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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. Description of Business</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are a leading provider of operational and financial consulting services. We help clients in
diverse industries improve performance, comply with complex regulations, reduce costs, recover from
distress, leverage technology, and stimulate growth. We team with our clients to deliver
sustainable and measurable results. Our professionals employ their expertise in healthcare
administration, accounting, finance and operations to provide our clients with specialized analyses
and customized advice and solutions that are tailored to address each client’s particular
challenges and opportunities. We provide consulting services to a wide variety of both financially
sound and distressed organizations, including healthcare organizations, leading academic
institutions, governmental entities, Fortune 500 companies, medium-sized businesses, and the law
firms that represent these various organizations.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. Basis of Presentation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited consolidated financial statements reflect the results of operations and
cash flows for the three months ended March 31, 2011 and 2010. These financial statements have been
prepared in accordance with the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”) for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do
not include all of the information and note disclosures required by accounting principles generally
accepted in the Unites States of America (“GAAP”) for annual financial statements. In the opinion
of management, these financial statements reflect all adjustments of a normal, recurring nature
necessary for the fair presentation of our financial position, results of operations and cash flows
for the interim periods presented in conformity with GAAP. These financial statements should be
read in conjunction with the consolidated financial statements and notes thereto for the year ended
December 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain amounts reported in the previous year have been reclassified to conform to the 2011
presentation. Our results for any interim period are not necessarily indicative of results for a
full year or any other interim period.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. Restatement of Previously-Issued Financial Statements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As previously disclosed, on August 17, 2009, we restated our financial statements for the years
ended December 31, 2008, 2007 and 2006, as well as the three months ended March 31, 2009:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Amendment No. 1 on Form 10-K/A, filed with the SEC on August 17, 2009, to our annual report
on Form 10-K for the year ended December 31, 2008, originally filed on February 24, 2009.</td>
</tr>
</table>
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Amendment No. 1 on Form 10-Q/A, filed with the SEC on August 17, 2009, to our quarterly
report on Form 10-Q for the period ended March 31, 2009, originally filed on April 30, 2009.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The restatement related to the accounting for certain acquisition-related payments received by the
selling shareholders of four acquired businesses (the “Acquired Businesses”). Pursuant to the
purchase agreements for each of these acquisitions, payments were made by us to the selling
shareholders (1) upon closing of the transaction, (2) in some cases, upon the Acquired Businesses
achieving specific financial performance targets over a number of years (“earn-outs”), and (3) in
one case, upon the buy-out of an obligation to make earn-out payments. These payments are
collectively referred to as “acquisition-related payments.” Certain acquisition-related payments
were subsequently redistributed by such selling shareholders among themselves in amounts that were
not consistent with their ownership interests on the date we acquired the businesses (the
“Shareholder Payments”) and to other select client-serving and administrative Company employees
(the “Employee Payments”) based, in part, on continuing employment with the Company or the
achievement of personal performance measures. The restatement was necessary because we failed to
account for the Shareholder Payments and the Employee Payments in accordance with GAAP. The
Shareholder Payments and the Employee Payments were required to be reflected as non-cash
compensation expense of Huron, and the selling shareholders were deemed to have made a capital
contribution to Huron. The payments were made directly by the selling shareholders from the
acquisition proceeds they received from us and, accordingly, the correction of these errors had no
effect on our net cash flows. The acquisition-related payments made by us to the selling
shareholders represented purchase consideration. As such, these payments, to the extent that they
exceeded the net of the fair value assigned to assets acquired and liabilities assumed, were
properly recorded as goodwill, in accordance with GAAP.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective August 1, 2009, the selling shareholders of two of the Acquired Businesses each amended
certain agreements related to the earn-outs to provide that future earn-outs will be distributed
only to the applicable selling shareholders and
only in accordance with their equity interests on the date we acquired the business with no
required continuing employment, and no further Shareholder Payments or Employee Payments will be
made. Accordingly, all earn-out payments related to such Acquired Businesses made on or after
August 1, 2009, have been, and will continue to be, accounted for as additional purchase
consideration and not also as non-cash compensation expense. Additional earn-out payment
obligations, payable through December 31, 2011, currently remain with respect to only one Acquired
Business.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The SEC is conducting an investigation with respect to the restatement. As often happens in these
circumstances, the United States Attorney’s Office (“USAO”) for the Northern District of Illinois
made a telephonic request of our counsel for copies of certain documents that we previously
provided to the SEC, which we then voluntarily provided.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, several purported shareholder class action complaints, since consolidated, and
derivative lawsuits have been filed in connection with the restatement. See note “13. Commitments,
Contingencies and Guarantees” for a discussion of the SEC investigations, the USAO’s request for
certain documents, and the purported private shareholder class action lawsuit and derivative
lawsuits that occurred as a result of the restatement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For the three months ended March 31, 2011 and 2010, expenses incurred in connection with the
restatement totaled $1.2 million and $0.8 million, respectively, and were primarily comprised of
legal fees.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. New Accounting Pronouncements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In January 2010, the Financial Accounting Standards Board (“FASB”) issued additional authoritative
guidance related to fair value measurements and disclosures. The guidance requires disclosure of
details of significant transfers in and out of Level 1 and Level 2 fair value measurements. The
guidance also clarifies the existing disclosure requirements for the level of disaggregation of
fair value measurements and the disclosures on inputs and valuation techniques. The company adopted
these provisions effective January 1, 2010. The adoption did not have a significant impact on our
consolidated financial statements. In addition, the guidance also requires the presentation of
purchases, sales, issuances and settlements within Level 3 on a gross basis rather than a net
basis. We adopted this additional guidance pertaining to Level 3 fair value measurements effective
January 1, 2011. The adoption of this guidance did not have any impact on our financial statements
as it contains only disclosure requirements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In October 2009, the FASB issued new guidance regarding revenue arrangements with multiple
deliverables. This new guidance requires companies to allocate revenue in arrangements involving
multiple deliverables based on the estimated selling price of each deliverable, even though such
deliverables are not sold separately either by the company or by other vendors. This new guidance
is effective prospectively for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010. We adopted this pronouncement effective January 1, 2011.
