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EX-32.2 - EX 32.2 - FTI CONSULTING, INCfti63018-10qex322.htm
EX-32.1 - EX 32.1 - FTI CONSULTING, INCfti63018-10qex321.htm
EX-31.2 - EX 31.2 - FTI CONSULTING, INCfti63018-10qex312.htm
EX-31.1 - EX 31.1 - FTI CONSULTING, INCfti63018-10qex311.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
Commission file number 001-14875
 
 
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
Maryland
52-1261113
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
 
 
555 12th Street NW
Washington, D.C.
20004
(Address of Principal Executive Offices)
(Zip Code)
(202) 312-9100
(Registrant’s telephone number, including area code)
 
  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
Accelerated filer
 
 
 
 
Non-accelerated filer
☐  (Do not check if a smaller reporting company)
Smaller reporting company
 
 
 
 
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
Class
Outstanding at July 19, 2018
Common stock, par value $0.01 per share
38,207,093
 



FTI CONSULTING, INC. AND SUBSIDIARIES
INDEX
 
 
 
Page 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I—FINANCIAL INFORMATION
FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
Item 1.
Financial Statements
 
 
June 30,
 
December 31,
 
2018
 
2017
Assets
(Unaudited)
 
 
Current assets
 

 
 

Cash and cash equivalents
$
116,556

 
$
189,961

Accounts receivable:
 
 
 
Billed receivables
455,707

 
390,996

Unbilled receivables
368,360

 
312,569

Allowance for doubtful accounts and unbilled services
(216,612
)
 
(180,687
)
Accounts receivable, net
607,455

 
522,878

Current portion of notes receivable
28,619

 
25,691

Prepaid expenses and other current assets
54,806

 
55,649

Total current assets
807,436

 
794,179

Property and equipment, net
75,046

 
75,075

Goodwill
1,198,732

 
1,204,803

Other intangible assets, net
39,379

 
44,150

Notes receivable, net
90,904

 
98,105

Other assets
45,915

 
40,929

Total assets
$
2,257,412

 
$
2,257,241

Liabilities and Stockholders' Equity
 
 
 
Current liabilities
 
 
 
Accounts payable, accrued expenses and other
$
93,988

 
$
94,873

Accrued compensation
224,663

 
268,513

Billings in excess of services provided
33,653

 
46,942

Total current liabilities
352,304

 
410,328

Long-term debt, net
371,662

 
396,284

Deferred income taxes
134,081

 
124,471

Other liabilities
123,564

 
134,187

Total liabilities
981,611

 
1,065,270

Commitments and contingent liabilities (Note 11)


 


Stockholders' equity
 
 
 
Preferred stock, $0.01 par value; shares authorized — 5,000; none
   outstanding

 

Common stock, $0.01 par value; shares authorized — 75,000;
   shares issued and outstanding — 38,179 (2018) and 37,729 (2017)
382

 
377

Additional paid-in capital
280,201

 
266,035

Retained earnings
1,128,670

 
1,045,774

Accumulated other comprehensive loss
(133,452
)
 
(120,215
)
Total stockholders' equity
1,275,801

 
1,191,971

Total liabilities and stockholders' equity
$
2,257,412

 
$
2,257,241

 
See accompanying notes to condensed consolidated financial statements

3


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues
$
512,098

 
$
444,715

 
$
1,009,872

 
$
891,059

Operating expenses
 
 
 
 
 
 
 
Direct cost of revenues
330,318

 
304,071

 
651,435

 
613,143

Selling, general and administrative expenses
117,897

 
108,119

 
230,025

 
215,809

Special charges

 
30,074

 

 
30,074

Amortization of other intangible assets
2,052

 
2,422

 
4,322

 
4,915

 
450,267

 
444,686

 
885,782

 
863,941

Operating income
61,831

 
29

 
124,090

 
27,118

Other income (expense)
 

 
 

 
 

 
 

Interest income and other
2,474

 
1,592

 
674

 
2,197

Interest expense
(6,583
)
 
(6,250
)
 
(12,827
)
 
(12,051
)
 
(4,109
)
 
(4,658
)
 
(12,153
)
 
(9,854
)
Income (loss) before income tax provision
57,722

 
(4,629
)
 
111,937

 
17,264

Income tax provision
14,113

 
527

 
29,383

 
8,404

Net income (loss)
$
43,609

 
$
(5,156
)
 
$
82,554

 
$
8,860

Earnings (loss) per common share — basic
$
1.18

 
$
(0.13
)
 
$
2.24

 
$
0.22

Earnings (loss) per common share — diluted
$
1.14

 
$
(0.13
)
 
$
2.18

 
$
0.22

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of tax expense
    of $0
$
(23,683
)
 
$
10,174

 
$
(13,237
)
 
$
17,544

Total other comprehensive income (loss), net of tax
(23,683
)
 
10,174

 
(13,237
)
 
17,544

Comprehensive income
$
19,926

 
$
5,018

 
$
69,317

 
$
26,404

 
See accompanying notes to condensed consolidated financial statements

4


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity
(in thousands)
(Unaudited)
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
 
 
Shares
 
Amount
 
 
 
 
Total
Balance at December 31, 2017
37,729

 
$
377

 
$
266,035

 
$
1,045,774

 
$
(120,215
)
 
