UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2018~~2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-12173

Navigant Consulting, Inc.

(Exact name of registrant as specified in its charter)



Delaware	36-4094854
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

150 North Riverside Plaza, Suite 2100, Chicago, Illinois 60606

(Address of principal executive offices, including zip code)

(312) 573-5600

(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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	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. YES ☐ NO ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of ~~November~~April 518, ~~2018~~2019, 4239,~~589~~346,~~165~~610 shares of the registrant’s common stock, par value $.001 per share, were outstanding.

INDEX

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	4
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3328
Item 4. Controls and Procedures	3428
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	3530
Item 1A. Risk Factors	3530
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3530
Item 6. Exhibits	3630
SIGNATURES	3731

Forward-Looking Statements

Statements included in this report which are not historical in nature are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may generally be identified by words such as “anticipate,” “believe,” “may,” “should,” “could,” “intend,” “estimate,” “expect,” “likely,” “continue,” “plan,” “projects,” “positioned,” “outlook” and similar expressions. These statements are based upon management’s current expectations and speak only as of the date of this ~~quarterly statement and are not guarantees of future performance~~report. The Company cautions readers that there may be events in the future that the Company is not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those contained in or implied by the forward-looking statements including, without limitation: the risk of unanticipated costs, liabilities ~~and~~or an adverse impact on the Company’s business operations arising from the Company’s provision of post-divestiture transition services and support in connection with the ~~SaleCo~~sale of the Company’s Disputes, Forensics and Legal Technology segment and the transaction advisory services practice within the Company’s Financial Services Advisory and Compliance segment; the execution of the Company’s long-term growth objectives and margin improvement initiatives; risks inherent in international operations, including foreign currency fluctuations; ability to make acquisitions and divestitures and complete such acquisitions and divestitures in the time anticipated; pace, timing and integration of acquisitions; operational risks associated with new or expanded service areas, including business process management services; impairments; changes in accounting standards or tax rates, laws or regulations; management of professional staff, including dependence on key personnel, recruiting, retention, attrition and the ability to successfully integrate new consultants into the Company’s practices; utilization rates; conflicts of interest; potential loss of clients or large engagements and the Company’s ability to attract new business; brand equity; competition; accurate pricing of engagements, particularly fixed fee and multi-year engagements; clients’ financial condition and their ability to make payments to the Company; risks inherent with litigation; higher risk client assignments; government contracting; professional liability; information security; the adequacy of our business, financial and information systems and technology; maintenance of effective internal controls; potential legislative and regulatory changes; continued and sufficient access to capital; compliance with covenants in our credit agreement; interest rate risk; and market and general economic and political conditions. Further information on these and other potential factors that could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018, and elsewhere in the Company’s filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website or at investors.navigant.com. The Company cannot guarantee any future results, levels of activity, performance or achievement and undertakes no obligation to update any of its forward-looking statements.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	September 30,			December 31,
	March 31,			December 31,
	2018			2017
	2019			2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	~~277~~107,~~425~~217		$	8206,~~449~~920
Accounts receivable, net and contract assets		~~176~~186,~~326~~523			~~165~~179,~~838~~923
Prepaid expenses and other current assets		3026,~~902~~835			2122,~~006~~512
Assets held for sale		-			361,030
Total current assets		320,575			409,355
Total current assets		484,653			556,323
Non-current assets:
Property and equipment, net		6761,~~257~~374			7163,~~432~~025
Intangible assets, net		15,605			20,172
Operating lease right-of-use assets		83,959			-
Goodwill		421,793			422,959
Intangible assets, net		15,470			14,166
Other assets		8,990			9,378
Goodwill		425,069			422,357
Total assets	$	998,298		$	1,080,264
Other assets		8,703			8,644
Total assets	$	915,150		$	917,547
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	812,~~958~~869		$	813,~~404~~302
Accrued liabilities		1916,~~459~~075			915,~~734~~558
Accrued compensation-related costs		6340,~~750~~784			5869,~~515~~555
Income tax payable		3910,~~432~~519			313,~~199~~357
Other current liabilities		41,113			30,550
Operating lease liabilities		22,368			-
Liabilities held for sale		-			86,384
Other current liabilities		22,761			34,044
Total current liabilities		~~172~~125,~~712~~376			~~196~~145,~~786~~816
Non-current liabilities:
Deferred income tax liabilities		3538,~~215~~492			3633,~~598~~901
Other non-current liabilities		26,063			26,602
Operating lease liabilities		85,297			-
Bank debt non-current		-			132,944
Other non-current liabilities		4,321			25,277
Total non-current liabilities		61128,~~278~~110			~~196~~59,~~144~~178
Total liabilities		~~233~~253,~~990~~486			~~392~~204,~~930~~994
Stockholders' equity:
Common stock		5949			5849
Additional paid-in capital		~~662~~666,~~647~~794			~~659~~664,~~825~~473
Treasury stock		(~~279~~214,~~816~~465	)		(~~224~~160,~~366~~972	)
Retained earnings		~~383~~213,~~648~~830			~~270~~211,~~995~~543
Accumulated other comprehensive loss		(56,~~900~~971	)		(196,~~178~~529	)
Total Navigant Consulting, Inc. stockholders' equity		~~760~~659,~~638~~237			~~687~~708,~~334~~564
Non-controlling interest		32,~~670~~427			-3,989
Total stockholders' equity		~~764~~661,~~308~~664			~~687~~712,~~334~~553
Total liabilities and stockholders' equity	$	~~998~~915,~~298~~150		$	1917,~~080,264~~547

See accompanying notes to unaudited consolidated financial statements.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data (1))

	~~For the three months ended~~	For the three months ended									~~For the nine months ended~~
	September 30,										September 30,
		March 31,
	2018					2017					2018			2017
		2019					2018
Revenues before reimbursements	$	$	~~171,386~~	186,129		$	$	~~164,523~~	161,445		$	~~498,055~~		$	~~480,307~~
Reimbursements			~~16,232~~	16,733				~~20,989~~	16,623			~~52,344~~			~~56,726~~
Total revenues			~~187,618~~	202,862				~~185,512~~	178,068			~~550,399~~			~~537,033~~
Cost of services before reimbursable expenses			~~121,945~~	135,356				~~111,197~~	116,936			~~352,002~~			~~334,414~~
Reimbursable expenses			~~16,232~~	16,733				~~20,989~~	16,623			~~52,344~~			~~56,726~~
Total cost of services			~~138,177~~	152,089				~~132,186~~	133,559			~~404,346~~			~~391,140~~
General and administrative expenses			~~32,073~~	35,167				~~35,326~~	37,079			~~104,064~~			~~106,361~~
Depreciation expense			~~5,026~~	4,586				~~4,777~~	4,997			~~14,966~~			~~15,592~~
Amortization expense			~~1,568~~	1,372				~~2,102~~	1,752			~~4,985~~			~~6,418~~
Other operating costs:
Other operating costs				32					983
Contingent acquisition liability adjustments, net			-					1,014				-			2,213
Operating income (loss)				9,616					(302	)
Gain on termination of swaps and other financing costs			(448	)				-				(448	)		-
Interest expense				318					828
Other costs			247					-				3,525			107
Interest income				(689	)				(119	)
Operating income			10,975					10,107				18,961			15,202
Other expense, net				132					361
Interest expense			669					833				2,408			2,264
Income (loss) from continuing operations before income tax expense				9,855					(1,372	)
Interest income			(697	)				(100	)			(893	)		(211	)
Income tax expense				3,047					225
Other expense, net			390					103				568			485
Net income (loss) from continuing operations				6,808					(1,597	)
Income from continuing operations before income tax expense			10,613					9,271				16,878			12,664
(Loss) income from discontinued operations, net of tax				(489	)				13,450
Income tax expense			3,785					3,430				5,519			3,673
Net income				6,319					11,853
Net income from continuing operations			6,828					5,841				11,359			8,991
Less: Income attributable to non-controlling interest, net of tax				(2,038	)				-
Income from discontinued operations, net of tax			67,287					6,098				103,435			22,841
Net income attributable to Navigant Consulting, Inc.		$		4,281			$		11,853
Less: Income attributable to non-controlling interest, net of tax			(70	)				-				(70	)		-
Basic net income per share
Net income	$		74,045			$		11,939			$	114,724		$	31,832
Net income (loss) from continuing operations attributable to Navigant Consulting, Inc.		$		0.12			$		(0.04	)
Basic net income per share
(Loss) income from discontinued operations, net of tax				(0.01	)				0.30
Net income from continuing operations	$		0.15			$		0.13			$	0.25		$	0.19
Net income attributable to Navigant Consulting, Inc. (1)		$		0.11			$		0.26
Income from discontinued operations, net of tax			1.51					0.13				2.30			0.49
Shares used in computing basic per share data				40,218					45,120
Net income (1)	$		1.66			$		0.26			$	2.55		$	0.68
Diluted net income per share
Shares used in computing basic per share data			44,645					46,619				44,957			46,888
Net income (loss) from continuing operations attributable to Navigant Consulting, Inc.		$		0.12			$		(0.04	)
Diluted net income per share
(Loss) income from discontinued operations, net of tax				(0.01	)				0.30
Net income from continuing operations	$		0.15			$		0.12			$	0.24		$	0.19
Net income attributable to Navigant Consulting, Inc. (1)		$		0.10			$		0.26
Income from discontinued operations, net of tax			1.46					0.13				2.23			0.47
Shares used in computing diluted per share data				41,408					45,120
Net income (1)	$		1.61			$		0.25			$	2.47		$	0.66
Net income		$		6,319			$		11,853
Shares used in computing diluted per share data			45,932					48,017				46,438			48,561
Other comprehensive (loss) income, net of tax:
Net income	$		74,045			$		11,939			$	114,724		$	31,832
Unrealized net (loss) gain, foreign currency translation				(442	)				1,369
Other comprehensive (loss) income, net of tax
Unrealized net gain on interest rate derivatives				-					250
Net income attributable to non-controlling interest			70									70
Reclassification adjustment on interest rate derivatives included in interest expense and income tax expense				-					7
Unrealized net (loss) gain, foreign currency translation			(1,232	)				1,865				(3,269	)		5,409
Other comprehensive (loss) income, net of tax				(442	)				1,626
Realized net loss on disposition, foreign currency translation			16,677					-				16,677
Total comprehensive income, net of tax				5,877					13,479
Unrealized net loss (gain) on interest rate derivatives			186					(18	)			548			(22	)
Income attributable to non-controlling interest, net of tax				(2,038	)				-
Realized net gain on termination of derivatives			(452	)				-				(452	)		-
Total comprehensive income attributable to Navigant Consulting, Inc., net of tax		$		3,839			$		13,479
Reclassification adjustment on interest rate derivatives included in interest expense and income tax expense			(194	)				36				(226	)		50
(1) Earnings per share may not foot due to rounding.
Other comprehensive gain, net of tax			15,055					1,883				13,348			5,437
Total comprehensive income, net of tax	$		89,100			$		13,822			$	128,072		$	37,269

~~(1) Earnings per share may not foot due to rounding.~~ See accompanying notes to ~~the~~ unaudited consolidated financial statements.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock Shares		Treasury Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Treasury Stock Cost			Accumulated Other Comprehensive Income (Loss)			Non-Controlling Interest			Retained Earnings			Total Stock-holders' Equity
	Navigant Consulting, Inc. Shareholders
Balance at December 31, 2017		58,047		(12,661	)	$	58	$	659,825		$	(224,366	)	$	(19,178	)	$	-		$	270,995		$	687,334
	Common Stock Shares		Treasury Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Treasury Stock Cost			Accumulated Other Comp- rehensive Loss			Retained Earnings			Non-Controlling Interest			Total Stock-holders' Equity
Cumulative-effect adjustment resulting from the adoption of ASU 2014-09 (Note 2)		-		-			-		-			-			-			-			151			151
Balance at December 31, 2018		49,387		(8,114	)	$	49	$	664,473		$	(160,972	)	$	(6,529	)	$	211,543		$	3,989		$	712,553
Comprehensive income		-		-			-		-			-			13,278			70			114,724			128,072
Distributions to non-controlling interests																					(3,600	)		(3,600	)
Dividends paid																		-			(2,222	)		(2,222	)
Comprehensive (loss) income		-		-			-		-			-			(442	)		4,281			2,038			5,877
Non-controlling interest initial investment		-		-			-		-			-			-			3,600			-			3,600
Dividends paid ($0.05 per share)																		(1,994	)		-			(1,994	)
Issuances of common stock		~~210~~69		-			-		~~3,110~~856			-			-			-			-			~~3,110~~856
Vesting of restricted stock units, net of forfeitures and tax withholdings		~~595~~90		-			1-		(51,~~408~~304	)		-			-			-			-			(51,~~407~~304	)
Share-based compensation expense		-		-			-		52,~~120~~769			-			-			-			-			52,~~120~~769
Repurchases of common stock		-		(2,~~451~~317	)		-		-			(5553,~~450~~493	)		-			-			-			(5553,~~450~~493	)
Balance at September 30, 2018		58,852		(15,112	)	$	59	$	662,647		$	(279,816	)	$	(5,900	)	$	3,670		$	383,648		$	764,308
Balance at March 31, 2019		49,546		(10,431	)	$	49	$	666,794		$	(214,465	)	$	(6,971	)	$	213,830		$	2,427		$	661,664

	Navigant Consulting, Inc. Shareholders
	Common Stock Shares		Treasury Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Treasury Stock Cost			Accumulated Other Comp- rehensive Loss			Retained Earnings		Total Stock-holders' Equity
Balance at December 31, 2017		58,047		(12,661	)	$	58	$	659,825		$	(224,366	)	$	(19,178	)	$	270,995	$	687,334
Cumulative-effect adjustment resulting from the adoption of ASU 2014-09 (Note 2)		-		-			-		-			-			-			151		151
Comprehensive income		-		-			-		-			-			1,626			11,853		13,479
Issuances of common stock		89		-			-		1,238			-			-			-		1,238
Vesting of restricted stock units, net of forfeitures and tax withholdings		94		-			-		(1,516	)		-			-			-		(1,516	)
Share-based compensation expense		-		-			-		3,377			-			-			-		3,377
Repurchases of common stock		-		(569	)		-		-			(11,357	)		-			-		(11,357	)
Balance at March 31, 2018		58,230		(13,230	)	$	58	$	662,924		$	(235,723	)	$	(17,552	)	$	282,999	$	692,706