The adoption of this pronouncement did not have a significant impact on our financial statements.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>5. Discontinued Operations</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Since December 31, 2009, we have undertaken several separate initiatives to divest certain
practices within the Financial Consulting segment in order to enable us to devote more of our
energy and financial resources to the remaining businesses of the Company where we have a more
substantial market presence. On September 30, 2010, we completed a sale of a portion of the
Disputes and Investigations (“D&I”) practice and wound down the remaining practice operations as of
that same date. Additionally, during the third quarter of 2010 we exited the utilities consulting
(“Utilities”) practice. In December 2009, our Board approved a plan to divest the businesses that
included the international operations of our Japan office (“Japan”) and the strategy business MS
Galt & Co LLC (“Galt”), which we acquired in April 2006. We exited Galt with the December 31, 2009
sale of the business back to its three original principals. We exited Japan effective June 30, 2010
via a wind down of the business. The Company recognized a gain of $1.2 million in connection with
the sale of D&I and a loss of $0.4 million in connection with the sale of Galt.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of these actions, the operating results of D&I, Utilities, Japan, and Galt are reported
as “discontinued operations.” All other operations of the business are considered “continuing
operations”. Amounts previously reported have been reclassified to conform to this presentation in
accordance with FASB ASC Topic 205 “Presentation of Financial Statements” to allow for meaningful
comparison of continuing operations. The Consolidated Balance Sheet as of March 31, 2011 and
December 31, 2010 aggregates amounts associated with the discontinued operations as described
above.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Summarized operating results of discontinued operations are presented in the following table
(amounts in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">45</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,313</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) from discontinued operations before income tax expense
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">58</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(498</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income (loss) from discontinued operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">95</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(167</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The carrying amounts of the major classes of assets and liabilities aggregated in discontinued
operations in the consolidated balance sheet as of December 31, 2010 are presented in the following
table (amounts in thousands). There were no assets or liabilities aggregated in discontinued
operations in the consolidated balance sheet as of March 31, 2011.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><b>Assets</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">76</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Receivables from clients, net
</div></td>
<td> </td>
<td> </td>
<td align="right">940</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current assets
</div></td>
<td> </td>
<td> </td>
<td align="right">1,460</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total current assets
</div></td>
<td> </td>
<td> </td>
<td align="right">2,476</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other non-current assets
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,476</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued payroll and related benefits
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">70</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Income tax payable
</div></td>
<td> </td>
<td> </td>
<td align="right">301</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accounts payable, accrued expenses and other liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">328</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total current liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">699</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other non-current liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">699</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. Goodwill and Intangible Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The table below sets forth the changes in the carrying amount of goodwill by segment for the three
months ended March 31, 2011.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Health and</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Education</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Legal</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Financial</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Consulting</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Consulting</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Consulting</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of December 31, 2010:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">418,652</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,013</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">160,549</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">612,214</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated impairment losses
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(106,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(106,000</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill, net
</div></td>
<td> </td>
<td> </td>
<td align="right">418,652</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,013</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">54,549</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">506,214</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill recorded in connection with business combinations
</div></td>
<td> </td>
<td> </td>
<td align="right">66</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">175</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">241</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign currency translation — goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">316</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">316</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance as of March 31, 2011:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">418,718</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,504</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">160,549</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">612,771</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accumulated impairment losses
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(106,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(106,000</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill, net
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">418,718</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,504</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">54,549</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">506,771</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets as of March 31, 2011 and December 31, 2010 consisted of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>March 31, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>December 31, 2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Gross Carrying</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Gross Carrying</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Accumulated</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amount</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Amortization</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer contracts
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">885</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">544</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">885</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">309</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td> </td>
<td align="right">18,290</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,451</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,213</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,781</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-competition agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">11,271</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,855</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,271</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,320</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Tradenames
</div></td>
<td> </td>
<td> </td>
<td align="right">3,717</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,538</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,717</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,409</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Technology and software
</div></td>
<td> </td>
<td> </td>
<td align="right">11,949</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,710</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,949</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,011</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">46,112</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">22,098</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">46,035</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,830</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Identifiable intangible assets with finite lives are amortized over their estimated useful lives.