$
1,191,971

Net income

 
$

 
$

 
$
82,554

 
$

 
$
82,554

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Cumulative translation adjustment

 

 

 

 
(13,237
)
 
(13,237
)
Issuance of common stock in
  connection with:
 
 
 
 
 
 
 
 
 
 
 
Exercise of options
513

 
5

 
20,595

 

 

 
20,600

           Restricted share grants, less net
             settled shares of 39
274

 
3

 
(1,834
)
 

 

 
(1,831
)
           Stock units issued under incentive
             compensation plan

 

 
1,059

 

 

 
1,059

Purchase and retirement of common
   stock
(337
)
 
(3
)
 
(14,217
)
 

 

 
(14,220
)
     Cumulative effect due to adoption of
        new accounting standard

 

 

 
342

 

 
342

Share-based compensation

 

 
8,563

 

 

 
8,563

Balance at June 30, 2018
38,179

 
$
382

 
$
280,201

 
$
1,128,670

 
$
(133,452
)
 
$
1,275,801

 
See accompanying notes to condensed consolidated financial statements

5


FTI Consulting, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 
Six Months Ended June 30,
Operating activities
2018
 
2017
Net income
$
82,554

 
$
8,860

Adjustments to reconcile net income to net cash used in operating
   activities:
 
 
 
Depreciation and amortization
16,253

 
16,298

Amortization and impairment of other intangible assets
4,322

 
4,915

Acquisition-related contingent consideration
232

 
1,172

Provision for doubtful accounts
8,710

 
5,971

Non-cash share-based compensation
8,563

 
9,959

Non-cash interest expense and other
993

 
992

Other
798

 
242

Changes in operating assets and liabilities, net of effects from
   acquisitions:
 
 
 
Accounts receivable, billed and unbilled
(99,299
)
 
(78,100
)
Notes receivable
4,214

 
2,241

Prepaid expenses and other assets
(4,151
)
 
947

Accounts payable, accrued expenses and other
352

 
(1,887
)
Income taxes
13,143

 
3,087

Accrued compensation
(58,547
)
 
(64,531
)
Billings in excess of services provided
(12,722
)
 
7,634

Net cash used in operating activities
(34,585
)
 
(82,200
)
Investing activities
 
 
 
Purchases of property and equipment
(16,220
)
 
(13,127
)
Other
689

 
72

Net cash used in investing activities
(15,531
)
 
(13,055
)
Financing activities
 
 
 
Borrowings (repayments) under revolving line of credit, net
(25,000
)
 
115,000

Deposits
2,602

 
3,262

Purchase and retirement of common stock
(14,220
)
 
(102,513
)
Net issuance of common stock under equity compensation plans
18,740

 
(500
)
Payments for acquisition-related contingent consideration
(3,029
)
 
(79
)
Net cash provided by (used in) financing activities
(20,907
)
 
15,170

Effect of exchange rate changes on cash and cash equivalents
(2,382
)
 
2,438

Net decrease in cash and cash equivalents
(73,405
)
 
(77,647
)
Cash and cash equivalents, beginning of period
189,961

 
216,158

Cash and cash equivalents, end of period
$
116,556

 
$
138,511

Supplemental cash flow disclosures
 
 
 
Cash paid for interest
$
13,020

 
$
14,903

Cash paid for income taxes, net of refunds
$
16,137

 
$
5,336

Non-cash investing and financing activities:
 
 
 
Issuance of stock units under incentive compensation plans
$
1,059

 
$
1,547

 
See accompanying notes to condensed consolidated financial statements

6


FTI Consulting, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(dollar and share amounts in tables in thousands, except per share data)
(Unaudited)
 
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “FTI Consulting”), presented herein, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.  
Revenue Recognition
As of January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers ("ASC 606"), which impacts the timing of when certain types of revenue will be recognized. Revenues are recognized when we satisfy a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods and services. Performance obligations in our contracts represent distinct or separate service streams that we provide to our customers.
We evaluate our revenue contracts with customers based on the five-step model under ASC 606: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenues when (or as) each performance obligation is satisfied. If, at the outset of an arrangement, we determine that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.
We generate the majority of our revenues by providing consulting services to our clients. Most of our consulting service contracts are based on one of the following types of arrangements:
Time and expense arrangements require the client to pay us based on the number of hours worked at contractually agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient, because we have a right to consideration for services completed to date. When a time and expense arrangement has a not-to-exceed or "cap" amount and we expect to perform work in excess of the cap, we recognize up to the cap amount specified by the client, based on the efforts or hours incurred as a percentage of total efforts or hours expected to be incurred (e.g. proportional performance method). Certain time and materials arrangements may be subject to third party approval, e.g. a court or other regulatory institution, with interim billing and payments made and received based upon preliminarily agreed upon rates. We record revenues for the portion of our services based on our assessment of the expected probability of amounts ultimately to be agreed upon by the court or regulator. These assessments are made on a case-by-case basis depending on the nature of the engagement, client economics, historical experience and other appropriate factors.
Fixed fee arrangements require the client to pay a pre-established fee in exchange for a predetermined set of professional services. We recognize revenues for these arrangements based on the proportional performance related to individual performance obligations within each arrangement, however, these arrangements generally have one performance obligation.
Performance based or contingent arrangements represent forms of variable consideration. In these arrangements, our fees are based on the attainment of contractually defined objectives with our client, such as completing a business transaction or assisting the client in achieving a specific business objective. When our performance obligation(s) are satisfied over time, we determine the transaction price based on the expected probability of achieving the agreed-upon outcome and recognize revenues earned to date by applying the proportional performance method. These