See accompanying notes to unaudited consolidated financial statements.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the nine months ended
	For the three months ended
	September 30,
	March 31,
	2018			2017
	2019			2018
Cash flows from operating activities:
Net income	$	~~114~~6,~~724~~319		$	3111,~~832~~853
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation expense		184,~~741~~586			226,~~041~~845
Amortization expense		51,~~197~~372			61,~~713~~856
Share-based compensation expense		52,~~120~~769			103,~~414~~377
Deferred income taxes		~~(26~~5,~~351~~086	)		~~7,054~~968
Allowance for doubtful accounts receivable		~~7,585~~448			63,~~344~~130
Payments of contingent acquisition liabilities in excess of initial fair value		(1,186	)		(1,700	)
Loss from disposition of discontinued operations		672			-
Contingent acquisition liability adjustments, net		-			2,213
Other, net		185			1,007
Gain on disposition		(87,171	)		-
Changes in assets and liabilities (net of acquisitions):
Other, net		1,812			1,827
Accounts receivable, net and contract assets		(7,014	)		(23,615	)
Changes in assets and liabilities (net of dispositions):
Prepaid expenses and other assets		(4,305	)		(716	)
Accounts receivable, net and contract assets		(29,195	)		(39,933	)
Accounts payable		(423	)		(2,100	)
Prepaid expenses and other assets		10,095			(1,035	)
Accrued liabilities		(119	)		2,200
Accounts payable		(2,920	)		906
Accrued compensation-related costs		(28,772	)		(36,458	)
Accrued liabilities		6,500			1,069
Income taxes payable		(3,356	)		2,926
Accrued compensation-related costs		(3,889	)		(17,943	)
Other liabilities		(8,587	)		(6,120	)
Income taxes payable		35,745			(33	)
Net cash used in operating activities		(31,139	)		(34,847	)
Other liabilities		(11,418	)		2,050
Net cash provided by operating activities		43,389			31,819
Cash flows from investing activities:
Purchases of property and equipment		(113,~~290~~007	)		(305,~~729~~750	)
Proceeds from dispositions, net of selling costs and cash		426,079			-
Acquisitions of businesses, net of cash acquired		(6,000	)		-
Other, net		-			(691	)
Net cash used in investing activities		(9,007	)		(5,750	)
Net cash provided by (used in) investing activities		414,789			(31,420	)
Cash flows from financing activities:
Issuances of common stock		~~3,110~~856			31,~~211~~238
Repurchases of common stock		(5553,~~450~~493	)		(2811,~~012~~357	)
Dividend payments		(21,~~222~~994	)		-
Payments of contingent acquisition liabilities		(1,170	)		(8,630	)
Repayments to banks		-			(79,144	)
Repayments to banks		(453,064	)		(349,164	)
Borrowings from banks		-			129,677
Borrowings from banks		321,231			388,458
Distributions to non-controlling interest holder		(3,600	)		-
Payments of debt issuance costs		-			(1,292	)
Other, net		(1,306	)		(1,596	)
Contributions from non-controlling interest		3,600			-
Net cash (used in) provided by financing activities		(59,537	)		38,818
Other, net		(4,694	)		(4,887	)
Effect of exchange rate changes on cash and cash equivalents		(20	)		(24	)
Net cash used in financing activities		(188,659	)		(316	)
Net decrease in cash and cash equivalents		(99,703	)		(1,803	)
Effect of exchange rate changes on cash and cash equivalents		(543	)		631
Cash and cash equivalents at beginning of the period		206,920			8,449
Net increase in cash and cash equivalents		268,976			714
Cash and cash equivalents at end of the period	$	107,217		$	6,646
Cash and cash equivalents at beginning of the period		8,449			8,291
Cash and cash equivalents at end of the period	$	277,425		$	9,005

Supplemental Unaudited Consolidated Cash Flow Information

(In thousands)

	For the nine months ended
	For the three months ended
	September 30,
	March 31,
	2018			2017
	2019			2018
Interest paid	$	~~3,777~~153		$	21,~~987~~014
Income taxes paid, net of refunds	$	~~(26~~1,~~720~~137	)	$	~~11,876~~891

See accompanying notes to unaudited consolidated financial statements.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Navigant Consulting, Inc. (“Navigant,” “we,” “us,” or “our”) (NYSE: NCI) is a specialized, global professional services firm that helps clients take control of their future. Navigant’s professionals apply deep industry knowledge, substantive technical expertise, and an enterprising approach to help clients build, manage, and/or protect their business interests. With a focus on markets and clients facing transformational change and significant regulatory or legal pressures, Navigant primarily serves clients in the healthcare, energy, and financial services industries. Across a range of advisory, consulting, outsourcing, and technology/analytics services, we believe our practitioners bring sharp ~~insight~~insights that ~~pinpoints~~pinpoint opportunities and delivers powerful results.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The information contained herein includes all adjustments, consisting of normal and recurring adjustments except where indicated, which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods presented.

The results of operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 are not necessarily indicative of the results to be expected for the entire year ending December 31, ~~2018~~2019.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes as of and for the year ended December 31, ~~2017~~2018 included in our Annual Report on Form 10-K filed with the SEC on February 2328, ~~2018~~2019 (“~~2017~~2018 Form 10-K”).

The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and the related notes. Actual results could differ from those estimates and may affect future results of operations and cash flows. We have evaluated events and transactions occurring after the balance sheet date and prior to the date of the filing of this report.

On August 24, 2018, we completed the previously announced sale of our former Disputes, Forensics and Legal Technology segment and the transaction advisory services practice within our Financial Services Advisory and Compliance segment (collectively, “SaleCo”) to Ankura Consulting Group, LLC (“Ankura”). The sale represented a strategic shift in our services and as such the results from operations of SaleCo have been classified as “discontinued operations” for all periods presented. All other operations are considered “continuing operations” and were presented in our three remaining segments. In addition, the assets and liabilities of SaleCo prior to the sale have been classified as assets held for sale and liabilities held for sale (see Note 3 – Dispositions and Discontinued Operations).

During the three months ended September 30, 2018, we commenced operation of our joint venture Health Systems Solutions (“HSS”), with Baptist Health South Florida. We have a 60% financial and controlling interest in HSS and as such we fully consolidate its operations. As a result, as of September 30, 2018 there is $3.7 million of non-controlling interest.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

OnEffective January 1, ~~2018~~2019, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ~~2014~~2016-0902, ~~Revenue~~Leases (“Topic 842”). This update amends the accounting requirements for leases by requiring recognition of lease liabilities and related right-of-use assets on the balance sheet. Lessees are required to recognize a lease liability measured on a discounted basis, which is the lessee’s obligation to make lease payments arising from ~~Contracts~~a ~~with~~lease, ~~Customers~~and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. We adopted Topic ~~606~~842 using the modified retrospective approach as of the effective date, January 1, 2019. ~~For~~We ~~updates~~have recorded the cumulative effects on our balance sheet as of the effective date. No adjustments were made to prior comparative periods. Due to the number of leases we are party to, the related obligations and right-of-use assets did have a material impact on our ~~revenue~~unaudited ~~recognition~~consolidated ~~policy~~balance sheets (see Note 411 – ~~Revenue Recognition~~Leases). ~~Other~~ ~~than~~As ~~Topic~~a ~~606~~result of the adoption, there ~~have~~was ~~been~~ no ~~material~~impact ~~changes~~on tonet ~~our~~income ~~significant~~or ~~accounting~~net ~~policies~~assets. We recorded operating lease right-of-use assets of $84.0 million, current lease liability of $22.4 million and ~~estimates~~non-current ~~from~~lease liability of $85.3 million as of March 31, 2019. The right-of-use asset balance reflects the ~~information~~impact ~~provided~~of inother ~~Part~~liability IIamounts, ~~Item~~specifically 8deferred rent that has been effectively reclassified. As part of the adoption, ~~“Financial~~we ~~Statements~~elected ~~and~~the ~~Supplementary~~package ~~Data”~~of inpractical ~~our~~expedients ~~2017~~permitted ~~Form~~under 10the transition guidance within Topic 842, which among other things, allowed us to carry forward the historical lease classification. Further, we also applied the practical expedient to combine, when applicable, lease and non-Klease components. Leases with a term of 12 months or less are not recorded on the balance sheet.

On January 1, 2018, we adopted ASU ~~2016~~2014-1509, ~~Statement~~Revenue offrom ~~Cash~~Contracts ~~Flow~~with Customers (“Topic ~~230~~606”). ~~This~~As ~~update~~a isresult ~~intended to reduce diversity in practice in how certain transactions are classified in the statement~~ of ~~cash flows. The update provides new guidance regarding~~ the ~~classification of debt prepayment or debt extinguishment costs~~adoption, ~~settlement~~we ofrecorded ~~zero-coupon debt instruments, contingent consideration payments made after~~ a ~~business~~net ~~combination,~~increase ~~proceeds~~to ~~from~~retained ~~the~~earnings ~~settlement~~as of ~~insurance~~January ~~claims~~1, ~~proceeds~~2018 ~~from the settlement~~ of ~~corporate-owned~~$0.2 ~~life insurance policies including bank-owned life insurance policies~~million, ~~distributions~~net ~~received~~of ~~from equity method investments~~tax, ~~beneficial~~with ~~interests~~the inimpact ~~securitized~~primarily ~~transactions,~~relating ~~and~~to ~~separately~~certain ~~identifiable~~contracts ~~cash flows and application of the predominance principle. We determined~~ that ~~the~~include ~~manner~~event-based invariable ~~which we classify our contingent acquisition liability payments in the consolidated statement of cash flows will change~~consideration. ~~Based~~ For onfurther ~~our~~discussion ~~evaluation,~~about ~~adoption of this standard requires a reclassification of a portion of the payments previously reported as financing activities for comparative periods in the statement of cash flows within~~ our ~~consolidated~~revenue ~~financial~~recognition ~~statements~~policy ~~issued~~see ~~for~~Note ~~periods~~4 ~~beginning~~– onRevenue ~~or after January 1, 2018~~Recognition. ~~Under this guidance, portions of these payments have~~

On January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flow (“Topic 230”). This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update provided new guidance regarding the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies, distributions received from equity

method investments, beneficial interests in securitized transactions, and separately identifiable cash flows and application of the predominance principle. We determined that the manner in which we previously classified our contingent acquisition liability payments in the unaudited consolidated statement of cash flows would change. Based on our evaluation, adoption of this standard required a reclassification of a portion of the payments previously reported as financing activities for comparative periods in the statement of cash flows within our unaudited consolidated financial statements issued for periods beginning on or after January 1, 2018. Under this guidance, portions of these payments have been reclassified from financing activities to operating activities. We applied this change retrospectively, and it did not have a material impact on our unaudited consolidated financial statements.

On January 1, 2018, we adopted ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (“Topic 805”), which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. We applied this change prospectively, and it did not have a material impact on our unaudited consolidated financial statements.

~~Recent~~3. ~~Accounting~~DISPOSITIONS ~~Pronouncements~~AND ~~Not~~DISCONTINUED ~~Yet Adopted~~ OPERATIONS

InOn ~~February~~August ~~2016~~24, ~~the FASB issued ASU 2016-02~~2018, ~~Leases~~we ~~(Topic~~completed ~~842). This update amends~~ the ~~requirements~~disposition ~~for~~of ~~assets~~our ~~and~~former ~~liabilities recognized for all leases longer than twelve months. Lessees will be required to recognize a lease liability measured on a discounted basis~~Disputes, ~~which~~Forensics isand ~~the~~Legal ~~lessee’s~~Technology ~~obligation~~segment ~~to make lease payments arising from the lease,~~ and ~~a right-of-use asset, which is an asset that represents~~ the ~~lessee’s~~transaction ~~right~~advisory toservices ~~use,~~practice orwithin ~~control~~our ~~the~~Financial ~~use~~Services ~~of,~~Advisory ~~a specified asset for the lease term. This standard will be effective for financial statements issued by public companies for the annual~~ and ~~interim~~Compliance ~~periods~~segment ~~beginning after December 15~~(collectively, ~~2018.~~“SaleCo”) ~~The~~to ~~standard,~~Ankura asConsulting ~~amended~~Group, ~~will~~LLC ~~require a modified retrospective approach either for leases existing at or entered into after the beginning of the earliest comparative period presented~~ (~~comparative method~~“Ankura”), or for ~~all~~total ~~leases~~proceeds ~~existing as~~ of ~~the~~$462.8 ~~effective~~million ~~date~~net of ~~adoption~~working ~~(effective~~capital ~~date method)~~adjustments. WeThe ~~expect~~operations toof ~~apply~~SaleCo ~~the~~have ~~effective~~been ~~date~~presented ~~method~~in ~~and~~accordance ~~are~~with ~~currently~~ASC ~~evaluating~~Topic ~~the~~205 ~~potential~~“Discontinued ~~impact~~Operations” offor ~~our~~all ~~adoption~~periods ~~of this guidance on our consolidated financial statements~~presented. ~~Due~~All toother ~~the~~operations ~~number of office leases we~~ are ~~party~~considered ~~to,~~“continuing ~~the~~operations” ~~related obligation~~ and ~~right-of-use~~have ~~asset~~been ispresented ~~expected~~in tothree besegments. ~~material~~See toNote ~~our~~5 ~~consolidated~~– ~~balance~~Segment ~~sheets~~Information.

3In addition to the purchase agreement for SaleCo, we entered into a Transition Services Agreement pursuant to which we provide Ankura with certain services to enable Ankura to operate SaleCo (the “TSA Services”).~~DISPOSITIONS~~ ~~AND~~The ~~DISCONTINUED~~TSA ~~OPERATIONS~~Services include information technology, finance and accounting, human resources and other corporate support services. The TSA Services were provided to Ankura for a period of up to 6 months after the closing date for certain services, and certain services were extended at Ankura’s option through August 31, 2019. Income related to the TSA Services has been recorded in general and administrative expenses.

On August 24, 2018, we completed the disposition of SaleCo to Ankura for total proceeds of $462.8 million net of working capital adjustments. The operations of SaleCo have been presented in accordance with ASC Topic 205 “Discontinued Operations” for all periods presented. All other operations are considered “continuing operations” and have been presented in three segments. See Note 5 – Segment Information. During the nine months ended September 30, 2018, the assets and liabilities of SaleCo were reclassified as assets held for sale and liabilities relating to assets held for sale in the unaudited consolidated balance sheets as of December 31, 2017.

The gain on sale was calculated as follows (in thousands):

		September 30,
		2018
Proceeds from disposition, net of cash	$		462,810
Current assets			121,301
Non-current assets			236,804
Current liabilities			(34,139	)
Non-current liabilities			(4,573	)
Net assets and liabilities related to SaleCo			319,393
Transaction costs			38,497
Foreign currency translation			17,749
Gain on disposition	$		87,171

In addition to the purchase agreement, for SaleCo, we entered into a Transition Services Agreement pursuant to which we provide Ankura with certain services to enable Ankura to operate SaleCo (the “TSA Services”). The TSA Services include information technology, finance and accounting, human resources and other corporate support services. The TSA Services will be provided at a cost to Ankura for a period of up to 6 months after the closing date for most services, although some services such as office location related services may extend beyond that date. Income related to the TSA Services has been recorded in general and administrative expenses.

The amounts attributable to each category of discontinued operations were as follows (in thousands):

	For the three months ended						~~For the nine months ended~~
	September 30,						September 30,
	March 31,
	2018			2017			2018		2017
	2019			2018
Revenues before reimbursements	$	~~45,334~~-		$	7282,~~982~~434		$	~~214,936~~	$	~~228,647~~
Total revenues	$	~~47,875~~-		$	7686,~~765~~452		$	~~225,340~~	$	~~239,927~~
Cost of services including reimbursable expenses	$	~~32,262~~-		$	5458,~~184~~487		$	~~150,917~~	$	~~172,237~~
General and administrative expenses	$	~~4,997~~-		$	87,~~854~~283		$	~~21,050~~	$	~~21,030~~
Amortization and depreciation expense	$	~~102~~-		$	21,~~039~~953		$	~~3,986~~	$	~~6,746~~
Interest expense	$	~~400~~-		$	~~534~~488		$	~~1,488~~	$	~~1,453~~
Gain on disposition	$	87,171		$	-		$	87,171	$	-
Loss from disposition of discontinued operations	$	(672	)	$	-
Income from discontinued operations before income tax expense	$	97,284		$	9,558		$	135,012	$	36,866
Other expense, net	$	-		$	(29	)
Income tax expense from discontinued operations	$	29,997		$	3,460		$	31,577	$	14,025
(Loss) income from discontinued operations before income tax expense	$	(672	)	$	18,212
Income from discontinued operations, net of tax	$	67,287		$	6,098		$	103,435	$	22,841
Income tax (benefit) expense from discontinued operations	$	(183	)	$	4,762
(Loss) income from discontinued operations, net of tax	$	(489	)	$	13,450

~~Current~~Amounts ~~year~~recorded ~~results~~to ~~from~~discontinued operations ~~are~~in ~~for~~ the ~~period~~three ~~through~~months ~~August~~ended 24March 31, ~~2018~~2019 ~~(the~~were ~~date~~due to settlements of ~~the~~certain ~~sale~~working capital amounts, as well as changes in estimates of ~~SaleCo)~~other ~~while~~transaction ~~the~~related ~~prior~~contingencies. ~~year~~Certain ~~includes~~contingencies ~~results~~remain ~~for~~unresolved and are subject to finalization and settlement, which may result in further adjustments to the ~~full~~gain ~~period~~(loss) ~~presented~~on disposition.

