Other current liabilities |
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Total current liabilities |
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Non-current liabilities: |
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Deferred income tax liabilities |
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Operating lease liabilities |
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- |
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Other non-current liabilities |
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Total non-current liabilities |
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Total liabilities |
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Stockholders' equity: |
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Common stock |
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Additional paid-in capital |
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Treasury stock |
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( |
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( |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Total Navigant Consulting, Inc. stockholders' equity |
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Non-controlling interest |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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See accompanying notes to unaudited consolidated financial statements.
5
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share data (1))
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For the three months ended |
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For the six months ended |
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June 30, |
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June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Revenues before reimbursements |
$ |
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$ |
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$ |
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$ |
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Reimbursements |
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Total revenues |
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Cost of services before reimbursable expenses |
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Reimbursable expenses |
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Total cost of services |
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General and administrative expenses |
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Depreciation expense |
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Amortization expense |
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Other operating costs |
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- |
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Operating income |
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Interest expense |
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Interest income |
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( |
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( |
) |
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( |
) |
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( |
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Other (income) expense, net |
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( |
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( |
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Income from continuing operations before income tax expense |
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Income tax expense |
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Net income from continuing operations |
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Income from discontinued operations, net of tax |
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Net income |
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Less: Income attributable to non-controlling interest, net of tax |
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( |
) |
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- |
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( |
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- |
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Net income attributable to Navigant Consulting, Inc. |
$ |
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$ |
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$ |
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$ |
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Basic net income per share |
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Net income from continuing operations attributable to Navigant Consulting, Inc. |
$ |
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$ |
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$ |
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$ |
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Income from discontinued operations, net of tax |
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- |
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Net income attributable to Navigant Consulting, Inc. (1) |
$ |
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$ |
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$ |
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$ |
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Shares used in computing basic per share data |
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Diluted net income per share |
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Net income from continuing operations attributable to Navigant Consulting, Inc. |
$ |
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$ |
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$ |
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$ |
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Income from discontinued operations, net of tax |
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- |
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Net income attributable to Navigant Consulting, Inc. (1) |
$ |
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$ |
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$ |
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$ |
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Shares used in computing diluted per share data |
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Net income |
$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Unrealized net gain (loss), foreign currency translation |
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( |
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( |
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Unrealized net gain on interest rate derivatives |
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- |
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- |
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Reclassification adjustment on interest rate derivatives included in interest expense and income tax expense |
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- |
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( |
) |
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- |
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( |
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Other comprehensive income (loss), net of tax |
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( |
) |
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( |
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Total comprehensive income, net of tax |
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Income attributable to non-controlling interest, net of tax |
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( |
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- |
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( |
) |
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- |
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Total comprehensive income attributable to Navigant Consulting, Inc., net of tax |
$ |
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$ |
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$ |
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$ |
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(1) |
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See accompanying notes to unaudited consolidated financial statements.
6
NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
|
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Navigant Consulting, Inc. Shareholders |
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Common Stock Shares |
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Treasury Stock Shares |
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Common Stock Par Value |
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Additional Paid-In Capital |
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Treasury Stock Cost |
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Accumulated Other Comprehensive Income (Loss) |
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Retained Earnings |
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Non-Controlling Interest |
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Total Stock-holders' Equity |
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Balance at March 31, 2019 |
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( |
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( |
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( |
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Comprehensive income |
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- |
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- |
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- |
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- |
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- |
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Dividends paid ($ |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
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- |
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( |
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Issuances of common stock |
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- |
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- |
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- |
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- |
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- |
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- |
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Vesting of restricted stock units, net of forfeitures and tax withholdings |
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- |
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( |
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- |
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- |
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- |
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- |
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( |
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Share-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Additional paid-in capital recorded through compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Repurchases of common stock |
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- |
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( |
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- |
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- |
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( |
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- |
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- |
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- |
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( |
) |
Balance at June 30, 2019 |
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( |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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$ |
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Navigant Consulting, Inc. Shareholders |
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Common Stock Shares |
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Treasury Stock Shares |
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Common Stock Par Value |
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Additional Paid-In Capital |
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Treasury Stock Cost |
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Accumulated Other Comprehensive Income (Loss) |
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Retained Earnings |
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Non-Controlling Interest |
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Total Stock-holders' Equity |
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Balance at December 31, 2018 |
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( |
) |
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( |
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( |
) |
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Distributions to non-controlling interests |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Comprehensive income |
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- |
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- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
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|
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|
|
|
Dividends paid ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Issuances of common stock |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Vesting of restricted stock units, net of forfeitures and tax withholdings |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Share-based compensation expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Additional paid-in capital recorded through compensation expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Repurchases of common stock |
|
|
- |
|
|
|
( |
) |
|
|
- |
|