7


arrangements include conditional payments, commonly referred to as success fees, which were previously recognized when the cash was collected.
In addition, we generate certain revenues from our Technology segment that are based on units of data stored or processed. Unit based revenues are recognized as services are provided, based on either the amount of data stored or processed, the number of concurrent users accessing the information, or the number of pages or images processed for a client, and agreed-upon per unit rates. We also generate revenues from our on-premise software licenses. Software license revenues are generally recognized at a point in time when the customer acceptance occurs, in accordance with the provision of the arrangements.
Certain of our time and expense and fixed fee billing arrangements may include client incentives in the form of volume-based discounts, where if certain fee levels are reached, the client can receive future services at a discounted hourly rate. Contracts with customers that have a prospective discounted pricing option based on predetermined volume thresholds are evaluated to determine whether they include a material right, which is an option that provides a customer the right to acquire free or discounted goods or services in the future. If the option provides a material right to the customer, we allocate a portion of the transaction price to the material right and defer revenues during the pre-discount period, compared to our previous practice of recognizing the reduction in revenues when customers became eligible to receive the volume discount.
Reimbursable expenses, including those relating to travel, out-of-pocket expenses, outside consultants and other outside service costs, are generally included in revenues, and an equivalent amount of reimbursable expenses is included in costs of services in the period in which the expense is incurred.
2. Earnings (Loss) Per Common Share
Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share adjusts basic earnings (loss) per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and restricted shares, each using the treasury stock method.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Numerator — basic and diluted
 
 
 
 
 
 
 
Net income (loss)
$
43,609

 
$
(5,156
)
 
$
82,554

 
$
8,860

Denominator
 
 
 
 
 
 
 
Weighted average number of common shares
   outstanding — basic
37,001

 
39,555

 
36,851

 
40,039

Effect of dilutive stock options
558

 

 
430

 
129

Effect of dilutive restricted shares
712

 

 
661

 
334

Weighted average number of
   common shares outstanding — diluted (1)
38,271

 
39,555

 
37,942

 
40,502

Earnings (loss) per common share — basic
$
1.18

 
$
(0.13
)
 
$
2.24

 
$
0.22

Earnings (loss) per common share — diluted
$
1.14

 
$
(0.13
)
 
$
2.18

 
$
0.22

Antidilutive stock options and restricted shares
44

 
1,947

 
330

 
1,469

 
(1) 
For the three months ended June 30, 2017, we excluded 377,389 potentially dilutive securities from the computation as their effect would be anti-dilutive due to a net loss applicable to common stockholders.
3. New Accounting Standards
 Adopted Accounting Standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers. On January 1, 2018, we adopted ASC 606 using the modified retrospective method and recorded an immaterial cumulative effect adjustment to the beginning balance of retained earnings for revenue contracts that existed at the adoption date. Under the modified retrospective method, prior year information has not been adjusted and continues to be reported under the accounting standards in effect for periods prior to the adoption date. We have not retroactively restated the existing contracts for modifications that occurred before January 1, 2018.