During the three months ended September 30, 2018, in conjunction with the SaleCo transaction, we recognized $27.0 million of income tax expense. In addition, we recognized a benefit of $7.9 during the three months ended June 30, 2018 related to the recognition of goodwill on a tax basis on a portion of the assets that were moved to assets held for sale and subsequently sold.

We have allocated interest expense to discontinued operations based on the ratio of net assets of discontinued operations to the sum of total net assets plus consolidated debt.

		December 31,
		2017
Current assets held for sale
Accounts receivable, net and contract assets	$		102,003
Prepaid expenses and other current assets			11,915
Property and equipment, net			17,737
Intangible assets, net			881
Goodwill			214,328
Other assets			14,166
Total assets held for sale	$		361,030
Current liabilities held for sale
Accounts payable	$		3,994
Accrued liabilities			4,160
Accrued compensation-related costs			38,258
Income taxes payable			1,521
Other current liabilities			8,346
Other non-current liabilities			5,572
Long-term deferred tax liability			24,533
Total liabilities held for sale	$		86,384

Capital expenditures for the three months ended March 31, 2018 totaled $0.3 million.

Capital expenditures for the three and nine months ended September 30, 2018 totaled $0.2 million and $0.4 million, respectively. During the three and nine months ended September 30, 2017, capital expenditures totaled $0.8 million and $9~~.1 million, respectively.~~

4.	REVENUE RECOGNITION

Recently Adopted Accounting Pronouncements

On January 1, 2018, we adopted Topic 606 and all the related amendments (“the new revenue standard”) for all contracts with customers not completed as of the adoption date using the cumulative catch-up transition (modified retrospective) method. Results as of January 1, 2018 are presented under Topic 606~~, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting~~. As a result of the adoption, we recorded a net increase to opening retained earnings of $0.2 million, net of tax, with the impact primarily relating to certain contracts that include event-based variable consideration. Previously, we recognized event-based variable fees when contractual milestones or obligations were met, however, Topic 606 requires us to estimate and recognize the revenue from certain event-based variable fees over the period of performance to the extent that it is probable that a significant reversal will not occur.

Effect of the Adoption of Topic 606

For the three and nine months ended September 30, 2018, we recorded $0.7 million and $3.8 million, respectively, in additional revenue related to estimated variable consideration, which would not have been recognized under the prior revenue recognition guidance and have been included in accounts receivable, net and contract assets. Prior year results are presented in accordance with historical accounting. See our 2017 Form 10-K for our historical accounting policy.

Significant Accounting Policy

We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods and services.

The majority of our revenues are generated from providing professional services under the following types of arrangements: time and material, fixed-fee, units of production and event or performance-based.

For our time and material arrangements, the amounts charged correspond directly to the value our clients receive. These arrangements qualify for the right to invoice practical expedient which allows revenue to be recognized based on the number of hours worked by our Client-Service FTE (as defined below) at the contracted bill rates. In some cases, our time and material engagements are subject to a maximum fee amount not to be exceeded, in which case we periodically evaluate the progress of work performed to ensure that the maximum amount billable to the client is not expected to be exceeded. Similarly, our units of production arrangements where the fee is unit/output priced at a per unit value qualifies for the right to invoice practical expedient. As such, revenue for units of production is recognized based on measures such as the number of items processed at agreed-upon rates. When such fees do not qualify for the right to invoice practical expedient or are not attributable to the services delivered in a specific time period, the fees are estimated and recognized over the term of the arrangement.

With our fixed-fee arrangements, we are contracted to complete a pre-determined set of professional services for a pre-determined fee (transaction price). However, the fee and engagement scope can be adjusted based on a mutual agreement between us and the client. In many cases, the recording of fixed revenue amounts requires us to make an estimate of the total amount of work to be performed, and revenues are then recognized as efforts are expended based on hours worked unless another recognition method such as output or straight-line is more representative of value transferred to the client.

We also have certain arrangements in which the fees are dependent on the completion of contractually defined outcomes. In many cases, this fee is earned in addition to an hourly or fixed-fee. These fees are rewarded when certain contractual milestones or outcomes are met. Contractually defined outcomes may be event-based or performance-based (for example based on obtaining a key performance indicator). For certain of these arrangements, the variable consideration is estimated at the expected value and subject to constraint based on risks specific to the contract. The estimate is evaluated in each reporting period and included in the total transaction price to the extent it is probable that a significant reversal of revenue will not occur. Transaction price is then recognized into revenue based upon efforts expended based on hours worked unless another method is more representative of revenue earned. In some cases, the estimation of the variable fees is complex and subject to many variables and may require significant judgement.

The majority of our contracts have a single performance obligation. However, when certain arrangements have more than one performance obligation that are distinct from one another, the transaction price is allocated to the separate performance obligations based on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing or margins. Generally, we consider each of consulting/advisory services, transaction advisory services or software-based fees as one distinct performance obligation.

Reimbursable expenses for our engagements include travel, out-of-pocket and independent contractor costs. Such expenses are passed through to clients as contractually allowed. Reimbursable expenses are considered a variable portion of the transaction price and are recognized into revenue consistent with the measure of progress of the respective performance obligation.

Contract Assets and Liabilities

We define contract assets as revenues recognized for fixed-fee, event-based or performance-based arrangements for which we are not contractually able to bill. These contract assets are included in accounts receivable, net and contract assets within the unaudited consolidated balance sheets. As of ~~September~~March 3031, ~~2018,~~2019 and December 31, ~~2017~~2018, our contract assets were not material. In most cases, our standard fixed fee contracts allow for monthly billing.

We define contract liabilities as retainers and advance payments from or billings to, our customers for services that have not yet been performed or earned and retainers. These liabilities are recorded within other current liabilities and are recognized as services are provided. Any taxes assessed on revenues relating to services provided to our clients are recorded on a net basis. As of ~~September~~March 3031, ~~2018,~~2019 and December 31, ~~2017~~2018, our contract liabilities were $2021.23 million and $2128.69 million, respectively. During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2018~~2019, $117.27 million ~~and $18.9 million, respectively,~~ was recognized into revenue from the opening balance. The remaining change related to amounts billed or payments received for work not yet performed.

Performance Obligations

For disclosure purposes, we apply the practical expedient to exclude the value of unsatisfied performance obligations for contracts with an enforceable duration of one year or less. We also apply the practical expedient to exclude those amounts for contracts in which we apply the right to invoice. The majority of our contracts include termination for convenience clauses which generally require 30 days’ notice with no penalty. The notice period required determines the contract duration resulting in very few agreements which are contractually enforceable beyond one year. As ~~such, the total amount~~ of ~~unsatisfied~~March ~~performance obligations beyond one year is not significant. As of September 30~~31, ~~2018~~2019, we had approximately $~~162~~147.53 million of remaining performance obligations of which approximately $9552.59 million are expected to be satisfied beyond one year. These obligations mainly relate to our newly formed joint venture with Baptist Health South Florida, Health System Solutions, LLC (“HSS”).

5.	SEGMENT INFORMATION

During the three months ended September 30, 2018, we completed the sale of SaleCo (See Note 3 – Dispositions and Discontinued Operations). All period operations of SaleCo are classified as discontinued operations. As a result, we have eliminated the former Disputes, Forensics and Legal Technology segment from our segment results reporting and disposed of a portion of our Financial Services Advisory and Compliance segment. The segment information below is presented on a continuing operations basis. See Note 3 — Dispositions and Discontinued Operations for further information. Also, during the three months ended March 31, 2018, we moved our life sciences regulatory and compliance related business from the former Disputes, Forensics and Legal Technology reporting segment into the Healthcare reporting segment. The change better aligns this business with our life sciences team as part of the Healthcare segment, as they have comparable client types and address similar business issues and industry dynamics. Prior year results have been adjusted to conform to current year presentation. Our business is assessed and resources are allocated based on the following three reportable segments:

• The Healthcare segment provides ~~consulting~~strategic, ~~services~~performance improvement, and business process management ~~services~~solutions. Clients of this segment include healthcare providers, physician enterprises, payers, government agencies and life sciences companies. We help clients respond to market legislative changes such as the shift to an outcomes and value-based reimbursements model, ongoing industry consolidation and reorganization, Medicaid expansion, the implementation of a new electronic health records system and product planning and commercialization expertise.

• The Energy segment provides ~~advisory~~full ~~services~~lifecycle tosolutions ~~utilities,~~that ~~governmental~~help ~~agencies,~~clients ~~manufacturers~~transform ~~and~~their ~~investors.~~businesses Wein ~~provide~~a ~~our~~rapidly ~~clients~~changing ~~with~~energy ~~advisory~~environment, ~~solutions~~manage incomplexity ~~business~~and ~~strategy~~accelerate ~~and~~operational ~~planning~~performance, ~~distributed~~meet ~~energy~~compliance ~~resources and renewables~~requirements, ~~energy efficiency~~ and ~~demand~~transform ~~response,~~their ~~sustainability~~organizations and ~~grid modernization~~systems. In addition, we provide a broad array of benchmarking, data and market research ~~services~~capabilities related to the energy sector.

• The Financial Services Advisory and Compliance segment provides strategic, operational, risk management, investigative and compliance advisory services to clients primarily in the highly-regulated financial services industry, including major financial and insurance institutions. This segment also provides anti-corruption solutions and anti-money laundering consulting, litigation support and tax compliance services to clients in a broad variety of industries.

The following information includes segment revenues before reimbursements, segment total revenues and segment operating profit. Certain unallocated expense amounts related to specific reporting segments have been excluded from segment operating profit to be consistent with the information used by management to evaluate segment performance. Segment operating profit represents total revenues less cost of services excluding long-term compensation expense attributable to client-service employees. Long-term compensation expense attributable to client-service employees includes share-based compensation expense and compensation expense ~~attributed to certain retention incentives (see Note 8 — Share-Based Compensation Expense and Note 9 — Supplemental Consolidated Balance Sheet Information).~~

1210

attributed to certain retention incentives (see Note 8 — Share-Based Compensation Expense and Note 9 — Supplemental Consolidated Balance Sheet Information).

The information presented does not necessarily reflect the results of segment operations that would have occurred had the reporting segments been stand-alone businesses.

Information on the segment operations has been summarized as follows (in thousands):

	~~For the three months ended~~	For the three months ended									~~For the nine months ended~~
	September 30,										September 30,
		March 31,
	2018					2017					2018		2017
		2019					2018
Revenues before reimbursements:
Healthcare	$	$	~~101,799~~	119,003		$	$	~~100,348~~	90,149		$	~~283,542~~	$	~~292,353~~
Energy			~~34,591~~	36,249				~~29,597~~	33,704			~~104,939~~		~~93,838~~
Financial Services Advisory and Compliance			~~34,996~~	30,877				~~34,578~~	37,592			~~109,574~~		~~94,116~~
Total revenues before reimbursements	$	$	~~171,386~~	186,129		$	$	~~164,523~~	161,445		$	~~498,055~~	$	~~480,307~~
Total revenues:
Healthcare	$	$	~~109,218~~	126,569		$	$	~~109,375~~	98,712		$	~~308,180~~	$	~~319,671~~
Energy			~~40,530~~	43,700				~~35,144~~	37,637			~~122,350~~		~~109,410~~
Financial Services Advisory and Compliance			~~37,870~~	32,593				~~40,993~~	41,719			~~119,869~~		~~107,952~~
Total revenues	$	$	~~187,618~~	202,862		$	$	~~185,512~~	178,068		$	~~550,399~~	$	~~537,033~~
Segment operating profit:
Healthcare	$	$	~~28,687~~	36,755		$	$	~~31,665~~	20,390		$	~~76,452~~	$	~~89,067~~
Energy			~~10,857~~	10,410				~~8,077~~	10,728			~~34,270~~		~~25,472~~
Financial Services Advisory and Compliance			~~11,482~~	5,231				~~15,034~~	14,836			~~39,705~~		~~37,389~~
Total segment operating profit			~~51,026~~	52,396				~~54,776~~	45,954			~~150,427~~		~~151,928~~
Segment reconciliation to income before income tax expense:
Reconciling items:
General and administrative expenses			~~32,073~~	35,167				~~35,326~~	37,079			~~104,064~~		~~106,361~~
Depreciation expense			~~5,026~~	4,586				~~4,777~~	4,997			~~14,966~~		~~15,592~~
Amortization expense			~~1,568~~	1,372				~~2,102~~	1,752			~~4,985~~		~~6,418~~
Other operating costs, net			~~(201~~	)32				~~1,014~~	983			~~3,077~~		~~2,320~~
Long-term compensation expense attributable to client-service employees (including share-based compensation expense)			~~1,585~~	1,623				~~1,450~~	1,445			~~4,374~~		~~6,035~~
Operating income			10,975					10,107				18,961		15,202
Operating income (loss)				9,616					(302	)
Interest and other expense, net			362					836				2,083		2,538
Interest and other (income) expense, net				(239	)				1,070
Income from continuing operations before income tax expense	$		10,613			$		9,271			$	16,878	$	12,664
Income (loss) from continuing operations before income tax expense		$		9,855			$		(1,372	)

13Total assets allocated by segment include accounts receivable, net and contract assets, certain retention-related prepaid assets, intangible assets, net and goodwill. The remaining assets are unallocated. Allocated assets by segment were as follows (in thousands):

Total assets allocated by segment include accounts receivable, net and contract assets, certain retention-related prepaid assets, intangible assets, net and goodwill. The remaining assets are unallocated. As of December 31, 2017, unallocated assets included assets held for sale of $361.0 million, related to assets previously allocated to the former Disputes, Forensics and Legal Technology segment and the transaction advisory services practice of the Financial Services Advisory and Compliance segment (see Note 3 – Dispositions and Discontinued Operations). Allocated assets by segment were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Healthcare	$	415,917	$	405,283
Energy		133,766		130,052
Financial Services Advisory and Compliance		81,508		85,250
Unallocated assets		283,959		296,962
Total assets	$	915,150	$	917,547

	September 30,		December 31,
	2018		2017
Healthcare	$	404,261	$	419,894
Energy		125,954		115,478
Financial Services Advisory and Compliance		87,782		87,554
Unallocated assets		380,301		457,338
Total assets	$	998,298	$	1,080,264

146. GOODWILL AND INTANGIBLE ASSETS, NET

15The changes made to the goodwill balances of our reporting units for the three months ended March 31, 2019 and the year ended December 31, 2018, were as follows (shown in thousands):