Customer contracts are amortized on a straight-line basis over relatively short lives due to the
short-term nature of the services provided under these contracts. The majority of customer
relationships are amortized on an accelerated basis to correspond to the cash flows expected to be
derived from the relationships. All other customer relationships, non-competition agreements,
tradenames, and technology and software are amortized on a straight-line basis.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets amortization expense was $2.3 million and $1.9 million for the three months ended
March 31, 2011 and 2010, respectively. Estimated annual intangible assets amortization expense is
$8.4 million for 2011, $5.9 million for 2012, $3.6 million for 2013, $2.5 million for 2014, $1.7
million for 2015 and $0.9 million for 2016. Actual future amortization expense could differ from
these estimated amounts as a result of future acquisitions and other factors.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:EarningsPerShareTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. Earnings (Loss) Per Share</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Basic earnings per share excludes dilution and is computed by dividing net income by the weighted
average number of common shares outstanding for the period, excluding unvested restricted common
stock and unvested restricted stock units. Diluted earnings per share reflects the potential
reduction in earnings per share that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock under the treasury stock method. Earnings per
share under the basic and diluted computations are as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from continuing operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,961</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,681</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) from discontinued operations, net of tax
</div></td>
<td> </td>
<td> </td>
<td align="right">95</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(167</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,056</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,514</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common shares outstanding — basic
</div></td>
<td> </td>
<td> </td>
<td align="right">20,925</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,296</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common stock equivalents
</div></td>
<td> </td>
<td> </td>
<td align="right">232</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">200</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common shares outstanding — diluted
</div></td>
<td> </td>
<td> </td>
<td align="right">21,157</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,496</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net earnings (loss) per basic share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from continuing operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.13</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) from discontinued operations, net of tax
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.01</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.12</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net earnings (loss) per diluted share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from continuing operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.13</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) from discontinued operations, net of tax
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.01</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">0.19</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.12</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The computation of diluted earnings per share excludes outstanding options and other common stock
equivalents in periods where inclusion of such potential common stock instruments would be
anti-dilutive in the periods presented. The weighted average common stock equivalents presented
above do not include the anti-dilutive effect of approximately 481,700 and 666,700 potentially
dilutive common stock equivalents for the three months ended March 31, 2011 and 2010, respectively.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
</div>
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<!-- Begin Block Tagged Note 8 - us-gaap:DebtDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8. Borrowings</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of March 31, 2011, the Revolving Credit and Term Loan Credit Agreement, as amended (the
“Credit Agreement”), consists of a $180.0 million revolving credit facility (“Revolver”) and a
$220.0 million term loan facility (“Term Loan”). Fees and interest on borrowings vary based on our
total debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio as
set forth in the Credit Agreement. Interest is based on a spread over the London Interbank Offered
Rate (“LIBOR”) or a spread over the base rate (which is the greater of the Federal Funds Rate plus
0.50% or the Prime Rate), as selected by us.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The obligations under the Credit Agreement are secured pursuant to a Security Agreement with Bank
of America as Administrative Agent. The Security Agreement grants Bank of America, for the ratable
benefit of the lenders under the Credit Agreement, a first-priority lien, subject to permitted
liens, on substantially all of the personal property assets of the Company and the subsidiary
grantors. The Revolver and Term Loan are also secured by a pledge of 100% of the voting stock or
other equity interests in our domestic subsidiaries and 65% of the voting stock or other equity
interests in our foreign subsidiaries.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Fees and interest on borrowings vary based on our total debt to EBITDA ratio as set forth in the
Credit Agreement, as amended. Interest is based on a spread, ranging from 2.25% to 3.25% over LIBOR
or a spread, ranging from 1.25% to 2.25% over the base rate (which is the greater of the federal
funds rate plus 0.50% or the prime rate), as selected by us. The letters of credit fee ranges from
2.25% to 3.25%, while the non-use fee is a flat 0.5%.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Credit Agreement includes quarterly financial covenants that require us to maintain certain
fixed coverage and total debt to EBITDA ratios as well as minimum net worth. Under the Credit
Agreement, dividends are restricted to an amount up to 50% of consolidated net income (adjusted for
non-cash share-based compensation expense) for such fiscal year, plus 50% of net cash proceeds
during such fiscal year with respect to any issuance of capital securities. In addition, certain
acquisitions and similar transactions will need to be approved by the lenders.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Term Loan is subject to amortization of principal in fifteen consecutive quarterly installments
that began on September 30, 2008, with the first fourteen installments being $5.5 million each. The
fifteenth and final installment will be the amount of the remaining outstanding principal balance
of the Term Loan and will be payable on February 23, 2012, but can be repaid earlier. All
outstanding borrowings under the Revolver will be due upon expiration of the Credit Agreement on
February 23, 2012. On April 14, 2011, the Company entered into an amended and restated credit
agreement as described in note “15. Subsequent Events.”
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The borrowing capacity under the Credit Agreement is reduced by any outstanding letters of credit
and payments under the Term Loan. At March 31, 2011, outstanding letters of credit totaled $6.4
million and are used primarily as security deposits for our office facilities. As of March 31,
2011, the borrowing capacity under the Credit Agreement was $46.6 million. Borrowings outstanding
under the credit facility at March 31, 2011 totaled $286.5 million. These borrowings carried a
weighted-average interest rate of 3.9%, including the effect of the interest rate swap described
below in note “10. Derivative Instrument and Hedging Activity”. All of the borrowings outstanding
under the credit agreement are classified as long-term on our consolidated balance sheet since we
entered into an amended and restated credit agreement dated April 14, 2011 that extended the
maturity date of the Revolver and Term Loan to 2016, and we intend to fund scheduled quarterly
payments under the Term Loan with availability under the Revolver. See note “15. Subsequent Events”
for additional information about our Amended and Restated Credit Agreement. Borrowings outstanding
at December 31, 2010 were $257.0 million and carried a weighted-average interest rate of 4.5%. At
both March 31, 2011 and December 31, 2010, we were in compliance with our financial debt covenants.
In addition, based upon projected operating results, management believes it is probable that we
will meet the financial covenants of the Credit Agreement discussed above at future covenant
measurement dates. Accordingly, pursuant to the provisions of FASB ASC Topic 470, “Debt”, all
amounts not due within the next twelve months under the amended loan terms have been classified as
long-term liabilities.
</div>
</div>
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<!-- Begin Block Tagged Note 9 - us-gaap:RestructuringAndRelatedActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9. Restructuring Charges</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2011, we incurred a $0.5 million pre-tax restructuring charge related
to the consolidation of office space within our Chicago office. The $0.5 million charge is
primarily comprised of the discounted future cash flows of rent expenses we are obligated to pay
under the lease agreement, partially offset by future sublease income which we calculated based on
certain sublease assumptions. This restructuring reserve balance was $0.5 million as of March 31,
2011.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the fourth quarter of 2010, we incurred a $2.6 million pre-tax restructuring charge related
to the exit of our San Francisco office space during the fourth quarter of 2010 due to the excess
capacity at the space and the virtual nature of the employees in this geographic region. This
restructuring charge was primarily comprised of the discounted future cash flows of rent expenses
we are obligated to pay under the lease agreement, which were partially offset by estimated
sublease income we calculated based on a sublease agreement executed in the fourth quarter of 2010.