8


See Note 1, "Basis of Presentation and Significant Accounting Policies" in Part I, Item 1, of this Quarterly Report on Form 10-Q for a description of the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements. See Note 4, “Revenues” in Part I, Item 1, of this Quarterly Report on Form 10-Q for the disclosures required under ASC 606. The adoption of ASC 606 had an immaterial impact on our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Balance Sheets and had no impact on our Condensed Consolidated Statements of Cash Flows.
In March 2018, the FASB issued ASU 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), Income Taxes (Topic 740). ASU 2018-05 provides guidance regarding the recording of tax impacts where uncertainty exists, in the period of adoption of the 2017 U.S. Tax Cuts and Jobs Act (the “2017 Tax Act”), which allowed companies to reflect provisional amounts for those specific income tax effects of the 2017 Tax Act for which the accounting under ASC Topic 740 is incomplete but for which a reasonable estimate could be determined. During the six months ended June 30, 2018, the Company has not recognized any material changes to the provisional amounts recorded in our 2017 Annual Report on Form 10-K in connection with the 2017 Tax Act. The accounting for the tax effects of the 2017 Tax Act will be finalized in the second half of 2018 as we complete our federal and state tax returns and incorporate any additional guidance that may be issued by the U.S. tax authorities.
Accounting Standards Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which supersedes existing lease guidance. Under ASC 842, we will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. Previously, there was no requirement to recognize an asset or liability on the balance sheet for an operating lease. ASC 842 also requires disclosure of key information about leasing arrangements. This guidance is effective beginning January 1, 2019 using a modified retrospective approach for each prior reporting period presented. In January 2018, the FASB issued an exposure draft of the proposed ASU, Leases (Topic 842): Targeted Improvements. The proposed ASU provides an alternative transition method of adoption, permitting the recognition of a cumulative-effect adjustment to retained earnings on the date of adoption.
The Company's implementation plan is under way and includes an information system and business process change to accumulate the appropriate data in order to calculate and record the recognition of right-of-use assets, lease liabilities and the related expense recognition. We are creating an inventory of our existing portfolio of leases and continue to review other contracts to determine if they contain leases as defined by ASC 842. Our existing portfolio of leases is primarily composed of operating leases related to our offices. While this assessment continues, we have not yet determined the effect of ASC 842 on our Condensed Consolidated Balance Sheets. We do not expect that the adoption of ASC 842 will have a material impact on our results of operations or cash flow presentation.
4. Revenues
Revenues recognized during the current period may include revenues recognized from performance obligations satisfied or partially satisfied in previous periods. This primarily occurs when the estimated transaction price has changed based on a re-assessment of the expected probability of achieving the agreed-upon outcome for our performance based and contingent arrangements, resulting in a catch-up adjustment for service provided in previous periods. The aggregate amount of revenues recognized related to the catch-up adjustment due to a change in the transaction price during the three and six months ended June 30, 2018 was $4.5 million and $6.5 million, respectively.
Unfulfilled performance obligations represent the remaining contract transaction prices allocated to the performance obligations that are unsatisfied, or partially unsatisfied, and therefore revenues have not yet been recorded. Unfulfilled performance obligations primarily consist of the remaining fees not yet recognized under our proportional performance method for both our fixed fee arrangements, and the portion of performance-based and contingent arrangements that we have deemed probable. As of June 30, 2018, the aggregate amount of the transaction price allocated to unfulfilled performance obligations was $3.8 million, and we expect to recognize the majority of the related revenues over the next 18 months. We elected to utilize the optional exemption to exclude from this disclosure fixed fee and performance-based and contingent arrangements with an original expected duration of one year or less, and to exclude our time and expense arrangements for which revenues are recognized using the right to invoice practical expedient.
Contract assets are defined as assets for which we have recorded revenue because we determined that it is probable that we will earn a performance based or contingent fee, but we are not yet entitled to receive our fees because certain events, such as completion of the measurement period or client approval, must occur. The contract asset balance was immaterial as of June 30, 2018 and December 31, 2017.
Contract liabilities are defined as liabilities incurred when we have received consideration from a client but have not yet performed the agreed upon services. This may occur when we receive advance billings before delivery and acceptance of

9


software licenses in our Technology segment and when clients pay us upfront fees before we begin work for them. The contract liability balance was immaterial as of June 30, 2018 and December 31, 2017.
5. Accounts Receivable and Allowance for Doubtful Accounts
Timing of revenue recognition often differs from the timing of billing to our customers. Generally, we transfer goods or services to a customer before the customer pays consideration or payment is due. If we have an unconditional right to invoice and receive payment for goods or services already provided, we record billed and unbilled receivables on our Condensed Consolidated Balance Sheets. Payment terms and conditions vary depending on the jurisdiction, market and type of service and whether regulatory or other third-party approvals are required. In addition, contracts may be negotiated per the client’s request, or at times we are asked to execute contracts in a form provided by customers that might include different terms. Our standard contract terms generally include a requirement of payment within 30 days where no contingencies exist.
We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenues when there are changes in estimates of fee reductions, such as those fee reductions imposed by bankruptcy courts and other regulatory institutions for both billed and unbilled receivables. The allowance for doubtful accounts and unbilled services is also adjusted after the related work has been billed to the client and we discover that collectability is not reasonably assured. These adjustments are recorded to “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income. Our bad debt expense totaled $3.0 million and $8.7 million for the three and six months ended June 30, 2018, respectively, and $2.4 million and $6.0 million for the three and six months ended June 30, 2017, respectively.
6. Special Charges
There was no special charge recorded during the three and six months ended June 30, 2018.
During the three and six months ended June 30, 2017, we recorded a special charge of $30.1 million. The charge includes the impact of certain targeted reductions in areas of each segment where we needed to realign our workforce with then-current business demand and in certain corporate departments where we were able to streamline support activities. In addition, certain strategic actions were taken to reduce our future real estate costs. The special charge included the following components:
$16.1 million of employee severance and other employee-related costs.
$12.4 million of exit costs associated with the curtailment of our lease on our executive office in Washington, D.C.
$1.6 million of other expenses, including costs related to disposing or closing several small international offices.
The following table details the special charges by segment for the three and six months ended June 30, 2018 and 2017:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Special Charges by Segment
2018
 
2017
 
2018
 
2017
Corporate Finance & Restructuring
$

 
$
3,049

 
$

 
$
3,049

Forensic and Litigation Consulting

 
10,445

 

 
10,445

Economic Consulting

 
5,910

 

 
5,910

Technology

 
3,827

 

 
3,827

Strategic Communications

 
3,599

 

 
3,599

 

 
26,830

 

 
26,830

Unallocated Corporate

 
3,244

 

 
3,244

Total
$

 
$
30,074

 
$

 
$
30,074

7. Research and Development Costs
Research and development costs related to software development in our Technology segment totaled $2.9 million and $5.8 million for the three and six months ended June 30, 2018, respectively, and $4.3 million and $8.5 million for the three and six months ended June 30, 2017, respectively. Research and development costs are included in “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income.  