6.GOODWILL AND INTANGIBLE ASSETS, NET

	Healthcare			Energy			Financial Services Advisory and Compliance			Total Company
Goodwill at December 31, 2018	$	294,283		$	80,034		$	48,040		$	422,357
Acquisitions		3,237			-			-			3,237
Adjustments		(2	)		-			(6	)		(8	)
Foreign currency translation		-			(58	)		(459	)		(517	)
Goodwill at March 31, 2019	$	297,518		$	79,976		$	47,575		$	425,069

As part of our divestiture of SaleCo the entire former Disputes Forensics and Legal Technology segment was sold. The disposed book value of goodwill was $212.3 million, which includes $5.7 million related to the transaction advisory services practice, formerly in Financial Services Advisory and Compliance segment (see Note 3 – Dispositions and Discontinued Operations) that we also sold. In addition, in the first quarter of 2018, we moved our life sciences regulatory and compliance related business from the former Disputes, Forensics and Legal Technology segment into our Healthcare segment. The changes made to the goodwill balances of our reporting units for the nine months ended September 30, 2018 and the year ended December 31, 2017, were as follows (shown in thousands):

	Healthcare			Energy			Financial Services Advisory and Compliance			Total Company
Goodwill at December 31, 2017	$	294,064		$	80,109		$	48,786		$	422,959
Adjustments		365			200			(24	)		541
Foreign currency translation		(146	)		(275	)		(722	)		(1,143	)
Goodwill at December 31, 2018	$	294,283		$	80,034		$	48,040		$	422,357

	Healthcare			Energy			Financial Services Advisory and Compliance			Total Company
Goodwill at December 31, 2017	$	278,130		$	80,109		$	54,462		$	412,701
Transfer from the former Disputes, Forensics and Legal Technology segment		15,934			-			-			15,934
Assets Held for Sale		-			-			(5,676	)		(5,676	)
Goodwill at December 31, 2017 adjusted	$	294,064		$	80,109		$	48,786		$	422,959
Adjustments		(54	)		200			(18	)		128
Foreign currency translation		(474	)		(396	)		(424	)		(1,294	)
Net goodwill at September 30, 2018	$	293,536		$	79,913		$	48,344		$	421,793

We performed our annual goodwill impairment test as of May 31, 2018 on our three continuing reporting units and our former Disputes, Forensics and Legal Technology reporting unit using certain key assumptions. The key assumptions included: internal projections completed during our first quarter 2018 forecasting process; profit margin improvement generally consistent with our longer-term historical performance; assumptions regarding contingent revenue; revenue growth consistent with our longer-term historical performance, also considering our near-term investment plans and growth objectives; discount rates based on comparable discount rates for our peer group; revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples comparable to multiples for our peer group; Navigant-specific risk considerations; control premium; and cost of capital based on our historical experience.

	Healthcare		Energy		Financial Services Advisory and Compliance			Total Company
Goodwill at December 31, 2016	$	272,032	$	77,924	$	53,784		$	403,740
Transfer from the former Disputes, Forensics and Legal Technology segment		15,934		-		-			15,934
Assets Held for Sale		-		-		(5,676	)		(5,676	)
Goodwill at December 31, 2016 adjusted	$	287,966	$	77,924	$	48,108		$	413,998
Acquisitions		5,837		-		-			5,837
Adjustments		9		1,231		(35	)		1,205
Foreign currency translation		252		954		713			1,919
Net goodwill at December 31, 2017	$	294,064	$	80,109	$	48,786		$	422,959

We performed our annual goodwill impairment test as of May 31, 2018 on our three continuing reporting units and our former Disputes, Forensics and Legal Technology reporting unit using certain key assumptions. The key assumptions included: internal projections completed during our first quarter 2018 forecasting process; profit margin improvement generally consistent with our longer-term historical performance; assumptions regarding contingent revenue; revenue growth consistent with our longer term historical performance also considering our near term investment plans and growth objectives; discount rates based on comparable discount rates for our peer group; revenue and EBITDA multiples comparable to multiples for our peer group; Navigant-specific risk considerations; control premium; and cost of capital based on our historical experience.

As of May 31, 2018, the estimated fair value of our Healthcare, Energy and Financial Services Advisory and Compliance reporting units exceeded the fair value of invested capital by 23%, 32%, and 72%, respectively.

We have reviewed our most recent financial projections and considered the impact of changes to our business and market conditions on our goodwill valuation and determined that no events or conditions have occurred or are expected to occur that would trigger a need to perform an interim goodwill impairment test on our remaining three reporting units. We ~~also reviewed the book value of goodwill and related assets and liabilities held for sale against the fair value based upon expected sale price and determined that no impairment was indicated.~~ We will continue to monitor the factors and key assumptions used in determining the fair value of each of our continuing three reporting units. There can be no assurance that goodwill or intangible assets will not be impaired in the future. We will perform our next annual goodwill impairment test as of May 31, 2019.

16 Intangible assets consisted of (in thousands):

As part of the disposition of SaleCo, we sold $0.3 million of intangible assets; which is net of $3.2 million of accumulated amortization. Intangible assets consisted of (in thousands):

	March 31,			December 31,
	2019			2018
Intangible assets:
Customer lists and relationships	$	108,555		$	105,368
Non-compete agreements		23,066			22,923
Other		28,450			28,304
Intangible assets, at cost		160,071			156,595
Less: accumulated amortization		(144,601	)		(142,429	)
Intangible assets, net	$	15,470		$	14,166

	September 30,			December 31,
	2018			2017
Intangible assets:
Customer lists and relationships	$	106,082		$	106,035
Non-compete agreements		23,173			22,866
Other		28,701			28,825
Intangible assets, at cost		157,956			157,726
Less: accumulated amortization		(142,351	)		(137,554	)
Intangible assets, net	$	15,605		$	20,172

Our intangible assets have estimated remaining useful lives ranging up to ~~seven~~six years which approximate the estimated periods of consumption. We will amortize the remaining net book values of intangible assets over their remaining useful lives. At ~~September~~March 3031, ~~2018~~2019, our intangible assets categories were as follows (in thousands, except year data):

Category	Weighted Average Remaining Years		Amount
Customer lists and relationships, net		4.21	$	1314,~~786~~014
Non-compete agreements, net		2.62		1,~~279~~018
Other intangible assets, net		3.63		~~540~~438
Total intangible assets, net		43.09	$	15,~~605~~470

Total amortization expense was $51.04 million and $61.48 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, respectively. The estimated annual aggregate amortization expense to be recorded related to intangible assets at ~~September~~March 3031, ~~2018~~2019 is as follows (in thousands):

Year Ending December 31,	Amount
2018 (includes January - September)	$	6,602
2019 (includes January - March)	$	5,393
2019		4,513
2020		4,196
2020		3,525
2021		4,085
2021		3,697
2022		936
2022		680
2023		1,243
2023 and thereafter		1,760
2024 and thereafter		989

7.	NET INCOME PER SHARE (EPS)

Income (loss) from continuing operations attributable to Navigant Consulting, Inc. was $4.8 million and ($1.6 million) for the three months ended March 31, 2019 and 2018, respectively. The components of basic and diluted shares ~~were as follows~~ (in thousands and based on the weighted average days outstanding for the periods) were as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	For the three months ended
	2018		2017		2018		2017
	March 31,
Basic shares		44,645		46,619		44,957		46,888
	2019		2018
Employee stock options		169		87		164		168
Basic shares		40,218		45,120
Restricted stock units		1,070		1,257		1,283		1,437
Employee stock options		146		153
Contingently issuable shares		48		54		34		68
Restricted stock units		951		1,544
Diluted shares		45,932		48,017		46,438		48,561
Contingently issuable shares		93		17
Antidilutive shares (1)		28		348		32		177
Diluted shares (1)		41,408		46,834
Antidilutive shares (2)		16		33

(1) ~~Stock~~Diluted ~~options~~earnings ~~with~~per ~~exercise~~share ~~prices~~is ~~greater~~not ~~than~~presented for the ~~average~~three ~~market~~months ~~price~~ended ofMarch ~~our~~31, ~~common~~2018 ~~stock~~as ~~during~~there ~~the~~is ~~respective~~a ~~time~~net ~~periods~~loss ~~were excluded~~ from ~~the~~continuing ~~computation~~operations offor ~~diluted~~that ~~shares because the impact of including the shares subject to these stock options in the diluted share calculation would have been antidilutive~~period.

17(2) Stock options with exercise prices greater than the average market price of our common stock during the respective time periods were excluded from the computation of diluted shares because the impact of including the shares subject to these stock options in the diluted share calculation would have been antidilutive.

8.	SHARE-BASED COMPENSATION EXPENSE

Share-based compensation expense is recorded for restricted stock units, stock options and the discount given on employee stock purchase plan transactions.

The amounts attributable to each category of share-based compensation expense were as follows (in thousands):

	For the three months ended	~~For the three months ended~~					~~For the nine months ended~~
		September 30,					September 30,
	March 31,
	2018				2017			2018		2017
	2019			2018
Amortization of restricted stock unit awards	$		1,854		$	2,545		$	6,291	$	8,184
Amortization of restricted stock awards and restricted stock unit awards	$	2,640		$	2,774
Amortization of stock option awards		21	24		34	~~152~~			82		~~531~~
Discount given on employee stock purchase transactions through our Employee Stock Purchase Plan		108	56		107	50			~~235~~		~~231~~
Total share-based compensation expense	$		1,934		$	2,747		$	6,608	$	8,946
Share-based compensation expense from continuing operations		2,769			2,915
Share-based compensation expense from discontinued operations		-			462
Total share-based compensation expense	$	2,769		$	3,377

Total share-based compensation expense consisted of the following (in thousands):

	For the three months ended				~~For the nine months ended~~
	September 30,				September 30,
	March 31,
	2018		2017		2018		2017
	2019		2018
Cost of services before reimbursable expenses	$	~~844~~639	$	~~1,111~~767	$	~~2,282~~	$	~~4,124~~
General and administrative expenses		12,~~090~~130		12,~~636~~148		~~4,326~~		~~4,822~~
Total share-based compensation expense	$	1,934	$	2,747	$	6,608	$	8,946
Share-based compensation expense from continuing operations		2,769		2,915
Share-based compensation expense from discontinued operations		-		462
Total share-based compensation expense	$	2,769	$	3,377

Share-based compensation expense attributable to client-service employees was included in cost of services before reimbursable expenses. Share-based compensation expense attributable to corporate management and support personnel was included in general and administrative expenses. ~~Amounts~~For ~~are~~further ~~presented~~information on adiscontinued ~~continuing~~ operations ~~basis (~~see Note 3 – Dispositions and Discontinued Operations).

At ~~September~~March 3031, ~~2018~~2019, we had $98.37 million of total compensation costs related to unvested share-based awards that have not been recognized as share-based compensation expense. The compensation costs will be recognized as an expense over the remaining vesting periods. The weighted average remaining vesting period is approximately two years. During the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019, we granted an aggregate of ~~450~~195,~~516~~031 share-based awards, consisting of restricted stock awards and units with an aggregate fair value of $93.79 million at the time of grant. These grants include certain awards that vest based on relative achievement of pre-established performance criteria.

9.	SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION

Accounts Receivable, Net and Contract Assets

The components of accounts receivable, net and contract assets, were as follows (in thousands):

	September 30,			December 31,
	March 31,			December 31,
	2018			2017
	2019			2018
Billed amounts	$	~~105~~108,~~770~~125		$	~~112~~116,~~356~~190
Engagements in process		80,535			64,835
Engagements in process and contract assets		89,512			74,633
Allowance for uncollectible billed amounts		(78,~~115~~022	)		(67,~~288~~815	)
Allowance for uncollectible engagements in process		(23,~~864~~092	)		(53,~~065~~085	)
Accounts receivable, net and contract assets	$	~~176~~186,~~326~~523		$	~~165~~179,~~838~~923

Receivables attributable to engagements in process represent balances for services that have been performed and earned but have not been billed to the client. Engagements in process include contract assets. See Note 4 – Revenue Recognition for information on contract assets. Services are generally billed on a monthly basis for the prior month’s services. Our allowance for uncollectible accounts is based on historical experience and management judgment and may change based on market conditions or specific client circumstances.

Prepaid Expenses and Other Current Assets

The components of prepaid expenses and other current assets were as follows (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Notes receivable - current	$	862	$	1,352
Prepaid recruiting and retention incentives - current	$	5,387	$	4,552
Prepaid recruiting and retention incentives - current		4,690		4,437
Other current prepaid expenses and other current assets		21,448		17,960
Other prepaid expenses and other current assets		25,350		15,217
Prepaid expenses and other current assets	$	26,835	$	22,512
Prepaid expenses and other current assets	$	30,902	$	21,006

Other Assets

The components of other assets were as follows (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Notes receivable - non-current	$	734	$	1,347
Prepaid recruiting and retention incentives - non-current	$	3,070	$	2,654
Capitalized client-facing assets		774		1,821
Other prepaid expenses and other non-current assets		5,633		5,990
Prepaid recruiting and retention incentives - non-current		2,889		3,164
Other assets	$	8,703	$	8,644
Prepaid expenses and other non-current assets		4,593		3,046
Other assets	$	8,990	$	9,378

~~Other~~ Prepaid ~~prepaid~~recruiting ~~expenses~~ and ~~other~~retention incentives, current ~~assets~~and ~~includes~~non-current, ainclude ~~$14~~sign-on and retention bonuses that are generally recoverable from an employee if the employee voluntarily terminates employment or if the employee’s employment is terminated for “cause” prior to fulfilling his or her obligations to us.0 ~~million~~These ~~receivable~~amounts are amortized as compensation expense over the periods in which ~~has~~they anare ~~equal~~recoverable ~~and~~from ~~off-setting~~the ~~other~~employees, ~~current~~with ~~liability~~periods ~~relating~~up to three years. During the ~~disposition~~three ofmonths ~~SaleCo~~ended March 31, 2019 and 2018, we granted $3.0 million and $2.5 million, respectively, in sign-on and retention bonuses.

Notes receivable, current and non-current, represent unsecured employee loans. These loans were issued to recruit or retain certain senior-level client-service employees. The principal amount and accrued interest on these loans is either paid by the employee or forgiven by us over the term of the loans so long as the employee remains continuously employed by us and complies with certain contractual requirements. The expense associated with the forgiveness of the principal amount of the loans is amortized as compensation expense over the terms of the loans.

Capitalized client-facing assets include software and hardware that is used by our clients as part of their engagements. These amounts are amortized into cost of services before reimbursable expenses over their estimated remaining useful life.

Prepaid recruiting and retention incentives, current and non-current, include sign-on and retention bonuses that are generally recoverable from an employee if the employee voluntarily terminates employment or if the employee’s employment is terminated for “cause” prior to fulfilling his or her obligations to us. These amounts are amortized as compensation expense over the periods in which they are recoverable from the employees, with periods averaging three years. During the nine months ended September 30, 2018 and 2017, we granted $5.2 million and $5.7 million, respectively, in sign-on and retention bonuses.

Property and Equipment, Net

The components of property and equipment, net were as follows (in thousands):

	September 30,			December 31,
	March 31,			December 31,
	2018			2017
	2019			2018
Furniture, fixtures and equipment	$	5856,~~467~~944		$	5655,~~298~~619
Software		9087,~~689~~821			86,~~611~~225
Leasehold improvements		4947,~~438~~114			4647,~~118~~097
Property and equipment, at cost		~~198~~191,~~594~~879			~~189~~188,~~027~~941
Less: accumulated depreciation and amortization		(~~131~~130,~~337~~505	)		(~~117~~125,~~595~~916	)
Property and equipment, net	$	6761,~~257~~374		$	7163,~~432~~025

During the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019, we invested $~~11.~~3.0 million in property and equipment.