This restructuring reserve balance was $2.2 million as of March 31, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the third quarter of 2010, we incurred a $0.3 million pre-tax restructuring charge related
to the exit of excess office space, as well as severance for certain corporate personnel related to
the disposition of the D&I practice discussed above in note “5. Discontinued Operations”. This
restructuring reserve balance was $0.1 million as of March 31, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the second quarter of 2010, we consolidated two of our offices into one existing location
and incurred a $1.2 million pre-tax restructuring charge related to the exit of the office space.
The restructuring charge is primarily comprised of the discounted future cash flows of rent
expenses we are obligated to pay under the lease agreement. There is no sublease income assumed in
the restructuring charge due to the short term nature of the remaining lease term. This
restructuring reserve balance was $0.5 million as of March 31, 2011.
</div>
</div>
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<!-- Begin Block Tagged Note 10 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10. Derivative Instrument and Hedging Activity</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On March 20, 2009, we entered into an interest rate swap agreement for a notional amount of $100.0
million effective on March 31, 2009 and ending on February 23, 2012. We entered into this
derivative instrument to hedge against the risk of changes in future cash flows related to changes
in interest rates on $100.0 million of the total variable-rate borrowings outstanding described
above in note “8. Borrowings.” Under the terms of the interest rate swap agreement, we receive from
the counterparty interest on the $100.0 million notional amount based on one-month LIBOR and we pay
to the counterparty a fixed rate of 1.715%. This swap effectively converted $100.0 million of our
variable-rate borrowings to fixed-rate borrowings beginning on March 31, 2009 and through February
23, 2012.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">FASB ASC Topic 815, “Derivatives and Hedging”, requires companies to recognize all derivative
instruments as either assets or liabilities at fair value on the balance sheet. In accordance with
ASC Topic 815, we have designated this derivative instrument as a cash flow hedge. As such, changes
in the fair value of the derivative instrument are recorded as a component of other comprehensive
income (“OCI”) to the extent of effectiveness. The ineffective portion of the change in fair value
of the derivative instrument is recognized in interest expense. All derivative gains and losses
included in OCI will be reclassified into earnings within the next 12 months. At this time, there
is no ineffectiveness to record on the Company’s Consolidated Statements of Operations resulting
from the derivative instrument.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The tables below set forth additional information relating to this interest rate swap designated as
a hedging instrument as of March 31, 2011 and December 31, 2010, and for the three months ended
March 31, 2011 and 2010.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Fair Value (Derivative Liability)</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Balance Sheet Location</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>March 31, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued expenses
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,241</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred compensation and other liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,459</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Amount of Gain (Loss), Net of Tax, Recognized in</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Other Comprehensive Income</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest rate swap
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">132</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(367</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We do not use derivative instruments for trading or other speculative purposes and we did not have
any other derivative instruments or hedging activities as of March 31, 2011.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. Fair Value of Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Cash and cash equivalents are stated at cost, which approximates fair market value. The carrying
values for receivables from clients, unbilled services, accounts payable, deferred revenues and
other accrued liabilities reasonably approximate fair market value due to the nature of the
financial instrument and the short term maturity of these items.
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<div align="left" style="font-size: 10pt; margin-top: 6pt">Certain of our assets and liabilities are measured at fair value. FASB ASC Topic 820, “Fair Value
Measurements and Disclosures” (formerly SFAS No. 157), defines fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy for
inputs used in measuring fair value and requires companies to maximize the use of observable inputs
and minimize the use of unobservable inputs. The fair value hierarchy consists of three levels
based on the objectivity of the inputs as follows:
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<!-- Begin Table Head -->
<tr valign="bottom">
<td width="8%"> </td>
<td width="2%"> </td>
<td width="90%"> </td>
</tr>
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<!-- Begin Table Body -->
<tr valign="bottom">
<td valign="top" nowrap="nowrap">
<div style="margin-left:0px; text-indent:-0px">Level 1 Inputs
</div></td>
<td> </td>
<td align="left" valign="top">Quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to
access at the measurement date.</td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td valign="top">
<div style="margin-left:0px; text-indent:-0px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Level 2 Inputs
</div></td>
<td> </td>
<td align="left" valign="top">Quoted prices in active markets for similar assets or
liabilities; quoted prices for identical or similar assets
or liabilities in markets that are not active; inputs other
than quoted prices that are observable for the asset or
liability; or inputs that are derived principally from or
corroborated by observable market data by correlation or
other means.</td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td valign="top">
<div style="margin-left:0px; text-indent:-0px"> 
</div></td>
<td> </td>
<td align="left" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Level 3 Inputs
</div></td>
<td> </td>
<td align="left" valign="top">Unobservable inputs for the asset or liability, and include
situations in which there is little, if any, market
activity for the asset or liability.</td>
</tr>
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</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The table below sets forth our fair value hierarchy for our financial liabilities measured at fair
value on a recurring basis as of March 31, 2011 and December 31, 2010.
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<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
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<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Quoted Prices in</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Active Markets for</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant Other</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Identical Assets</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Observable Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Unobservable Inputs</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 1)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 2)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 3)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td>
</tr>
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<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>March 31, 2011
</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>
Liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Settlement Shares
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">13,140</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">13,140</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest rate swap
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,241</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,241</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>December 31, 2010</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Settlement Shares
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">12,552</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12,552</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest rate swap
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,459</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,459</td>
<td> </td>
</tr>
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</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of the interest rate swap was derived using estimates to settle the interest rate
swap agreement, which is based on the net present value of expected future cash flows on each leg
of the swap utilizing market-based inputs and discount rates reflecting the risks involved.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">See note “13. Commitments, Contingencies and Guarantees for more information about the Settlement
Shares.”