10


8. Financial Instruments
The following table presents the carrying amounts and estimated fair values of our financial instruments by hierarchy level as of June 30, 2018 and December 31, 2017.

 
June 30, 2018
 
 
 
Hierarchy Level
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
Acquisition-related contingent consideration, including
current portion (1)
$
2,960

 
$

 
$

 
$
2,960

Long-term debt
375,000

 

 
381,750

 

Total
$
377,960

 
$

 
$
381,750

 
$
2,960

 
December 31, 2017
 
 
 
Hierarchy Level
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
Acquisition-related contingent consideration, including
current portion (1)
$
3,750

 
$

 
$

 
$
3,750

Long-term debt
400,000

 

 
409,000

 

Total
$
403,750

 
$

 
$
409,000

 
$
3,750

 
(1) 
The short-term portion is included in “Accounts payable, accrued expenses and other,” and the long-term portion is included in “Other liabilities” on the Condensed Consolidated Balance Sheets.  
The fair values of financial instruments not included in this table are estimated to be equal to their carrying values as of June 30, 2018 and December 31, 2017.
We determine the fair value of our long-term debt primarily based on quoted market prices for our 6% senior notes due 2022 (the “2022 Notes”) as of June 30, 2018 and December 31, 2017. The fair value of our borrowings on our senior secured bank revolving credit facility (“Credit Facility”) approximates the carrying amount. The fair value of our long-term debt is classified within Level 2 of the fair value hierarchy because it is traded in less active markets.
We estimate the fair value of acquisition-related contingent consideration using a probability-weighted discounted cash flow model. This fair value estimate represents a Level 3 measurement as it is based on significant inputs not observed in the market and reflect our own assumptions. The significant unobservable inputs used in the fair value measurements of our acquisition-related contingent consideration are our measures of the future profitability and related cash flows and discount rates. The fair value of the contingent consideration is reassessed at each reporting period by the Company based on additional information as it becomes available.
Any change in the fair value of an acquisition’s contingent consideration liability results in a remeasurement gain or loss that is recorded in “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income. During the six months ended June 30, 2018 there was no change in the estimated fair value of future expected contingent consideration payments. During the six months ended June 30, 2017, we recorded a remeasurement loss of $0.7 million.

11


9. Goodwill and Other Intangible Assets
Goodwill
The table below summarizes the changes in the carrying amount of goodwill by reportable segment:   
 
Corporate
Finance &
Restructuring
 
Forensic and
Litigation
Consulting
 
Economic
Consulting
 
Technology
 
Strategic
Communications
 
Total
Balance at December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Goodwill
$
454,816

 
$
233,719

 
$
268,995

 
$
117,740

 
$
323,672

 
$
1,398,942

Accumulated goodwill impairment

 

 

 

 
(194,139
)
 
(194,139
)
Goodwill, net at December 31, 2017
454,816


233,719


268,995


117,740


129,533


1,204,803

Foreign currency translation adjustment and other
(2,454
)
 
(1,168
)
 
(213
)
 
(38
)
 
(2,198
)
 
(6,071
)
Balance at June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Goodwill
452,362


232,551


268,782


117,702

 
321,474

 
1,392,871

Accumulated goodwill impairment

 

 

 

 
(194,139
)
 
(194,139
)
Goodwill, net at June 30, 2018
$
452,362


$
232,551


$
268,782


$
117,702


$
127,335


$
1,198,732

Other Intangible Assets
Other intangible assets with finite lives, comprised primarily of customer relationships, are amortized over their estimated useful lives. We recorded amortization expense of $2.1 million and $4.3 million for the three and six months ended June 30, 2018, respectively, and $2.4 million and $4.9 million for the three and six months ended June 30, 2017, respectively.
We estimate our future amortization expense for our intangible assets with finite lives to be as follows: 
Year
As of
June 30, 2018 (1)
2018 (remaining)
$
3,884

2019
7,437

2020
7,274

2021
6,731

2022
4,939

Thereafter
3,514

 
$
33,779

 
(1) 
Actual amortization expense to be reported in future periods could differ from these estimates because of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes.
10. Long-Term Debt
The table below summarizes the components of the Company’s long-term debt. 
 
June 30, 2018
 
December 31, 2017
2022 Notes
$
300,000

 
$
300,000

Credit Facility
75,000

 
100,000

Total debt
375,000


400,000

Less: deferred debt issue costs
(3,338
)
 
(3,716
)
Long-term debt, net (1)
$
371,662


$
396,284

 
 
(1) 
There were no current portions of long-term debt as of June 30, 2018 and December 31, 2017.