1915

Other Current Liabilities

The components of other current liabilities were as follows (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Deferred acquisition liabilities - current	$	~~2,661~~978	$	~~3,897~~969
Contract liabilities		2021,~~231~~301		2128,~~621~~909
Deferred rent - current		~~2,852~~-		2,~~466~~656
Other current liabilities		~~15,369~~482		21,~~566~~510
Total other current liabilities	$	4122,~~113~~761	$	3034,~~550~~044

Other Non-Current Liabilities

The components of other non-current liabilities were as follows (in thousands):

	September 30,		December 31,
	March 31,		December 31,
	2018		2017
	2019		2018
Deferred acquisition liabilities - non-current	$	~~959~~733	$	~~1,972~~710
Deferred rent - non-current		~~22,423~~-		2321,~~499~~648
Other non-current liabilities		23,~~681~~588		12,~~131~~919
Total other non-current liabilities	$	264,~~063~~321	$	2625,~~602~~277

~~Other~~ Deferred ~~current~~acquisition liabilities, ~~include~~current aand ~~$14.0~~non-current, ~~million~~at ~~payable~~March ~~which~~31, ~~has~~2019 anconsisted ~~equal~~of cash obligations related to definitive and ~~off-setting~~contingent ~~receivable~~purchase ~~within~~price ~~other~~considerations ~~current~~recorded ~~assets~~at fair value and net present value, respectively. ~~These~~See ~~amounts~~Note ~~were~~13 ~~recorded~~– inFair ~~conjunction~~Value ~~with~~for ~~the~~additional ~~disposition~~information ofregarding ~~SaleCo~~deferred contingent consideration fair value adjustments.

~~Deferred~~As ~~acquisition~~a ~~liabilities,~~result ~~current~~of ~~and~~the ~~non-current,~~adoption atof ~~September~~Topic 30842, ~~2018~~deferred ~~consisted~~rent ofamounts ~~cash~~as ~~obligations~~of ~~related~~March ~~to contingent and definitive purchase price considerations recorded at fair value and net present value~~31, ~~respectively.~~2019 ~~See~~are ~~Note~~reflected 13in –the ~~Fair~~operating ~~Value~~lease ~~for~~right-use ~~additional information regarding deferred contingent consideration fair value adjustments~~assets.

~~The~~At ~~current~~March ~~and~~31, 2019, other non-current ~~portions~~liabilities included $2.3 million of ~~deferred~~performance-based ~~rent~~long-term ~~relate~~incentive tocompensation ~~tenant~~liabilities. ~~allowances~~As part of our long-term incentive program for select senior-level client-service employees and ~~incentives~~leaders, we grant restricted stock units which typically vest three years from the grant date. The value of equity granted is based on ~~lease~~the ~~arrangements~~relative ~~for~~achievement ~~our~~of ~~office~~certain ~~facilities~~performance ~~that~~targets ~~expire~~during atthe ~~various~~year ~~dates~~prior ~~through~~to ~~2028~~grant.

AtContract ~~September 30, 2018, other non-current~~ liabilities ~~included~~represent ~~$1.1 million~~advance ofbillings ~~performance-based~~to ~~long-term incentive compensation liabilities. As part of~~ our ~~long-term~~clients ~~incentive program~~ for ~~select~~services ~~senior-level~~that ~~client-service~~have ~~employees~~not ~~and~~yet ~~leaders,~~been weperformed ~~grant~~and ~~restricted stock units which typically vest three years from the grant date~~earned. ~~The~~See ~~value~~Note of4 ~~equity~~– ~~granted~~Revenue isRecognition ~~based~~for information on ~~the~~contract ~~relative achievement of certain performance targets during the year prior to grant~~liabilities.

Contract liabilities represents advance billings to our clients for services that have not yet been performed and earned. Further information regarding the amount of revenue recognized of the beginning contract liabilities balance in the nine months ended September 30, 2018 can be found in Note 4 - Revenue Recognition. As a result of our adoption of Topic 606, as of January 1, 2018 we renamed Deferred revenue to Contract liabilities. 16

10.	ACCUMULATED OTHER COMPREHENSIVE LOSS

The activity in accumulated other comprehensive loss attributable to Navigant, Consulting Inc. was as follows (in thousands):

	~~For the three months ended~~	For the three months ended									~~For the nine months ended~~
	September 30,										September 30,
		March 31,
	2018					2017					2018			2017
		2019					2018
Unrealized loss on foreign exchange:
Balance at beginning of period	$	$	~~(21,345~~	)(6,529	)	$	$	~~(21,622~~	)(19,308	)	$	~~(19,308~~	)	$	~~(25,166~~	)
Unrealized (loss) gain on foreign exchange			~~(1,232~~	)(442	)			~~1,865~~	1,369			~~(3,269~~	)		~~5,409~~
Realized loss on foreign exchange			16,677					-				16,677			-
Balance at end of period		$		(6,971	)		$		(17,939	)
Balance at end of period	$		(5,900	)		$		(19,757	)		$	(5,900	)	$	(19,757	)
Unrealized gain on derivatives:
Unrealized loss on derivatives:
Balance at beginning of period		$		-			$		130
Balance at beginning of period	$		460			$		(30	)		$	130		$	(40	)
Unrealized gain on derivatives in period, net of reclassification				-					250
Unrealized gain (loss) on derivatives in period, net of reclassification			186					(18	)			548			(22	)
Reclassified to interest expense				-					10
Realized gain on termination of derivatives			(452	)				-				(452	)		-
Income tax expense				-					(3	)
Reclassified to interest expense			(35	)				61				(79	)		84
Balance at end of period		$		-			$		387
Income tax expense			(159	)				(25	)			(147	)		(34	)
		2019					2018
Balance at end of period	$		-			$		(12	)		$	-		$	(12	)
Accumulated other comprehensive loss at March 31,		$		(6,971	)		$		(17,552	)
											2018			2017
Accumulated other comprehensive loss at September 30,												(5,900	)		(19,769	)

~~During the three months ended September 30, 2018, we realized $16~~11.7 ~~million in foreign currency translation loss related our European based entity which was included in the disposition of SaleCo (See Note 3 – Dispositions and Discontinued Operations).~~LEASES

11As described in Note 2 – Recent Accounting Pronouncements above, effective January 1, 2019, we adopted Topic 842. ~~BANK~~We ~~DEBT~~have operating leases for office space and, to a much lesser extent, we also have operating leases for equipment. Our office leases are typically for terms of between 3 and 10 years. Rents usually increase annually in accordance with defined rent steps or based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions or clauses: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. For the purpose of recognizing these provisions on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space and begin to make improvements in preparation of intended use or in the case of a lease modification, the date both parties execute the modification. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, we generally do not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of our lease liability nor our right-of-use asset. In certain cases, we sublease excess office space to third party tenants. We do not recognize liabilities or right-of-use assets for leases with an initial term of 12 months or less.

~~Our credit agreement provides a $350 million revolving credit facility.~~ The ~~credit~~components facility becomes due and payable in full upon maturity on March 28, 2022. At our option, subject to the terms and conditions specified in the credit agreement, we may elect to increase commitments under the credit facility up to an aggregate amount of ~~$450 million.~~lease ~~Borrowings~~expense ~~and~~were ~~repayments~~as ~~under~~follows ~~the credit facility may be made in multiple currencies including United States~~ (~~U.S.) Dollars, Canadian Dollars, United Kingdom (U.K.) Pound Sterling and Euro. $400 million to $350 million,~~ in ~~each case effective concurrently with the closing of the reorganization and sale of SaleCo.~~ thousands):

At September 30, 2018, we had no aggregate borrowings outstanding, compared to $132.9 million at December 31, 2017. Based on our financial covenants at September 30, 2018, approximately $346.1 million in additional borrowings were available to us under the credit facility. At September 30, 2018, we had $3.9 million of unused letters of credit under our credit facility, which have been included as a reduction in the available borrowings above. The letters of credit are primarily related to the requirements of certain lease agreements for office space.

	For the Three Months Ended
	March 31, 2019
Operating lease cost	$	5,890
Variable lease costs		2,914
Short term lease costs		289
Sublease income		(1,780	)
Total net lease cost	$	7,313

At our option, borrowings under the credit facility bear interest at a variable rate equal to an applicable base rate or LIBOR, in each case plus an applicable margin. For LIBOR loans, the applicable margin varies depending upon our consolidated leverage ratio (the ratio of total funded debt to adjusted EBITDA, as defined in the credit agreement). At September 30, 2018, the applicable margins on LIBOR and base rate loans were 1.00% and 0.00%, respectively. Depending upon our performance and financial condition, our LIBOR loans will have applicable margins varying between 1.00% and 2.00%, and our base rate loans have applicable margins varying between 0.00% and 1.00%. Our average borrowing rate was 3.9% and 2.7% for the three months ended September 30, 2018 and 2017, respectively and 3.2% and 2.6% for the nine months ended September 30, 2018 and 2017, respectively. 17

~~Our~~Supplemental ~~credit~~balance ~~agreement~~sheet ~~contains~~information ~~certain~~related ~~financial~~to ~~covenants, including covenants that require that we maintain a consolidated leverage ratio of not greater than 3.5~~leases:~~1, with certain exceptions as defined in the agreement, and a consolidated interest coverage ratio~~

	March 31,
	2019
Weighted average remaining lease term (in years):
Operating leases		6

Weighted average discount rate:
Operating leases		5.4	%

~~(the~~The ~~ratio~~discount ofrates ~~the~~applied ~~sum of adjusted EBIT, as defined in the credit agreement,~~ to ~~cash~~each ~~interest~~lease ~~expense)~~reflect ofour ~~not~~estimated ~~less~~incremental ~~than~~borrowing 2rate.~~0:1.~~ AtThis ~~September~~includes ~~30,~~an ~~2018,~~assessment ~~under~~of ~~the definitions in the credit agreement,~~ our ~~consolidated leverage ratio was 0.0:1 and our consolidated interest coverage ratio was 41.0:1. In addition, the~~ credit ~~agreement~~rating ~~contains customary affirmative and negative covenants (subject~~ to ~~exceptions),~~determine ~~including~~the ~~covenants~~rate that inwe ~~certain~~would ~~circumstances~~have ~~limit~~to ~~our~~pay ~~ability~~ to ~~incur liens or other encumbrances~~borrow, ~~make~~on ~~investments~~a ~~and~~collateralized ~~acquisitions,~~basis ~~incur~~for ~~indebtedness,~~a ~~enter~~similar ~~into mergers~~term, ~~consolidations and asset dispositions, pay cash dividends after the occurrence of~~ an ~~event~~amount ofequal ~~default, change the nature of our business and engage in transactions with affiliates, as well as customary provisions with respect~~ to ~~events of default. We were in compliance with the covenants contained in~~ our ~~credit~~lease ~~agreement~~payments ~~at September 30, 2018; however, there can be no assurances that we will remain~~ in ~~compliance~~a insimilar ~~the~~economic ~~future~~environment.

~~12.~~Supplemental ~~INCOME~~cash ~~TAXES~~flow and other information related to leases was as follows (in thousands):

On December 22, 2017, Tax Reform, the legislation, significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. Tax Reform permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a 21% rate, effective January 1, 2018.

~~While~~Future ~~Tax~~minimum ~~Reform~~lease ~~provides~~payments ~~for~~under ~~a territorial tax system, beginning in 2018, it includes the global intangible low~~non-~~taxed~~cancellable ~~income~~operating ~~(“GILTI”)~~leases ~~provision.~~were Weas ~~elected~~follows to account for GILTI tax in the period in which it is incurred. The GILTI provisions require us to include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. As a result of the GILTI provisions, our effective tax rate from continuing operations increased by 1.3% for the nine months ended September 30, 2018, and our effective income tax rate from discontinued operations increased by 8.9% for the nine months ended September 30, 2018. In conjunction with the GILTI provisions, the new law provides a 13.125% effective tax rate on excess returns earned directly from foreign services. Specifically, the new law allows us a deduction equal to foreign derived intangible income ("FDII"). Our FDII is the amount of our "deemed intangible income" that is attributable to the performance of services for foreign persons or with respect to property outside the U.S. The FDII provisions allow us to deduct from our U.S. income tax return foreign services income in excess of a minimum return on our tangible assets. As a result of the FDII provisions, our effective tax rate from continuing operations decreased by 4.0% for the nine months ended September 30, 2018, and our effective tax rate from discontinued operations decreased by 0.9% for the nine months ended September 30, 2018.thousands):

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of Tax Reform. We recognized provisional tax impacts related to the deemed repatriated earnings and the revaluation of deferred tax assets and liabilities in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from those provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of Tax Reform. Any adjustments made to the provisional amounts under SAB 118 should be recorded as discrete adjustments in the period identified (not to extend beyond the one-year measurement provided in SAB 118). During the nine months ended September 30, 2018, our effective tax rate from continuing operations increased by 0.3% due to adjustments to its provisional amounts included in our consolidated financial statements for the year ended December 31, 2017. The accounting is expected to be completed when the 2017 U.S. corporate income tax return is filed in the fourth quarter 2018.

	March 31,
	2019
2019 (excluding the three months ended March 31, 2019)	$	20,860
2020		25,452
2021		20,328
2022		14,428
2023		12,612
2024 and thereafter		34,798
Total lease payments	$	128,478
Less imputed interest		(20,813	)
Total	$	107,665

As of March 31, 2019, we have additional operating leases that have not yet commenced with obligations of $2.4 million. These operating leases expected to commence in 2019 with lease terms of 1 year to 5 years.

Future minimum annual lease payments for the years subsequent to December 31, 2018 and in the aggregate were as follows (shown in thousands):

Year ending December 31,	Amount
2019	$	27,496
2020		25,583
2021		20,742
2022		14,747
2023		12,873
Thereafter		35,077
	$	136,518

Rent expense for operating leases was $25.3 million for the year ended December 31, 2018.

12.

BANK DEBT

Our credit agreement provides a $350 million revolving credit facility. The credit facility becomes due and payable in full upon maturity on March 28, 2022. At our option, subject to the terms and conditions specified in the credit agreement, we may elect to increase commitments under the credit facility up to an aggregate amount of $450 million. Borrowings and repayments under the credit facility may be made in multiple currencies including United States (“U.S.”) Dollars, Canadian Dollars, United Kingdom (“U.K.”) Pound Sterling and Euro.

We had no aggregate borrowings outstanding at March 31, 2019 or at December 31, 2018. Based on our financial covenants at March 31, 2019, approximately $347.0 million in additional borrowings were available to us under the credit facility. At March 31, 2019, we had $3.0 million of unused letters of credit under our credit facility, which have been included as a reduction in the available borrowings above. The letters of credit are primarily related to the requirements of certain lease agreements for office space.

At our option, borrowings under the credit facility bear interest at a variable rate equal to an applicable base rate or LIBOR, in each case plus an applicable margin. For LIBOR loans, the applicable margin varies depending upon our consolidated leverage ratio (the ratio of total funded debt to adjusted EBITDA, as defined in the credit agreement). At March 31, 2019, the applicable margins on LIBOR and base rate loans were 1.00% and 0.00%, respectively. Depending upon our performance and financial condition, our LIBOR loans will have applicable margins varying between 1.00% and 2.00%, and our base rate loans have applicable margins varying between 0.00% and 1.00%.