</div>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>12. Comprehensive Income</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The tables below set forth the components of comprehensive income (loss) for the three months ended
March 31, 2011 and 2010.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="28%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 0px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 0px solid #000000"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>March 31, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>March 31, 2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Tax</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Tax</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Before</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Expense)</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Before</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Expense)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Taxes</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Benefit</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Net of Taxes</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Taxes</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Benefit</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Net of Taxes</b></td>
<td> </td>
</tr>
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<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,056</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,514</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive
income (loss):
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign currency
translation adjustment
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">371</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(59</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">312</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(683</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(683</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Unrealized gain (loss)
on cash flow hedging
instrument
</div></td>
<td> </td>
<td> </td>
<td align="right">219</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(87</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">132</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(612</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">245</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(367</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other comprehensive
income (loss)
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">590</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(146</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">444</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,295</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">245</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,050</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Comprehensive income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,500</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,464</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>13. Commitments, Contingencies and Guarantees</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Litigation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In August, 2009, the SEC commenced an investigation with respect to the restatement and an
investigation into the allocation of time within a certain practice group. We also conducted a
separate inquiry, in response to the initial inquiry from the SEC, into the allocation of time
within a certain practice group. This matter had no impact on billings to our clients, but could
have impacted the timing of when revenue was recognized. Based on our internal inquiry, which is
complete, we have concluded that an adjustment to our historical financial statements is not
required with respect to this matter. The SEC investigations with respect to the restatement and
the allocation of time within a certain practice group are ongoing. We are cooperating fully with
the SEC in its investigations. As often happens in these circumstances, the USAO for the Northern
District of Illinois has contacted our counsel. The USAO made a telephonic request for copies of
certain documents that we previously provided to the SEC, which we have voluntarily provided to the
USAO.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, the following purported shareholder class action complaints were filed in connection
with our restatement in the United States District Court for the Northern District of Illinois:
(1) a complaint in the matter of Jason Hughes v. Huron Consulting Group Inc., Gary E. Holdren and
Gary L. Burge, filed on August 4, 2009; (2) a complaint in the matter of Dorothy DeAngelis v. Huron
Consulting Group Inc., Gary E. Holdren, Gary L. Burge, Wayne Lipski and PricewaterhouseCoopers LLP,
filed on August 5, 2009; (3) a complaint in the matter of Noel M. Parsons v. Huron Consulting Group
Inc., Gary E. Holdren, Gary L. Burge, Wayne Lipski and PricewaterhouseCoopers LLP, filed on August
5, 2009; (4) a complaint in the matter of Adam Liebman v. Huron Consulting Group Inc., Gary E.
Holdren, Gary L. Burge and Wayne Lipski, filed on August 5, 2009; (5) a complaint in the matter of
Gerald Tobin v. Huron Consulting Group Inc., Gary E. Holdren, Gary L. Burge and
PricewaterhouseCoopers LLP, filed on August 7, 2009, (6) a complaint in the matter of Gary Austin
v. Huron Consulting Group Inc., Gary E. Holdren, Gary L. Burge and Wayne Lipski, filed on August 7,
2009 and (7) a complaint in the matter of Thomas Fisher v. Huron Consulting Group Inc., Gary E.
Holdren, Gary L. Burge, Wayne Lipski and PricewaterhouseCoopers LLP, filed on September 3, 2009.
On October 6, 2009, Plaintiff Thomas Fisher voluntarily dismissed his complaint. On November 16,
2009, the remaining suits were consolidated and the Public School Teachers’ Pension & Retirement
Fund of Chicago, the Arkansas Public Employees Retirement System, the City of Boston Retirement
Board, the Cambridge Retirement System and the Bristol County Retirement System were appointed Lead
Plaintiffs. Lead Plaintiffs filed a consolidated complaint on January 29, 2010. The consolidated
complaint asserts claims under Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated
thereunder against Huron Consulting Group, Inc., Gary Holdren and Gary Burge and claims under
Section 20(a) of the Exchange Act against Gary
Holdren, Gary Burge and Wayne Lipski. The consolidated complaint contends that the Company and the
individual defendants issued false and misleading statements regarding the Company’s financial
results and compliance with GAAP. Lead Plaintiffs request that the action be declared a class
action, and seek unspecified damages, equitable and injunctive relief, and reimbursement for fees
and expenses incurred in connection with the action, including attorneys’ fees. On March 30, 2010,
Huron, Gary Burge, Gary Holdren and Wayne Lipski jointly filed a motion to dismiss the consolidated
complaint. On August 6, 2010, the Court denied the motion to dismiss. On December 6, 2010, we
reached an agreement in principle with Lead Plaintiffs to settle the litigation (“the Class Action
Settlement”), pursuant to which the plaintiffs will receive total consideration of approximately
$39.6 million, comprised of $27.0 million in cash and the issuance by the Company of 474,547 shares
of our common stock (the “Settlement Shares”). The Settlement Shares had an aggregate value of
approximately $12.6 million based on the closing market price of our common stock on December 31,
2010. As a result of the Class Action Settlement, we recorded a non-cash charge to earnings in the
fourth quarter of 2010 of $12.6 million representing the fair value of the Settlement Shares and a
corresponding settlement liability. During the first quarter of 2011, we recorded an additional
$0.6 million non-cash charge related to the Settlement Shares to reflect the fair value of the
Settlement Shares as of March 31, 2011, which totaled $13.2 million, and a corresponding increase
to our recorded settlement liability. We will continue to adjust the amount of the non-cash charge
and corresponding settlement liability to reflect changes in the fair value of the Settlement
Shares until and including the date of issuance, which may result in either additional non-cash
charges or non-cash gains. In accordance with the proposed settlement, in the fourth quarter of
2010 we also recorded a receivable for the cash portion of the consideration, which was funded into
escrow in its entirety by our insurance carriers in the first quarter of 2011, and a corresponding
settlement liability. There was no impact to our Consolidated Statement of Operations for the cash
consideration as we concluded that a right of setoff existed in accordance with Accounting
Standards Codification Topic 210-20-45, “Other Presentation Matters”. The total amount of
insurance coverage under the related policy was $35.0 million and the insurers had previously paid
out approximately $8.0 million in claims prior to the final $27.0 million payment discussed above.