12


The Company has classified the borrowings under the Company’s Credit Facility as long-term debt in the accompanying Condensed Consolidated Balance Sheets, as amounts due under the credit agreement entered into on June 26, 2015, which expires on June 26, 2020, are not contractually required or expected to be liquidated for more than one year from the applicable balance sheet date. Additionally, $1.0 million of the borrowing limit under the Credit Facility was utilized for letters of credit as of June 30, 2018.  
11. Commitments and Contingencies
We are subject to legal actions arising in the ordinary course of business. In management’s opinion, we believe we have adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. We do not believe any settlement or judgment relating to any pending legal action would materially affect our financial position or results of operations.  
12. Share-Based Compensation
During the six months ended June 30, 2018, we granted 216,761 restricted stock awards, 32,374 restricted stock units and 91,370 performance-based restricted stock units. These awards are recorded as equity on the Condensed Consolidated Balance Sheets. During the six months ended June 30, 2018, stock options exercisable for up to 190,927 shares and 7,907 shares of restricted stock awards were forfeited prior to the completion of the applicable vesting requirements.
Total share-based compensation expense, net of forfeitures, for the three and six months ended June 30, 2018 and 2017 is detailed in the following table:   
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Income Statement Classification
2018
 
2017
 
2018
 
2017
Direct cost of revenues
$
2,427

 
$
1,183

 
$
6,206

 
$
7,021

Selling, general and administrative expenses
3,158

 
1,209

 
5,347

 
2,052

Special charges

 
96

 

 
96

Total share-based compensation expense
$
5,585


$
2,488


$
11,553


$
9,169

13. Stockholders’ Equity
On June 2, 2016, our Board of Directors authorized a stock repurchase program of up to $100.0 million (the “Repurchase Program”). On each of May 18, 2017 and December 1, 2017, our Board of Directors authorized an additional $100.0 million increasing the Repurchase Program to an aggregate authorization of $300.0 million. No time limit has been established for the completion of the Repurchase Program, and the Repurchase Program may be suspended, discontinued or replaced by the Board of Directors at any time without prior notice. As of June 30, 2018, we have $99.1 million available under the Repurchase Program to repurchase additional shares.
The following table details our stock repurchases under the Repurchase Program: 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Shares of common stock repurchased and retired

 
1,887

 
337

 
2,767

Average price paid per share
$

 
$
34.74

 
$
42.17

 
$
37.03

Total cost
$

 
$
65,556

 
$
14,213

 
$
102,457

  
14. Segment Reporting
We manage our business in five reportable segments: Corporate Finance & Restructuring ("Corporate Finance"), Forensic and Litigation Consulting ("FLC"), Economic Consulting, Technology and Strategic Communications.
Our Corporate Finance segment focuses on the strategic, operational, financial and capital needs of our clients around the world and delivers a wide range of service offerings related to restructuring, business transformation and transaction support. Our restructuring practice includes corporate restructuring, including bankruptcy and interim management services. Our business transformation and transaction practices include financings, mergers and acquisitions (“M&A”), M&A integration, valuations and tax advice, as well as financial, operational and performance improvement services.

13


Our FLC segment provides law firms, companies, government clients and other interested parties with multidisciplinary, independent dispute advisory, investigations, data analytics, forensic accounting, business intelligence and risk mitigation services, as well as interim management and performance improvement services for our health solutions practice clients.
Our Economic Consulting segment provides law firms, companies, government entities and other interested parties with analysis of complex economic issues for use in legal, regulatory and international arbitration proceedings, strategic decision making and public policy debates in the U.S. and around the world.
Our Technology segment offers a comprehensive portfolio of information governance and e-discovery software, services and consulting support to companies, law firms, courts and government agencies worldwide. Our services allow our clients to control the risk and expense of e-discovery events, as well as manage their data in the context of compliance and risk.
Our Strategic Communications segment designs and executes communications strategies for management teams and boards of directors to help them seize opportunities, manage financial, regulatory and reputational challenges, navigate market disruptions, articulate their brand, stake a competitive position, and preserve and grow their operations.
We evaluate the performance of our operating segments based on Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA, a non-GAAP financial measure, as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.
The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 
 
 
Corporate Finance & Restructuring
$
141,355

 
$
117,487

 
$
284,277

 
$
223,388

Forensic and Litigation Consulting
133,527

 
111,410

 
261,566

 
222,816

Economic Consulting
133,308

 
124,004

 
266,417

 
263,225

Technology
46,429

 
45,566

 
87,343

 
91,653

Strategic Communications
57,479

 
46,248

 
110,269

 
89,977

Total revenues
$
512,098


$
444,715


$
1,009,872


$
891,059

Adjusted Segment EBITDA
 
 
 
 
 
 
 
Corporate Finance & Restructuring
$
35,777

 
$
20,048

 
$
70,581

 
$
30,373

Forensic and Litigation Consulting
27,615

 
13,032

 
53,372

 
26,553

Economic Consulting
15,472

 
15,509

 
34,608

 
35,619

Technology
7,508

 
5,421

 
13,240

 
13,225

Strategic Communications
10,967

 
4,876

 
20,819

 
9,133

Total Adjusted Segment EBITDA
$
97,339


$
58,886


$
192,620


$
114,903


14


The table below reconciles net income (loss) to Total Adjusted Segment EBITDA: 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
43,609

 
$
(5,156
)
 
$
82,554

 
$
8,860

Add back:
 
 
 
 
 
 
 
Income tax provision
14,113

 
527

 
29,383

 
8,404

Interest income and other
(2,474
)
 
(1,592
)
 
(674
)
 