Our credit agreement contains certain financial covenants, including covenants that require that we maintain a consolidated leverage ratio of not greater than 3.5:1, with certain exceptions as defined in the agreement, and a consolidated interest coverage ratio (the ratio of the sum of adjusted EBIT, as defined in the credit agreement, to cash interest expense) of not less than 2.0:1. At March 31, 2019, under the definitions in the credit agreement, our consolidated leverage ratio was 0.0:1 and our consolidated interest coverage ratio was 63.5:1. In addition, the credit agreement contains customary affirmative and negative covenants (subject to exceptions), including covenants that in certain circumstances limit our ability to incur liens or other encumbrances, make investments and acquisitions, incur indebtedness, enter into mergers, consolidations and asset dispositions, pay cash dividends after the occurrence of an event of default, change the nature of our business and engage in transactions with affiliates, as well as customary provisions with respect to events of default. We were in compliance with the covenants contained in our credit agreement at March 31, 2019; however, there can be no assurances that we will remain in compliance in the future.

13.	FAIR VALUE

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3: Unobservable inputs for the asset or liability

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As circumstances change, we will reassess the level in which the inputs are included in the fair value hierarchy.

22In certain instances, our acquisitions provide for deferred contingent acquisition payments. These deferred payments are recorded at fair value at the time of acquisition and are included in other current and/or non-current liabilities on our unaudited consolidated balance sheets. We estimate the fair value of our deferred contingent acquisition liabilities using a probability-weighted

In certain instances, our acquisitions provide for deferred contingent acquisition payments. These deferred payments are recorded at fair value at the time of acquisition and are included in other current and/or non-current liabilities on our consolidated balance sheets. We estimate the fair value of our deferred contingent acquisition liabilities using a probability-weighted discounted cash flow model. This fair value measure is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Fair value measurements characterized within Level 3 of the fair value hierarchy are measured based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value. 19

~~The~~discounted ~~significant unobservable inputs used in the fair value measurements of our deferred contingent acquisition liabilities are our measures of the future profitability and related~~ cash ~~flows~~flow ~~and discount rates~~model. ~~The~~This fair value ofmeasure ~~the deferred contingent acquisition liabilities~~ is ~~reassessed on a quarterly basis~~ based on ~~assumptions~~significant ~~provided~~inputs tonot usobserved ~~by segment and business area leaders together with our corporate development and finance departments. Any change~~ in the ~~fair~~market ~~value~~and ~~estimate~~thus isrepresents ~~recorded~~a inLevel 3 ~~the earnings of that period~~measurement. ~~During~~Fair ~~the~~value ~~nine~~measurements ~~months~~characterized ~~ended~~within ~~September 30, 2017, we recorded $2.2~~Level ~~million~~3 inof ~~other operating costs for a net increase in~~ the ~~liability, reflecting changes in the~~ fair value ~~estimate~~hierarchy ofare ~~the~~measured ~~deferred~~based ~~contingent~~on ~~acquisition~~unobservable ~~liability~~inputs ~~for~~that ~~certain~~are ~~acquisitions~~supported ~~made~~by inlittle ~~2017~~or ~~(see~~no ~~Note~~market 3activity –and ~~Acquisitions~~reflect toour ~~the~~own ~~consolidated~~assumptions ~~financial statements~~ in ~~our~~measuring ~~2017~~fair ~~Form 10-K)~~value. ~~The following table summarizes the changes in deferred contingent acquisition liabilities (in thousands):~~

	For the nine months ended
	September 30,
	2018			2017
Beginning Balance	$	3,870		$	1,723
Accretion of acquisition-related contingent consideration		151			208
Remeasurement of acquisition-related contingent consideration		-			2,213
Payments		(2,356	)		(330	)
Ending Balance	$	1,665		$	3,814

The significant unobservable inputs used in the fair value measurements of our deferred contingent acquisition liabilities are our measures of the future profitability and related cash flows and discount rates. The fair value of the deferred contingent acquisition liabilities is reassessed on a quarterly basis based on assumptions provided to us by segment and business area leaders together with our corporate development and finance departments. Any change in the fair value estimate is recorded in the earnings of that period.

WeThe ~~consider~~following ~~the~~table ~~recorded~~summarizes ~~value of our financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, net and contract assets and accounts payable, to approximate~~ the ~~fair~~changes ~~value~~in ofdeferred ~~the~~contingent ~~respective~~acquisition ~~assets and~~ liabilities at(in ~~September~~thousands): ~~30, 2018 based upon the short-term nature of the assets and liabilities. As of September 30, 2018 we had minimal financial assets and liabilities measured at fair value on a recurring basis.~~

	For the three months ended
	March 31,
	2019		2018
Beginning Balance	$	710	$	3,870
Accretion of acquisition-related contingent consideration		23		59
Payments		-		(204	)
Ending Balance	$	733	$	3,725

We consider the recorded value of our financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, net and contract assets and accounts payable, to approximate the fair value of the respective assets and liabilities at March 31, 2019 based upon the short-term nature of the assets and liabilities. As of March 31, 2019, we had minimal financial assets and liabilities measured at fair value on a recurring basis.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to, and should be read in conjunction with, our unaudited consolidated financial statements included elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations. Please see the sections of this report entitled “Forward-Looking Statements” and Part II, Item 1A, “Risk Factors.”

Overview

We are a specialized, global professional services firm that helps clients take control of their future. With a focus on markets and clients facing transformational change and significant regulatory or legal pressures, we primarily serve clients in the healthcare, energy and financial services industries.

On August 24, 2018, we completed the ~~previously~~disposition ~~announced sale~~ of SaleCo to Ankura. The sale represented a strategic shift in our services and in accordance with the applicable guidance the results from operations of SaleCo have been classified as discontinued operations for all periods presented. All other operations are considered “continuing operations” and have been presented in our three remaining segments. ~~In addition, the assets and liabilities of SaleCo prior to the sale were classified as assets held for sale and liabilities held for sale.~~ See Note 3 — Dispositions and Discontinued Operations to the notes to our unaudited consolidated financial statements for further information.

Revenues and Expenses

Our clients’ demand for our services ultimately drives our revenues and expenses. We derive our revenues from fees on services provided. The ~~Approximately~~most ~~40%~~common type of contract through which our revenues are generated is on a time and ~~material~~materials basis,. ~~though~~We we also have engagements where fees are a fixed amount (either in total or for a period of time). We may also earn incremental revenues, in addition to hourly or fixed fees, which are contingent on the attainment of certain event-based or performance-based contractual milestones or outcomes. We estimate and recognize the revenue from such contingent fees over the period of performance to the extent that it is probable that a significant reversal will not occur. Variations in our quarterly or ~~yearly~~annual revenues and resulting operating profit margins may occur depending on, ~~the~~among ~~timing~~other ofthings, ~~and~~ our ability to estimate, ~~such~~fees ~~contractual~~associated ~~outcomes.~~with ~~Revenues~~contingent ~~are~~outcomes ~~also earned on a per unit~~ or ~~subscription basis~~, ~~generally~~in ~~for~~certain ~~our technology-based service offerings. On January 1~~contracts, ~~2018,~~our weability ~~adopted~~to ~~Topic~~achieve ~~606~~performance onmetrics aindicative ~~modified~~of ~~retrospective~~the ~~basis. As~~value ~~such,~~provided ~~results~~to ~~for~~ the ~~nine months ended September 30~~client, ~~2018 are presented under the new standard while the comparable results are presented using our historic accounting. During the three~~ and ~~nine~~therefore ~~months~~to ~~ended~~be ~~September~~recognized ~~30, 2018 we recorded $0.7 million and $3.8 million~~ in ~~estimated event-based fees as a result of~~ the ~~new guidance~~period. ~~See~~ ~~Note~~Revenues 4are –also ~~Revenue~~earned ~~Recognition~~on toa ~~the~~per ~~notes~~unit toor ~~our~~subscription ~~unaudited consolidated financial statements for further information~~basis.

Our most significant ~~expense~~expenses isare client-service employee compensation, which includes salaries, incentive compensation, amortization of sign-on and retention incentive payments, share-based compensation and benefits. Client-service employee compensation is included in cost of services before reimbursable expenses, in addition to technology costs, sales and marketing expenses and the direct costs of recruiting and training client-service employees.

Our most significant overhead expenses included in general and administrative expense are administrative compensation and office-related expenses. Administrative compensation includes salaries, incentive compensation, share-based compensation and benefits for corporate management and other non-billable employees that indirectly support client engagements. Office-related expenses primarily consist of rent for our offices. General and administrative expense includes bad debt expense, technology, finance, human capital management, marketing and legal expenses. Certain non-billable employees who support the reporting segments are recorded in cost of services before reimbursable expenses.

We periodically review and adjust our employees’ total compensation (which may include salaries, annual cash incentive compensation, other cash and share-based compensation, and benefits) to ensure that it is competitive within the industry and is consistent with our performance. We also monitor and adjust our bill rates for our service offerings and within the various industries we serve, depending on market conditions.

Hiring and Retention

Because our ability to derive fees is largely reliant on the hiring and retention of employees, the average number of full-time employees and our ability to keep client-service employees utilized are important drivers of the business. We use full time equivalent (“FTE”) as a measure of our client-service employees. The number of Client-Service FTE is client-service employees adjusted for part-time ~~status~~employees and project employees and takes into account hiring and attrition which occurred during the reporting period. Our average utilization rate as defined below provides a benchmark for how well we are managing our Consulting FTE levels in response to changing demand.

2421

Client-Service FTE levels and related compensation in excess of demand drive additional costs that can negatively impact operating profit margin. From time to time, we engage independent contractors and hire project employees to supplement our Client-Service FTE on certain engagements, which allows us to adjust staffing in response to changes in demand for our services and manage our costs accordingly.

In connection with recruiting activities and business acquisitions, our general policy is to obtain non-solicitation covenants from senior and some mid-level client-service employees. Most of these covenants have restrictions that extend 12 months beyond the termination of employment. We utilize these contractual agreements and other agreements to reduce the risk of attrition and to safeguard our existing clients, employees and projects.

Technology

We continue to invest in technology, ~~infrastructure~~data toand ~~support~~analytics ~~our evolving service offerings~~infrastructure, including ~~investment~~machine inintelligence ~~more~~and ~~sophisticated~~robotics ~~technology~~process ~~infrastructure~~automation abilities, to ~~enable~~support our evolving and expanding technology-based ~~services~~service toofferings, ~~expand~~ and ~~change~~to ~~over~~allow ~~time~~us ~~and~~ to deliver more scalable ~~technology~~ solutions to meet the changing demands of our clients.

Acquisitions

For details regarding our acquisitions, see Note 3 – Acquisitions to the consolidated financial statements in our 2017 Form 10-K. Any material impact our acquisitions may have had on our results from operations or segment results for the periods presented has been included in our discussion below.

Key Operating Metrics

The following key operating metrics provide additional operating information related to our continuing business and reporting segments. These key operating metrics may not be comparable to similarly-titled metrics at other companies. ~~Our~~During 2019, we renamed our Technology, Data & Process businesses as “Managed Services” businesses. Managed Services businesses are comprised of technology-enabled professional services, including business process management services and data analytics, ~~legal technology solutions and data services, insurance claims processing,~~ market research and benchmarking businesses.

•

Average FTE is our average headcount during the reporting period adjusted for part-time status. Average FTE is further split between the following categories:

• Client-Service FTE — a combination of Consulting FTE and ~~Technology,~~Managed ~~Data~~Services ~~& Process~~ FTE defined as follows:

•

Consulting FTE — individuals assigned to client services who record time to client engagements; and

• ~~Technology,~~Managed ~~Data~~Services ~~& Process~~ FTE — individuals in businesses primarily dedicated to maintaining and delivering the services described above that are not included in the average bill rate and average utilization metrics described below.

• Non-billable FTE — individuals assigned to administrative, ~~analytics and~~ support functions, including office services, ~~corporate functions~~ and ~~certain~~corporate ~~practice support~~ functions.

• ~~Period-end~~Centralized ~~FTE~~Client ~~represents~~Support ~~our~~FTE ~~headcount~~– atindividuals ~~the~~providing ~~last~~data ~~day~~analytics ~~of the reporting period adjusted for part-time status. Consulting, Technology, Data & Process~~ and ~~Non-billable~~project ~~criteria~~support ~~also apply~~ to ~~period~~client-~~end~~related ~~FTE~~engagements.

• ~~Average~~Period-end ~~bill~~FTE ~~rate~~– isheadcount ~~calculated~~at bythe ~~dividing~~last ~~fee~~day ~~revenues~~of ~~before~~the ~~certain~~reporting ~~adjustments~~period, ~~such~~adjusted asfor ~~discounts~~part-time ~~and markups, by the number of hours associated with the fee revenues~~status. ~~Revenues~~The ~~recognized~~criteria ondescribed ~~the~~in ~~attainment~~Consulting ofFTE, ~~certain~~Managed ~~event-driven~~Services ~~contractual~~FTE ~~milestones~~and ~~(event~~Non-~~based)~~billable ~~and~~FTE ~~those~~also ~~related~~apply to ~~Technology,~~period-end ~~Data & Process~~ FTE ~~are excluded from average bill rate~~.

• Average ~~utilization~~bill rate is calculated by dividing ~~the~~fee ~~number~~revenues ofbefore ~~hours~~certain ofadjustments, ~~our~~such ~~Consulting~~as ~~FTE~~discounts ~~who~~and ~~recorded~~markups, ~~time~~by tothe ~~client~~number ~~engagements~~of ~~during~~hours aassociated ~~period~~with by the ~~total~~fee ~~available~~revenues. ~~working~~Revenues ~~hours~~recognized ~~for~~on ~~these~~the ~~consultants~~attainment ~~during~~of ~~the~~certain ~~same~~event-driven ~~period~~contractual ~~(1,850~~milestones ~~hours annually~~(event-based). ~~Hours~~and those related to ~~Technology,~~Managed ~~Data~~Services ~~& Process~~ FTE are excluded from average ~~utilization~~bill rate.

• ~~Billable~~Average ~~hours~~utilization ~~are~~rate is calculated by dividing the number of hours of our Consulting FTE who recorded time to client engagements during a period by the ~~reporting~~total available working hours for these consultants during the same period (1,850 hours annually). Hours related to ~~Technology,~~Managed ~~Data~~Services ~~& Process~~ FTE are excluded from ~~billable~~average ~~hours~~utilization rate.

• ~~Segment~~Billable ~~operating~~hours ~~profit~~are ~~represents~~the ~~total~~number ~~revenues~~of ~~less~~hours ~~cost~~our ofConsulting ~~services~~FTE ~~excluding~~recorded ~~long-term~~to ~~compensation~~client ~~expense~~engagements ~~attributable~~during tothe ~~Client-Service~~reporting ~~employees~~period. ~~Long-term~~Hours ~~compensation~~related ~~expense attributable~~ to ~~Client-Service~~Managed ~~employees~~Services ~~includes~~FTE ~~share-based~~are ~~compensation~~excluded ~~expense~~from ~~and~~billable ~~compensation expense attributable to retention incentives~~hours.

25• Segment operating profit represents total revenues less cost of services excluding long-term compensation expense attributable to Client-Service FTE. Long-term compensation expense attributable to Client-Service FTE includes share-based compensation expense and compensation expense attributable to retention incentives.

All Client-Service FTE, utilization and average bill rate metric data provided in this report exclude the impact of independent contractors and project employees.

Recent Accounting Pronouncements

See Note 2 — Recent Accounting Pronouncements to the notes to our unaudited consolidated financial statements for further information on our accounting policies and recent accounting pronouncements.