As a result of the final payment by the insurance carriers, we will not receive any further
contributions from our insurance carriers for the reimbursement of legal fees expended on the
finalization of the Class Action Settlement or any amounts (including any damages, settlement costs
or legal fees) with respect to the SEC investigation with respect to the restatement, the USAO’s
request for certain documents and the purported private shareholder class action lawsuit and
derivative lawsuits in respect of the restatement (collectively, the “restatement matters”). The
proposed Class Action Settlement received preliminary court approval on January 21, 2011 and is
subject to final court approval and the issuance of the Settlement Shares. A Fairness Hearing is
currently scheduled to consider final approval of the settlement on May 6, 2011. The issuance of
the Settlement Shares is expected to occur after final court approval is granted. There can be no
assurance that final court approval will be granted. The proposed settlement contains no admission
of wrongdoing. Additionally, the Company has the right to terminate the settlement if class
members representing more than a specified amount of alleged securities losses elect to opt out of
the settlement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company also has been named as a nominal defendant in two state derivative suits filed in
connection with the Company’s restatement, since consolidated in the Circuit Court of Cook County,
Illinois, Chancery Division on September 21, 2009: (1) a complaint in the matter of Curtis Peters,
derivatively on behalf of Huron Consulting Group Inc. v. Gary E. Holdren, Gary L. Burge, Wayne
Lipski, each of the members of the Board of Directors and PricewaterhouseCoopers LLP, filed on
August 28, 2009 (the “Peters suit”) and (2) a complaint in the matter of Brian Hacias, derivatively
on behalf of Huron Consulting Group Inc. v. Gary E. Holdren, Gary L. Burge and Wayne Lipski, filed
on August 28, 2009 (the “Hacias suit”). The consolidated cases are captioned “In Re Huron
Consulting Group, Inc. Shareholder Derivative Litigation”. On March 8, 2010, plaintiffs filed a
consolidated complaint. The consolidated complaint asserts claims for breach of fiduciary duty,
unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets. The
consolidated complaint also alleges claims for professional negligence and breach of contract
against PricewaterhouseCoopers LLP, the Company’s independent auditors. Plaintiffs seek to recoup
for the Company unspecified damages allegedly sustained by the Company resulting from the
restatement and related matters, disgorgement and reimbursement for fees and expenses incurred in
connection with the suits, including attorneys’ fees. Huron filed a motion to dismiss plaintiffs’
consolidated complaint on April 22, 2010. On October 25, 2010, the Court granted Huron’s motion to
dismiss and dismissed plaintiffs’ consolidated complaint with prejudice. On November 19, 2010,
plaintiffs filed a notice of appeal of the dismissal to the Appellate Court of Illinois.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has also been named as a nominal defendant in three Federal derivative suits filed in
connection with the Company’s restatement, since consolidated in the United States District Court
for the Northern District of Illinois on November 23, 2009: (1) a complaint in the matter of
Oakland County Employees’ Retirement System, derivatively on
behalf of Huron Consulting Group Inc. v. Gary E. Holdren, Gary L. Burge, Wayne Lipski and each of
the members of the Board of Directors, filed on October 7, 2009 (the “Oakland suit”); (2) a
complaint in the matter of Philip R. Wilmore, derivatively on behalf of Huron Consulting Group Inc.
v. Gary E. Holdren, Gary L. Burge, Wayne Lipski, David M. Shade, and each of the members of the
Board of Directors, filed on October 12, 2009 (the “Wilmore suit”); and (3) a complaint in the
matter of Lawrence J. Goelz, derivatively on behalf of Huron Consulting Group Inc. v. Gary E.
Holdren, Gary L. Burge, Wayne Lipski, David M. Shade, and each of the members of the Board of
Directors, filed on October 12, 2009 (the “Goelz suit”). Oakland County Employees’ Retirement
System, Philip R. Wilmore and Lawrence J. Goelz have been named Lead Plaintiffs. Lead Plaintiffs
filed a consolidated complaint on January 15, 2010. The consolidated complaint asserts claims
under Section 14(a) of the Exchange Act and for breach of fiduciary duty, waste of corporate assets
and unjust enrichment. Lead Plaintiffs seek to recoup for the Company unspecified damages
allegedly sustained by the Company resulting from the restatement and related matters, restitution
from all defendants and disgorgement of all profits, benefits or other compensation obtained by the
defendants and reimbursement for fees and expenses incurred in connection with the suit, including
attorneys’ fees. On April 7, 2010, the Court denied Huron’s motion to stay the Federal derivative
suits. On April 8, 2010, Huron filed a motion to stay discovery proceedings in the derivative
suits, pursuant to the Private Securities Litigation Reform Act, pending the resolution of Huron’s
motion to dismiss plaintiffs’ consolidated complaint. The Court granted Huron’s motion to stay
discovery proceedings in the derivative suits on April 12, 2010. Huron filed a motion to dismiss
plaintiffs’ consolidated complaint on April 27, 2010. Huron’s motion to dismiss was granted,
judgment entered and the case closed on September 7, 2010. On October 5, 2010, plaintiffs moved
for relief from judgment and for leave to file a first amended complaint. The Court granted
plaintiffs’ motion on October 12, 2010, and plaintiffs filed their amended complaint that same day.