(2,197
)
Interest expense
6,583

 
6,250

 
12,827

 
12,051

Unallocated corporate expenses
25,882

 
22,286

 
49,770

 
41,339

Segment depreciation expense
7,574

 
6,783

 
14,438

 
13,999

Amortization of intangible assets
2,052

 
2,422

 
4,322

 
4,915

Segment special charges

 
26,830

 

 
26,830

Remeasurement of acquisition-related contingent
   consideration

 
536

 

 
702

Total Adjusted Segment EBITDA
$
97,339


$
58,886


$
192,620


$
114,903

15. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information
Substantially all domestic subsidiaries are guarantors of borrowings under our Credit Facility and 2022 Notes. The guarantees are full and unconditional and joint and several. Our guarantors are wholly owned, direct or indirect, subsidiaries.
The following financial information presents condensed consolidating balance sheets, statements of comprehensive income and statements of cash flows for FTI Consulting, all the guarantor subsidiaries, all the non-guarantor subsidiaries and the eliminations necessary to arrive at the consolidated information for FTI Consulting and its subsidiaries. For purposes of this presentation, we have accounted for our investments in our subsidiaries using the equity method of accounting. The principal eliminating entries eliminate investment in subsidiary and intercompany balances and transactions.

15


Condensed Consolidating Balance Sheet as of June 30, 2018  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
14,117

 
$
151

 
$
102,288

 
$

 
$
116,556

Accounts receivable, net
194,004

 
194,976

 
218,475

 

 
607,455

Intercompany receivables

 
1,123,906

 

 
(1,123,906
)
 

Other current assets
33,030

 
24,765

 
25,630

 

 
83,425

Total current assets
241,151

 
1,343,798

 
346,393

 
(1,123,906
)
 
807,436

Property and equipment, net
37,147

 
13,397

 
24,502

 

 
75,046

Goodwill
570,876

 
416,053

 
211,803

 

 
1,198,732

Other intangible assets, net
16,678

 
10,525

 
25,564

 
(13,388
)
 
39,379

Investments in subsidiaries
2,199,577

 
491,143

 

 
(2,690,720
)
 

Other assets
34,322

 
64,889

 
37,608

 

 
136,819

Total assets
$
3,099,751

 
$
2,339,805

 
$
645,870

 
$
(3,828,014
)
 
$
2,257,412

Liabilities
 
 
 
 
 
 
 
 
 
Intercompany payables
$
1,117,874

 
$

 
$
6,032

 
$
(1,123,906
)
 
$

Other current liabilities
123,468

 
124,473

 
104,363

 

 
352,304

Total current liabilities
1,241,342

 
124,473

 
110,395

 
(1,123,906
)
 
352,304

Long-term debt, net
371,662

 

 

 

 
371,662

Other liabilities
210,946

 
11,407

 
35,292

 

 
257,645

Total liabilities
1,823,950

 
135,880

 
145,687

 
(1,123,906
)
 
981,611

Stockholders' equity
1,275,801

 
2,203,925

 
500,183

 
(2,704,108
)
 
1,275,801

Total liabilities and stockholders' equity
$
3,099,751

 
$
2,339,805

 
$
645,870

 
$
(3,828,014
)
 
$
2,257,412


16


Condensed Consolidating Balance Sheet as of December 31, 2017  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
10,186

 
$
159

 
$
179,616

 
$

 
$
189,961

Accounts receivable, net
155,124

 
156,859

 
210,895

 

 
522,878

Intercompany receivables

 
1,093,211

 
32,695

 
(1,125,906
)
 

Other current assets
31,933

 
21,840

 
27,567

 

 
81,340

Total current assets
197,243

 
1,272,069

 
450,773

 
(1,125,906
)
 
794,179

Property and equipment, net
39,137

 
13,572

 
22,366

 

 
75,075

Goodwill
570,876

 
416,053

 
217,874

 

 
1,204,803

Other intangible assets, net
18,426

 
11,251

 
29,441

 
(14,968
)
 
44,150

Investments in subsidiaries
2,175,362

 
566,911

 

 
(2,742,273
)
 

Other assets
34,454

 
60,566

 
44,014

 

 
139,034

Total assets
$
3,035,498

 
$
2,340,422

 
$
764,468

 
$
(3,883,147
)
 
$
2,257,241

Liabilities
 
 
 
 
 
 
 
 
 
Intercompany payables
$
1,125,906

 
$

 
$

 
$
(1,125,906
)
 
$

Other current liabilities
127,295

 
144,474

 
138,559

 

 
410,328

Total current liabilities
1,253,201

 
144,474

 
138,559

 
(1,125,906
)
 
410,328

Long-term debt, net
396,284

 

 

 

 
396,284

Other liabilities
194,042

 
14,753

 
49,863

 

 
258,658

Total liabilities
1,843,527

 
159,227

 
188,422

 
(1,125,906
)
 
1,065,270

Stockholders' equity
1,191,971

 
2,181,195

 
576,046

 
(2,757,241
)
 
1,191,971

Total liabilities and stockholders' equity
$
3,035,498

 
$
2,340,422

 
$
764,468

 
$
(3,883,147
)
 
$
2,257,241

 

17


Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended June 30, 2018  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
187,569

 
$
159,288

 
$
166,503

 
$
(1,262
)
 
$
512,098

Operating expenses
 
 
 
 
 