Additional Highlight

On April 10, 2018, we announced that we formed HSS, a joint venture ~~(HSS)~~ with Baptist Health South Florida in which we own a 60% interest. The operations, which began in July 2018, are fully consolidated. Through this joint venture, we ~~will~~ leverage the business process management services team within the Healthcare segment to help drive efficiencies and improved revenue collection, cash flow and cost management for ~~the~~ Baptist Health ~~system. We~~South ~~commenced~~Florida’s ~~operation~~health ~~of HSS during the three months ended September 30, 2018, during the early ramp-up stage we expect lower profitability than our on-going business process management service engagements~~systems.

Results of Operations

Key highlights of our results of operations for the three months ended ~~September~~March 3031, ~~2018~~2019 ~~and~~compared ~~2017~~to the corresponding period in the prior year were:

Revenues before reimbursements (“RBR”) increased 415.23% over the prior year period. RBR increased inmainly ~~all~~due ~~three~~to ofthe ~~our~~increase ~~segments~~in Healthcare and ~~mainly~~Energy ~~due~~consulting toservices ~~organic~~as ~~RBR~~well ~~growth~~as ~~within~~the ~~our~~HSS ~~Energy~~joint ~~segment~~venture, aswhich ~~well~~were aspartially offset by lower RBR ~~from~~within our ~~newly~~Financial ~~formed~~Services ~~joint~~Advisory ~~venture~~and ~~mentioned~~Compliance ~~above~~segment. Event-based fees for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 were $18.01 million and $13.93 million, respectively, mainly due to the HSS joint venture. Cost of services before reimbursable expenses increased 915.78% mainly due to ~~wages~~the HSS joint venture and ~~benefits~~hiring ~~expenses~~that ~~related~~occurred toduring ~~HSS~~the ~~and~~second ~~new~~half ~~hiring~~of 2018 within the Financial Services Advisory and Compliance ~~and Energy segments~~segment. General and administrative expenses decreased 95.2% mainly due to alower ~~decrease in~~ bad debt expense. ~~Income from discontinued operations, net of tax increased significantly mainly due to the gain on sale of $60.2 million, net of tax.~~ Our effective income tax rate for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 ~~on a continuing basis~~ was 3530.79% and 37(16.74)%, respectively. Net income attributable to Navigant Consulting, Inc. for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 was $744.03 million and $11.9 million, respectively.

Key highlights of our results of operations for the nine months ended September 30, 2018 and 2017 were:

							2019 over
							2018
	For the three months ended						Increase
	March 31,						(Decrease)
		2019		2018			Percentage
Key operating metrics:
Average FTE
-Consulting		1,403			1,372			2.3
-Managed Services		3,698			2,874			28.7
-Centralized Client Support		138			79			74.7
-Non-billable		797			732			8.9
Period end FTE
-Consulting		1,393			1,355			2.8
-Managed Services		3,743			2,800			33.7
-Centralized Client Support		138			80			72.5
-Non-billable		804			740			8.6
Average bill rate	$	256		259				(1.2	)
Utilization		71	%		73	%		(2.7	)

RBR increased 3.7% over the prior year period, mainly due to organic RBR growth within our Financial Services Advisory and Compliance and Energy segments partially offset by a decrease within the Healthcare segment. Event-based fees for the nine months ended September 30, 2018 and 2017 were $6.8 million and $4.1 million, respectively mainly due to the adoption of the new revenue standard. Cost of services before reimbursable expenses increased by 5.3% and general and administrative expenses decreased 2.2%. Income from discontinued operations, net of tax increased 352.8% mainly due to the gain on sale. Our effective income tax rate for the nine months ended September 30, 2018 and 2017, on a continuing basis was 32.7% and 29.0%, respectively. Net income for the nine months ended September 30, 2018 and 2017 was $114.7 million and $31.8 million, respectively. Further explanations are provided below.

							2018 over									2018 over
							2017									2017
	For the three months ended						Increase			For the nine months ended						Increase
	September 30,						(Decrease)			September 30,						(Decrease)
		2018		2017			Percentage				2018		2017			Percentage
Key operating metrics:
Average FTE
-Consulting		1,388			1,378			0.7			1,372			1,383			(0.8	)
-Technology, Data & Process		3,356			2,930			14.5			2,990			2,784			7.4
-Non-billable		851			728			16.9			825			724			14.0
Period end FTE
-Consulting		1,408			1,385			1.7			1,408			1,384			1.7
-Technology, Data & Process		3,483			2,949			18.1			3,483			2,949			18.1
-Non-billable		881			737			19.5			881			737			19.5
Average bill rate	$	253		$	264			(4.2	)	$	255		$	260			(1.9	)
Utilization		68	%		73	%		(6.8	)		71	%		73	%		(2.7	)

Key Operating Metrics

Average FTE – Consulting ~~was~~increased ~~relatively~~2.3% ~~flat~~for asthe ~~hiring~~three ~~within~~months ~~our~~ended ~~Financial~~March ~~Services~~31, ~~Advisory~~2019 ~~and~~compared ~~Compliance~~to ~~segment~~the tothree ~~meet~~months ~~future~~ended ~~needs~~March as31, ~~well~~2018, asrespectively. The increase was due to hiring ~~within~~in ~~our~~all ~~Energy~~three ~~segment~~segments and was partially offset by ~~fewer~~the ~~hires~~transfer ~~within~~of ~~our~~certain ~~Healthcare~~Consulting ~~segment.~~FTE ~~Average~~to ~~FTE~~the –newly ~~Technology,~~formed ~~Data~~Centralized &Client ~~Process~~Support group in the first quarter of 2019. Average Managed Services FTE increased 1428.57% for the three months ended ~~September~~March 3031, ~~2018~~2019 compared to the three months ended ~~September~~March 3031, ~~2017~~2018, mainly due to ~~our~~HSS ~~newly formed joint venture with Baptist Health South Florida~~FTE. Utilization levels were 6871% and 73% for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, respectively, for all three segments combined. Average bill rate decreased 41.2% to $~~253~~256 over the same periods, primarily attributable to anproject ~~increase~~mix. Centralized Client Support was formed in ~~lower~~the ~~bill~~three ~~rate~~months ~~engagements~~ended ~~mainly~~March ~~within~~31, 2019. This FTE group includes individuals in our ~~Healthcare~~data analytics and ~~Financial~~robotics ~~Services~~process ~~Advisory~~automation centers of excellence that were previously classified as Non-Billable FTEs (which has been recast in prior period FTE reported above), as well as some data analytics resources that were previously de-centralized and ~~Compliance~~included ~~segments~~in Consulting FTEs (which is not recast in prior period FTE data reported above). The increase in average Centralized Client Support FTE primarily

Average FTE – Consulting for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 was relatively flat, as overall hires within the Financial Services Advisory and Compliance segment were offset by reductions within Energy and Healthcare segments. Average FTE – Technology, Data & Process increased 7.4% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. The increase was mainly a result of HSS. Utilization levels were 71% and 73% for the nine months ended September 30, 2018 and 2017, respectively, and average bill rate decreased 1.9% to $255 over the same periods, for reasons discussed above. 23

~~Average~~relates ~~Non-billable~~to ~~FTE~~the ~~increased~~centralization ~~16.9%~~of ~~and~~an ~~14.0%~~analytic ~~for~~team ~~the~~located ~~three~~both ~~and~~in ~~nine~~the ~~months~~U.S. ~~ended~~and ~~September~~in 30India, ~~2018~~which ~~compared~~was done to ~~the~~create ~~three~~cross-company ~~and~~efficiencies ~~nine~~for ~~months~~corporate ~~ended~~and ~~September~~practice ~~30,~~support ~~2017,~~functions ~~respectively.~~and ~~The~~not ~~increase~~recast ~~primarily~~in ~~relates~~prior toperiod ~~the transfer of~~ FTE. ~~from~~The ~~our~~prior ~~Healthcare~~periods’ ~~segment~~Non-Billable ~~and~~FTE ~~new~~data ~~hires~~now toreported ~~support~~as ~~the~~Centralized ~~buildout~~Client ofSupport ahas ~~centralized~~been ~~data~~recast ~~management~~to ~~and~~conform ~~analytic~~to ~~team~~the ~~largely~~current ~~located~~period ~~in India~~presentation.

Results for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2018~~2019 compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018

Revenue before Reimbursements. See segment results below for further discussion on RBR.

Cost of Services before Reimbursable Expenses. Cost of services before reimbursable expenses increased 915.78% for the three months ended ~~September~~March 3031, ~~2018~~2019 compared to three months ended ~~September~~March 3031, ~~2017~~2018, mainly due to increased ~~compensation~~wages and benefits expense relating to recent hires and ~~our recently formed joint venture. Medical expenses included in benefits expense were higher for~~ the ~~three~~formation ~~months~~of ~~ended September 30, 2018 compared to the three months ended September 30, 2017~~HSS. Severance expense relating to Client-Service FTE was ~~nil~~$0.6 million and $01.48 million for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, respectively.

~~Cost~~General ofand ~~services~~Administrative ~~before~~Expenses. ~~reimbursable~~General ~~expenses~~and ~~increased~~administrative byexpenses decreased 5.32% for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2017.~~2018 ~~The~~mainly ~~increase was primarily~~ due to ~~reasons~~a ~~similar~~decrease toin ~~those~~bad ~~discussed~~debt ~~above~~expense. In ~~addition,~~Bad wedebt ~~incurred~~expense ~~higher~~for ~~strategic development costs within~~ the ~~Healthcare~~three ~~segment during the nine~~ months ended ~~September~~March 3031, ~~2018~~2019 ~~compared~~and to2018 ~~the corresponding period in 2017. Severance expense relating to Client-Service FTE~~ was $20.2 4 million and $21.8 9 million, respectively. Severance expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017,~~2018 ~~respectively,~~was ~~primarily~~$0.1 ~~related~~million toand ~~planned~~nil, ~~personnel actions within the Healthcare segment~~respectively.

General and ~~Administrative~~administrative ~~Expenses.~~expenses ~~General~~as ~~and~~a ~~administrative~~percent ~~expenses~~of ~~decreased~~RBR 9were 18.29% for the three months ended ~~September~~March 3031, ~~2018~~2019 as compared to 23.0% for the three months ended ~~September~~March 3031, ~~2017~~2018. The decrease mainly ~~due~~relates to athe ~~decrease~~increase in ~~bad~~RBR ~~debt~~as ~~expense~~well as athe ~~result~~reduction ofin ~~our annual general reserve analysis and a specific customer~~ bad debt expense ~~in the prior year period. Bad debt expense~~ for the three months ~~ended~~ending ~~September~~March 3031, ~~2018~~2019 ~~and~~compared ~~2017~~to ~~was~~March ~~nil and $2.3 million~~31, ~~respectively~~2018. ~~This decrease was offset by an increase in incentive bonus due to company performance.~~ In addition, ~~wage~~we ~~savings~~continue ~~were~~to ~~offset~~incur ~~by increases in long-term compensation and incentive bonus~~ expenses; ~~mainly~~for ~~due~~resources to ~~accelerated~~support ~~stock-based compensation as a result of retirement eligibility at time of grant. Severance expense for~~ the ~~three~~transition ~~months~~services ~~ended~~agreement ~~September~~with 30Ankura, ~~2018~~which ~~and~~are ~~2017~~offset ~~was~~by ~~nil~~reimbursements ~~and~~per ~~$0.7~~the ~~million, respectively~~agreement.

~~General~~Depreciation ~~and~~Expense. ~~administrative~~Depreciation ~~expenses~~expense asdecreased ~~a percent of RBR were 18~~8.72% for the three months ended ~~September~~March 3031, ~~2018~~2019 as compared to ~~21.5% for~~ the three months ended ~~September~~March 3031, ~~2017. The decrease mainly relates to the increase in RBR for the three months ending September 30,~~ 2018 ~~compared to September 30~~, ~~2017.~~mainly ~~General and administrative expenses as a percent of RBR is higher than historical norms~~ due to ~~the~~a ~~absorption~~decrease ofresulting ~~costs~~from ~~relating~~fully todepreciated ~~SaleCo~~computer ~~which~~software ~~were~~and ~~not allocated to discontinued operations due to them not being directly identifiable~~hardware. ~~However, we do expect these costs to be reduced over time.~~

Amortization ~~General~~Expense. ~~and~~Amortization ~~administrative~~expense ~~expenses~~ decreased 221.27% for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018. The decrease was primarily ~~related~~due to ~~lower~~reduced ~~audio~~amortization ~~conferencing,~~relating ~~communication~~to ~~and~~certain ~~computer~~intangible ~~expenses~~assets ~~and~~as ~~compensation~~their ~~and~~useful ~~benefits~~lives ~~expense.~~came ~~These~~to ~~decreases~~term, ~~were~~ partially offset by ~~higher incentive compensation due to company performance and accelerated stock-based compensation expense and higher medical expense. Bad debt expense for~~ the ~~nine~~allocation ~~months~~of ~~ended~~purchase ~~September~~price ~~30,~~to ~~2018~~intangible ~~and~~assets ~~2017~~of ~~was~~recent $2acquisitions.~~6 million and $3.2 million, respectively. Severance expense for the nine months ended September 30, 2018 and 2017 was $2.2 million and $4.3 million, respectively.~~

27Interest Expense. Interest expense decreased 61.6% for the three months ended March 31, 2019 compared to the three months ended March 31, 2018, primarily due to the repayment of debt in the third quarter of 2018 using proceeds from the SaleCo transaction.

~~General~~Interest ~~and~~Income. ~~administrative~~Interest ~~expenses~~income asincreased ~~a percent of RBR were 20~~479.90% for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 as compared to ~~22.1% for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2017.~~2018 ~~The~~mainly ~~decrease~~due ~~was~~to ~~primarily~~higher ~~due~~cash toequivalents ~~the~~balances ~~same~~in ~~reasons~~the ~~discussed~~current ~~above~~year ~~for~~period from the ~~three~~proceeds ~~month~~of ~~period~~the SaleCo transaction.

Depreciation Expense. Depreciation expense increased 5.2% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 mainly due to an increase in leasehold improvement depreciation partially offset by fully depreciated computer software and hardware. Depreciation expense decreased 4.0% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 mainly due to fully depreciated software and hardware partially offset depreciation relating to recent leasehold improvement expenditures.

Other operating costs (benefit). Other operating benefit for the three months ended September 30, 2018 was $0.4 million relating to a gain resulting from the termination of our swaps partially offset by the write down of capitalized financing fees proportionate to the reduction in borrowing capacity on our credit facility. Other costs included office consolidation costs relating to a small office which we exited during the quarter. Other operating expense for the three months ended September 30, 2017 was $1.0 million relating to fair value adjustment to our estimated deferred contingent acquisition liabilities.

Other operating costs (benefit) for the nine months ended September 30, 2018 included a $0.5 million impairment of software and $3.2 million in legal and transition costs relating to the disposition of SaleCo in addition to the items in the three month discussion above. For the nine months ended September 30 2017, we recorded a $2.2 million fair value adjustment to our estimated deferred contingent acquisition liabilities.

Amortization Expense. Amortization expense decreased 25.4% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 and decreased 22.3% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. The decrease was primarily due to reduced amortization relating to certain intangible assets as their useful lives came to term, partially offset by the allocation of purchase price to intangible assets of recent acquisitions.