Defendants moved to dismiss plaintiffs’ amended complaint on November 5, 2010. On March 22, 2011,
the Court granted defendants’ motion to dismiss and dismissed plaintiffs’ amended complaint with
prejudice.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Given the uncertain nature of the restatement matters, and the uncertainties related to the
incurrence and amount of loss, including with respect to the imposition of fines, penalties,
damages, administrative remedies and liabilities for additional amounts, with respect to the
restatement matters, we are unable to predict the ultimate outcome of the restatement matters,
determine whether a liability has been incurred or make a reasonable estimate of the liability that
could result from an unfavorable outcome in the restatement matters. Any such liability could be
material.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On December 9, 2009, plaintiff, Associates Against Outlier Fraud, filed a First Amended <i>qui tam</i>
complaint against Huron Consulting Group, Inc., and others under the federal and New York state
False Claims Act (“FCA”) in the United States District Court for the Southern District of New York.
The federal and state FCA authorize private individuals (known as “relators”) to sue on behalf of
the government (known as “<i>qui tam</i>” actions) alleging that false or fraudulent claims were knowingly
submitted to the government. Once a <i>qui tam </i>action is filed, the government may elect to intervene
in the action. If the government declines to intervene, the relator may proceed with the action.
Under the federal and state FCA, the government may recover treble damages and civil penalties
(civil penalties of up to $11,000 per violation under the federal FCA and $12,000 per violation
under the state FCA). On January 6, 2010, the United States declined to intervene in the lawsuit.
On February 2, 2010, Huron filed a motion to dismiss the relator’s federal and state claims. On
August 25, 2010, the Court granted Huron’s motion to dismiss without prejudice. On September 29,
2010, relator filed a Second Amended Complaint alleging that Huron and others caused St. Vincent
Catholic Medical Center to receive more than $30 million in inflated outlier payments under the
Medicare and Medicaid programs in violation of the federal and state FCA and also seeks to recover
an unspecified amount of civil penalties. On October 19, 2010 Huron filed a motion to dismiss the
Second Amended Complaint, which the Court denied on January 3, 2011. The suit is in the
pre-trial stage and no trial date has been set. We believe that the claims are without merit and
intend to vigorously defend ourselves in this matter.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">From time to time, we are involved in legal proceedings and litigation arising in the ordinary
course of business. As of the date of this quarterly report on Form 10-Q, we are not a party to or
threatened with any other litigation or legal proceeding that, in the current opinion of
management, could have a material adverse effect on our financial position or results of
operations. However, due to the risks and uncertainties inherent in legal proceedings, actual
results could differ from current expected results.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Guarantees</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Guarantees in the form of letters of credit totaling $6.4 million and $6.3 million were
outstanding at March 31, 2011 and December 31, 2010, respectively, to support certain office lease
obligations as well as Middle East performance and bid bonds.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In connection with certain business acquisitions, we are required to pay additional purchase
consideration to the sellers if specific performance targets and conditions are met over a number
of years as specified in the related purchase agreements. These amounts are calculated and payable
at the end of each year based on full year financial results. There is no limitation to the
maximum amount of additional purchase consideration and the aggregate amount that potentially may
be paid could be significant. Additional purchase consideration earned by certain sellers totaled
$28.3 million for the year ended December 31, 2010, of which $3.0 million remains payable as of
March 31, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">To the extent permitted by law, our by-laws and articles of incorporation require that we indemnify
our officers and directors against judgments, fines and amounts paid in settlement, including
attorney’s fees, incurred in connection with civil or criminal action or proceedings, as it relates
to their services to us if such person acted in good faith. Although there is no limit on the
amount of indemnification, we may have recourse against our insurance carrier for certain payments
made.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>14. Segment Information</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Segments are defined by FASB ASC Topic 280, “Segment Reporting”, as components of a company in
which separate financial information is available and is evaluated regularly by the chief operating
decision maker, or decision making group, in deciding how to allocate resources and in assessing
performance. Our chief operating decision maker manages the business under three operating
segments: Health and Education Consulting, Legal Consulting, and Financial Consulting.
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><b>Health and Education Consulting. </b>Our Health and Education Consulting
segment provides consulting services to hospitals, health systems,
physicians, managed care organizations, academic medical centers,
colleges, universities, and pharmaceutical and medical device
manufacturers. This segment’s professionals develop and implement
solutions to help clients address financial management, strategy,
operational and organizational effectiveness, research administration,
and regulatory compliance. This segment also provides consulting
services related to hospital or healthcare organization performance
improvement, revenue cycle improvement, turnarounds, merger or
affiliation strategies, labor productivity, non-labor cost management,
information technology, patient flow improvement, physician practice
management, interim management, clinical quality and medical
management, and governance and board development.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><b>Legal Consulting. </b>Our Legal Consulting segment provides advisory and
business services to assist law departments and law firms with their
strategy, organizational design and development, operational
efficiency, and cost effectiveness. These results-driven services add
value to organizations by helping reduce legal spend and enhance
client service. Our expertise focuses on strategic and management
consulting, cost management, and technology and information management
including matter management, records, document review and discovery
services. Included in this segment’s offerings is our V3locity™
solution, which delivers streamlined e-discovery process resulting in
more affordable and predictable discovery costs and our IMPACT™
solution, which delivers sustainable cost reductions.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="1%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td><b>Financial Consulting. </b>Our Financial Consulting segment assists
corporations with complex accounting and financial reporting matters,
and provides financial analysis in restructuring and turnaround
situations. We have an array of services that are flexible and
responsive to event- and transaction-based needs across industries.
Our professionals consist of certified public accountants, certified
insolvency and restructuring advisors, certified turnaround
professionals, and chartered financial analysts that serve attorneys,
corporations, and financial institutions as advisors and consultants.
Huron also consults with companies in the areas of corporate
governance, Sarbanes Oxley compliance, and internal audit, and helps
companies with critical finance and accounting department projects
utilizing on demand resources.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Segment operating income consists of the revenues generated by a segment, less the direct costs of
revenue and selling, general and administrative costs that are incurred directly by the segment.