 
 
 
 
Direct cost of revenues
115,751

 
110,665

 
105,334

 
(1,432
)
 
330,318

Selling, general and administrative expenses
53,472

 
30,494

 
33,797

 
134

 
117,897

Amortization of other intangible assets
874

 
313

 
1,637

 
(772
)
 
2,052

 
170,097

 
141,472

 
140,768

 
(2,070
)
 
450,267

Operating income
17,472

 
17,816

 
25,735

 
808

 
61,831

Other income (expense)
(32,179
)
 
(572
)
 
5,642

 
23,000

 
(4,109
)
Income (loss) before income tax provision
(14,707
)
 
17,244

 
31,377

 
23,808

 
57,722

Income tax provision
2,547

 
4,977

 
6,589

 

 
14,113

Equity in net earnings of subsidiaries
60,863

 
32,779

 

 
(93,642
)
 

Net income
$
43,609

 
$
45,046

 
$
24,788

 
$
(69,834
)
 
$
43,609

Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of
   tax expense of $0
$

 
$

 
$
(23,683
)
 
$

 
$
(23,683
)
Other comprehensive loss, net of tax

 

 
(23,683
)
 

 
(23,683
)
Comprehensive income
$
43,609

 
$
45,046

 
$
1,105

 
$
(69,834
)
 
$
19,926


Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended June 30, 2017  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
163,649

 
$
151,716

 
$
131,480

 
$
(2,130
)
 
$
444,715

Operating expenses
 
 
 
 
 
 
 
 
 
Direct cost of revenues
108,445

 
108,388

 
89,307

 
(2,069
)
 
304,071

Selling, general and administrative expenses
45,908

 
31,730

 
30,542

 
(61
)
 
108,119

Special charges
13,592

 
7,306

 
9,176

 

 
30,074

Amortization of other intangible assets
883

 
540

 
1,741

 
(742
)
 
2,422

 
168,828


147,964


130,766


(2,872
)

444,686

Operating income (loss)
(5,179
)
 
3,752

 
714

 
742

 
29

Other income (expense)
(5,361
)
 
(71
)
 
774

 

 
(4,658
)
Income (loss) before income tax provision
(10,540
)
 
3,681


1,488


742


(4,629
)
Income tax provision (benefit)
(7,034
)
 
4,219

 
3,342

 

 
527

Equity in net earnings of subsidiaries
(1,650
)
 
(3,862
)
 

 
5,512

 

Net loss
$
(5,156
)

$
(4,400
)

$
(1,854
)

$
6,254


$
(5,156
)
Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of
   tax expense of $0
$

 
$

 
$
10,174

 
$

 
$
10,174

Other comprehensive income, net of tax

 

 
10,174

 

 
10,174

Comprehensive income (loss)
$
(5,156
)

$
(4,400
)

$
8,320


$
6,254


$
5,018



18


Condensed Consolidating Statement of Comprehensive Income for the Six Months Ended June 30, 2018  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
372,890

 
$
316,417

 
$
324,275

 
$
(3,710
)
 
$
1,009,872

Operating expenses
 
 
 
 
 
 
 
 
 
Direct cost of revenues
231,211

 
220,063

 
203,931

 
(3,770
)
 
651,435

Selling, general and administrative expenses
104,153

 
59,474

 
66,374

 
24

 
230,025

Amortization of other intangible assets
1,748

 
727

 
3,427

 
(1,580
)
 
4,322

 
337,112

 
280,264

 
273,732

 
(5,326
)
 
885,782

Operating income
35,778

 
36,153

 
50,543

 
1,616

 
124,090

Other income (expense)
(15,249
)
 
(881
)
 
3,977

 

 
(12,153
)
Income before income tax provision
20,529

 
35,272

 
54,520

 
1,616

 
111,937

Income tax provision
6,917

 
11,017

 
11,449

 

 
29,383

Equity in net earnings of subsidiaries
68,942

 
67,567

 

 
(136,509
)
 

Net income
$
82,554

 
$
91,822

 
$
43,071

 
$
(134,893
)
 
$
82,554

Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of
   tax expense of $0
$

 
$

 
$
(13,237
)
 
$

 
$
(13,237
)
Other comprehensive loss, net of tax

 

 
(13,237
)
 

 
(13,237
)
Comprehensive income
$
82,554

 
$
91,822

 
$
29,834

 
$
(134,893
)
 
$
69,317


Condensed Consolidating Statement of Comprehensive Income for the Six Months Ended June 30, 2017  
 
FTI
Consulting
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
315,456

 
$
322,742

 
$
257,583

 
$
(4,722
)
 
$
891,059

Operating expenses
 
 
 
 
 
 
 
 
 
Direct cost of revenues
219,703

 
226,174

 
171,868

 
(4,602
)
 
613,143

Selling, general and administrative expenses
91,706

 
63,109

 
61,114

 
(120
)
 
215,809

Special charges
13,592

 
7,306

 
9,176

 

 
30,074

Amortization of other intangible assets
1,785

 
1,080

 
3,511

 
(1,461
)
 
4,915

 
326,786

 
297,669

 
245,669

 
(6,183
)
 
863,941

Operating income (loss)
(11,330
)
 
25,073

 
11,914

 
1,461