Unallocated corporate costs include costs related to administrative functions that are performed in
a centralized manner that are not attributable to a particular segment.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">These administrative function costs include costs for corporate office support, certain office
facility costs, costs relating to accounting and finance, human resources, legal, marketing,
information technology and company-wide business development functions, as well as costs related to
overall corporate management.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The table below sets forth information about our operating segments for the three months ended
March 31, 2011 and 2010, along with the items necessary to reconcile the segment information to the
totals reported in the accompanying consolidated financial statements.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Health and Education Consulting:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">91,031</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">76,914</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">26,367</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21,066</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment operating income as a percent of segment revenues
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">29.0</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">27.4</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Legal Consulting:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">37,317</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,105</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">9,595</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,419</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment operating income as a percent of segment revenues
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">25.7</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">22.4</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Financial Consulting:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">14,637</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17,723</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,375</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,518</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment operating income as a percent of segment revenues
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">23.1</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">25.5</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total Company:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">142,985</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">127,742</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Reimbursable expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">13,102</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,499</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total revenues and reimbursable expenses
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">156,087</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">139,241</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Statement of operations reconciliation:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Segment operating income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">39,337</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,003</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Charges not allocated at the segment level:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other selling, general and administrative expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">23,394</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,938</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Depreciation and amortization expense
</div></td>
<td> </td>
<td> </td>
<td align="right">4,305</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,627</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other expense, net
</div></td>
<td> </td>
<td> </td>
<td align="right">3,468</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,709</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income from continuing operations before income tax expense
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">8,170</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,729</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 15 - us-gaap:ScheduleOfSubsequentEventsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>15. Subsequent Events</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On April 14, 2011 (“Closing Date”), the Company and certain of the Company’s subsidiaries as
guarantors entered into an Amended and Restated Credit Agreement, dated as of April 14, 2011, (the
“Agreement”) with the various financial institutions party thereto, which include, Bank of America,
N.A., as lender, administrative agent and collateral agent for the lenders; JPMorgan Chase Bank,
N.A., as lender and syndication agent; PNC Bank, National Association, Harris N.A. and KeyBank
National Association as lenders and Co-Documentation Agents; Fifth Third Bank, The Northern Trust
Company, RBS Citizens, N.A., The PrivateBank and Trust Company, FirstMerit Bank, N.A., and
Northbrook Bank & Trust Company as lenders (collectively the “Lenders”); and Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as joint lead arrangers and joint book
managers. The Agreement replaces the Credit Agreement, dated as of June 7, 2006, and all subsequent
amendments thereto, by and among the Company and the lenders therein.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Under the Agreement, the Lenders have agreed to make available to the Company a senior secured
credit facility in an aggregate principal amount of $350 million comprised of the following: a
five-year revolving credit facility under which the Company may borrow from time to time up to $150
million and a $200 million five-year term loan facility which was funded in a single advance on the
closing date. The revolving credit facility is reduced by any letters of credit outstanding. The
Agreement provides for the option to increase the revolving credit facility in an aggregate amount
of up to $50 million subject to certain requirements as defined in the Agreement. The proceeds of the senior secured
credit facility are to be used (i) to refinance existing indebtedness, and (ii) for working
capital, capital expenditures, and other lawful corporate purposes.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Fees and interest on borrowings vary based on the Company’s total debt to earnings before interest,
taxes, depreciation and amortization ratio as set forth in the Agreement and will be based on a
spread over LIBOR or a spread over the base rate, as selected by the Company. The base rate is the
greater of (a) the Federal Funds Rate plus 0.5%, (b) the Prime Rate and (c) except during a
Eurodollar Unavailability Period, the Eurodollar Rate plus 1.0%.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The commitment under the revolving credit facility will terminate five years from the Closing Date,
at which time the outstanding principal balance and all accrued interest and fees will be due and
payable in full. The term loan is subject to scheduled quarterly amortization payments equal to
7.5% of the original principal balance in year one, 10.0% in year two, 12.5% in years three and
four, and 57.5% in year five, as set forth in the Agreement. The maturity date for the term Loan is
April 14, 2016, at which time the outstanding principal balance and all accrued interest will be
due and payable in full. The maturity date of any borrowings is automatically accelerated upon the
bankruptcy or insolvency of the Company or any of its subsidiaries and may be accelerated by the
Lenders upon the default in the payment of any principal, interest or fees on the borrowings, the
default in the payment of amounts in any other agreements in excess of $15 million, the failure by
the Company to comply with or perform certain specified covenants or agreements in the Agreement,
any representation or warranty in the Agreement and specified other documents is breached or is
false or misleading, or a change in control of the Company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Agreement also includes financial covenants that require the Company to maintain certain
leverage ratio, fixed charge coverage ratio and net worth levels. In addition, certain
acquisitions and similar transactions will need to be approved by the Lenders.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On April 14, 2011, the Company also entered into an Amended and Restated Security Agreement (the
“Security Agreement”) and an Amended and Restated Pledge Agreement (the “Pledge Agreement”) with
Bank of America, N.A. as collateral agent for the holders of the secured obligations. The Security
Agreement is required by the terms of the Agreement in order to secure the obligations thereunder,
and grants Bank of America, for the benefit of the Lenders under the Agreement, a first-priority
lien, subject to permitted liens, on substantially all of the personal property assets of the
Company and the subsidiary grantors. The Pledge Agreement is also required by the terms of the
Agreement in order to secure the obligations thereunder, and grants Bank of America, for the
benefit of the Lenders under the Agreement, a first-priority lien, subject to permitted liens, on
100% of the issued and outstanding equity interests of the Company and each of its domestic
subsidiaries and 65% of the issued and outstanding equity interests of certain foreign
subsidiaries.
</div>
</div>
false
--12-31
Q1
2011
2011-03-31
10-Q
0001289848
22198866
Yes
Accelerated Filer
417500000
Huron Consulting Group Inc.
No
No
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Cash and cash equivalents presented herein includes $1.0 million of cash and cash equivalents classified as discontinued operations as of March 31, 2010.