Interest Expense. Interest expense decreased 19.7% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 as higher borrowing interest rates were more than offset by lower average borrowing. For the nine months ended September 30, 2018 interest expense increased 6.4% compared to the corresponding period in the prior year, mainly due to higher borrowing rates partially offset by lower average borrowing. Average borrowing interest rates were 3.7% and 2.7% for the three months ended September 30, 2018 and 2017, respectively and 3.2% and 2.5% for the nine months ended September 30, 2018 and 2017, respectively.

Interest Income. Interest income increased 597.0% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 mainly due to short-term investments made during the three months ended September 30, 2018. Following the disposition of SaleCo, we are investing excess cash from the proceeds. The investments qualify as cash and cash equivalents under US GAAP.

Income Tax Expense. Our effective income tax rate fluctuates based on the mix of income earned in various tax jurisdictions, including U.S. state and foreign jurisdictions.

The effective income tax rate on a continuing operations basis for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 was 3530.79% and 37(16.04)%, respectively. The increase in the effective income tax rate ~~on a continuing basis~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 ~~and~~is ~~2017~~a ~~was~~direct ~~32.7%~~result ~~and~~of ~~29.0%,~~increased ~~respectively.~~earnings ~~Rates~~compared ~~between~~to ~~periods~~the ~~from~~corresponding ~~changes~~period ~~that~~in ~~reduced~~2018, when the UScompany ~~Federal~~had ~~Corporate~~incurred ~~Income~~a pre-tax ~~rate~~loss from ~~35.0%~~continuing tooperations 21of approximately $1.0%4 ~~that~~million. ~~became~~The effective ontax ~~January~~rate 1,is ~~2018.~~negative ~~Off-setting~~for the ~~benefit~~three ~~from~~months ~~the~~ended ~~Tax~~March ~~Reform~~31, ~~was~~2018 ~~the~~primarily ~~impact~~as of a ~~settlement~~result ~~associated~~of ~~with~~ the ~~finalization~~amounts ofrecorded ~~our~~as ~~IRS~~tax ~~audit~~expense for ~~the~~an ~~2014~~IRS ~~tax~~audit ~~year~~settlement ~~and~~estimate ~~the~~made ~~impact~~in of the ~~value~~period offor ~~vested restricted stock unit awards and exercised stock options in~~ the ~~prior~~2014 ~~year~~tax ~~period~~year.

28Income from discontinued operations, net of tax. Income from discontinued operations, net of tax decreased $13.9 million for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 due to the divestiture of SaleCo which was completed in the third quarter of 2018 (See Note 3 – Dispositions and Discontinued Operations to the notes to our unaudited consolidated financial statements).

Income from discontinued operations, net of tax. Income from discontinued operations, net of tax increased $61.2 million for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 mainly due to the gain on disposition of SaleCo of $60.2 million, net of tax (See Note 3 – Dispositions and Discontinued Operations to the notes to our unaudited consolidated financial statements). The current year also benefited from lower effective tax rates due to certain provision eligibilities. These increases were partially offset by a decrease relating to a full three months of SaleCo operating results in the operations included in the prior period compared to seven weeks in the current period.

Income from discontinued operations, net of tax increased $80.6 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 mainly relating to similar items discussed above.

Segment Results

As a result of the disposition of SaleCo, its operations have been reported in accordance with ASC Topic 205 as “discontinued operations” for all periods presented. Accordingly, we have eliminated the former Disputes, Forensics and Legal Technology segment from our segment results. See Note 3 – Dispositions and Discontinued Operations and Note 5 – Segment Information to the notes to our unaudited consolidated financial statements for further information. All other operations are considered “continuing operations.”

Our operating segments are the same as our reporting segments, and our performance is assessed and resources are allocated based on the following three reporting segments:

•

Healthcare

•

Energy

•

Financial Services Advisory and Compliance

The following information includes segment RBR, segment total revenues and segment operating profit all on a continuing operations basis. Certain unallocated expense amounts related to specific reporting segments have been excluded from the calculation of segment operating profit to be consistent with the information used by management to evaluate segment performance (see Note 5 — Segment Information to the notes to our unaudited consolidated financial statements). Segment operating profit represents total revenues less cost of services excluding long-term compensation expense attributable to client-service employees. Long-term compensation expense attributable to client-service employees includes share-based compensation expense and compensation expense related to retention incentives (see Note 9 — Supplemental Consolidated Balance Sheet Information to the notes ofto our unaudited consolidated financial statements). Key operating metric definitions are provided above.

In the first quarter of 2018, we moved our life sciences regulatory and compliance related business from the Disputes, Forensics and Legal Technology reporting segment into the Healthcare reporting segment. This change better aligns this business with our life sciences team as part of the Healthcare segment, as they have comparable client types and address similar business issues and industry dynamics. Prior year results have been adjusted to conform to current year presentation.

The information presented does not necessarily reflect the results of segment operations that would have occurred had the segments been stand-alone businesses.

Healthcare
											2018 over									2018 over
												2019 over
											2017									2017
												2018
	For the three months										Increase			For the nine months						Increase
		For the three month										Increase
	ended September 30,										(Decrease)			ended September 30,						(Decrease)
		ended March 31,										(Decrease)
	2018					2017					Percentage			2018			2017			Percentage
		2019					2018					Percentage
Revenues before reimbursements (in 000s)	$	$	~~101,799~~	119,003		$	$	~~100,348~~	90,149			~~1.4~~	32.0	$	~~283,542~~		$	~~292,353~~			~~(3.0~~	)
Total revenues (in 000s)	$	$	~~109,218~~	126,569		$	$	~~109,375~~	98,712			~~(0.1~~	)28.2	$	~~308,180~~		$	~~319,671~~			~~(3.6~~	)
Segment operating profit (in 000s)	$	$	~~28,687~~	36,755		$	$	~~31,665~~	20,390			~~(9.4~~	)80.3	$	~~76,452~~		$	~~89,067~~			~~(14.2~~	)
Key segment operating metrics:
Segment operating profit margin			~~28.2~~	30.9	%	%		~~31.6~~	22.6	%	%	~~(10.8~~	)36.7		~~27.0~~	%		~~30.5~~	%		~~(11.5~~	)
Average FTE - Consulting			~~624~~	655				~~671~~	648			~~(7.0~~	)1.1		~~631~~			~~658~~			~~(4.1~~	)
Average FTE - Technology, Data & Process			3,127					2,780				12.5			2,801			2,634			6.3
Average FTE - Managed Services				3,393					2,706				25.4
Average utilization rates based on 1,850 hours			68	76	%	%		73	71	%	%	~~(6.8~~	)7.0		70	%		74	%		~~(5.4~~	)
Average bill rate	$	$	~~272~~	283		$	$	~~282~~	263			~~(3.5~~	)7.6	$	~~264~~		$	~~280~~			~~(5.7~~	)

29The Healthcare segment provides strategic, performance improvement, and business process management solutions. Clients of this segment include healthcare providers, physician enterprises, payers, government agencies and life sciences companies. We help clients respond to market legislative changes such as the shift to an outcomes and value-based reimbursements model, ongoing industry consolidation and reorganization, Medicaid expansion, the implementation of a new electronic health records system and product planning and commercialization expertise.

~~The~~Three ~~Healthcare~~months ~~segment~~ended ~~provides~~March ~~consulting services and business process management services. Clients of this segment include healthcare providers~~31, ~~payers~~2019 ~~and~~compared ~~life sciences companies. We help clients respond~~ to ~~market~~corresponding ~~legislative~~period ~~changes~~in such as the shift to an outcomes and value-based reimbursements model, ongoing industry consolidation and reorganization, Medicaid expansion, the implementation of a new electronic health records system and we provide product planning and commercialization expertise. 2018

~~Three~~RBR for this segment increased 32.0% for the three months ended ~~September~~March 3031, ~~2018~~2019 compared to ~~corresponding~~the ~~period~~three months ended March 31, 2018. The segment experienced increases in ~~2017~~RBR resulting from higher demand and converted sales pipeline from consulting engagements and contributions from our managed services, including strong performance and event-based fees from HSS. Event-based fees were $8.1 million and $3.2 million for the three months ended March 31, 2019 and March 31, 2018, respectively.

~~RBR~~Average ~~for~~FTE ~~this~~– ~~segment~~Consulting increased 1.41% for the three months ended ~~September~~March 3031, ~~2018~~2019 compared to the three months ended ~~September~~March 3031, ~~2017.~~2018 ~~The~~due ~~segment~~to ~~experienced~~a ~~increases~~small group hire in ~~RBR~~January ~~resulting~~2019. ~~from~~Average ~~HSS,~~FTE – Managed Services increased 25.4% for the ~~newly~~three ~~formed~~months ~~joint~~ended ~~venture~~March ~~with~~31, ~~Baptist~~2019 ~~Health~~compared ~~South~~to ~~Florida~~the ~~and~~three ~~continued~~months ~~demand~~ended ~~for~~March ~~life~~31, ~~sciences~~2018 ~~engagements.~~mainly ~~These~~due ~~increases~~to ~~were~~the ~~partially~~formation ~~offset~~of byHSS. ~~lower~~Consulting ~~RBR~~utilization asincreased a7.0% ~~result~~for ofthe ~~fewer~~three ~~large~~months ~~Healthcare~~ended ~~consulting~~March ~~engagements~~31, ~~versus~~2019 ~~the~~compared ~~prior~~to ~~year~~the ~~and~~three ~~event-based~~months ~~fees~~ended ~~which~~March ~~were~~31, ~~$1.0~~2018 ~~million~~primarily ~~and~~due ~~$1.9~~to ~~million~~higher demand for ~~the~~consulting ~~three~~engagements. ~~months~~Average ~~ended~~bill ~~September~~rate 30increased 7.6% to $283, ~~2018~~mainly ~~and~~due ~~September~~to ~~30,~~a ~~2017,~~change ~~respectively~~in project mix.

Average FTE – Consulting decreased 7.0% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to planned reductions in headcount in the first quarter of 2018 and attrition in the period. Average FTE – Technology, Data & Process increased 12.5% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 mainly due to the joint venture. Utilization decreased 6.8% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to lower demand for consulting engagements discussed above. Average bill rate decreased 3.5% to $272, mainly due to a change in project mix. 25

For the three months ended ~~September~~March 3031, ~~2018~~2019 compared to the three months ended ~~September~~March 3031, ~~2017~~2018, segment operating profit ~~decreased $3.0 million~~ and segment operating profit margin ~~decreased~~increased 3$16.4 million and 8.3 percentage points, respectively, mainly due to ~~lower~~the higher demand for consulting ~~fees~~services ~~and~~as ~~start-up~~well ~~costs~~as ~~related~~growth toat HSS. In addition, severance expense for the three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 was ~~nil~~$0.1 million and $01.46 million, respectively.

Nine months ended September 30, 2018 compared to corresponding period in 2017

Energy
							2019 over
							2018
	For the three month						Increase
	ended March 31,						(Decrease)
	2019			2018			Percentage
Revenues before reimbursements (in 000s)	$	36,249		$	33,704			7.6
Total revenues (in 000s)	$	43,700		$	37,637			16.1
Segment operating profit (in 000s)	$	10,410		$	10,728			(3.0	)
Key segment operating metrics:
Segment operating profit margin		28.7	%		31.8	%		(9.7	)
Average FTE - Consulting		445			437			1.8
Average FTE - Managed Services		59			57			3.5
Average utilization rates based on 1,850 hours		68	%		68	%		-
Average bill rate	$	200		$	215			(7.0	)

~~RBR~~The ~~for this~~ Energy segment ~~decreased~~provides ~~3.0%~~full ~~for~~lifecycle ~~the~~solutions ~~nine~~that ~~months~~help ~~ended~~clients ~~September~~transform ~~30,~~their ~~2018~~businesses ~~compared~~in toa ~~the~~rapidly ~~nine~~changing ~~months~~energy ~~ended September 30~~environment, ~~2017,~~manage ~~mainly~~complexity ~~due~~and toaccelerate ~~fewer~~operational ~~large~~performance, ~~Healthcare~~meet ~~consulting~~compliance ~~engagements~~requirements, and ~~lower~~transform ~~event-based~~their ~~fees~~organizations ~~partially~~and ~~offset by increases similar to those mentioned in the three-month discussion above~~systems. ~~This~~ ~~decrease~~In ~~was~~addition, ~~partially~~we ~~offset~~provide bya ~~higher~~broad ~~event-based~~array ~~fees driven mainly by the adoption~~ of ~~Topic 606 on January 1~~benchmarking, ~~2018~~data ~~(See~~and ~~Note~~market 4research –capabilities ~~Revenue~~related ~~Recognition~~ to the ~~notes~~energy ~~to our unaudited consolidated financial statements)~~sector. ~~Event-based fees were $6.3 million and $3.5 million for the nine months ended September 30, 2018 and 2017, respectively.~~

30Three months ended March 31, 2019 compared to corresponding period in 2018

~~Average~~RBR ~~FTE – Consulting decreased 4.1%~~ for ~~the~~this ~~nine~~segment ~~months ended September 30, 2018 compared to the nine months ended September 30, 2017 and Average FTE – Technology, Data & Process~~ increased 67.36% for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2017. Utilization decreased 5.4% and average bill rate decreased 5.7% to $264 for the nine months ended September 30,~~ 2018 ~~compared to the nine months ended September 30~~. ~~Changes~~Increases towere ~~these~~seen ~~key~~across ~~operating metrics are~~ the ~~result~~segment ofas ~~factors~~demand ~~similar~~from toglobal ~~those~~commercial ~~discussed~~clients ~~above~~and ~~for~~government ~~the~~work ~~three~~remained ~~month period~~strong.

~~For~~Average ~~the~~FTE ~~nine~~– ~~months~~Consulting ~~ended~~increased ~~September~~1.8% ~~30,~~for ~~2018 compared to~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2017,~~2019 ~~segment~~compared ~~operating~~to ~~profit~~the ~~and~~three ~~segment~~months ~~operating~~ended ~~profit~~March ~~margin decreased $12.6 million and 3.5 percentage points~~31, ~~respectively.~~2018 ~~These~~due ~~decreases~~to ~~were~~hiring ~~attributable~~ to ~~lower~~meet ~~RBR~~future ~~and~~anticipated ~~higher strategic development costs~~demand, ~~increased~~partially ~~headcount~~offset ~~within~~by ~~our~~FTE ~~business~~transferred ~~process~~to ~~management services and~~ the ~~maintenance~~Centralized ofClient ~~resources~~Support ingroup. ~~consulting~~Utilization inremained ~~anticipation~~flat ~~of improving demand~~ for ~~those services. In addition~~ the ~~start-up~~three ofmonths ~~the~~ended ~~joint~~March ~~venture~~31, ~~has~~2019 ~~decreased~~compared ~~segment~~to ~~operating profit as anticipated. Severance expense for~~ the ~~nine~~three months ended ~~September~~March 3031, 2018. ~~and~~Average ~~2017~~bill ~~was~~rate $1decreased 7.90% ~~million~~to ~~and~~ $~~1.4 million~~200, ~~respectively,~~mainly due to ~~Client~~project ~~Service-FTE reductions taken towards the end of the first quarter 2018~~mix.

Energy
							2018 over									2018 over
							2017									2017
	For the three months ended						Increase			For the nine months						Increase
	ended September 30,						(Decrease)			ended September 30,						(Decrease)
	2018			2017			Percentage			2018			2017			Percentage
Revenues before reimbursements (in 000s)	$	34,591		$	29,597			16.9		$	104,939		$	93,838			11.8
Total revenues (in 000s)	$	40,530		$	35,144			15.3		$	122,350		$	109,410			11.8
Segment operating profit (in 000s)	$	10,857		$	8,077			34.4		$	34,270		$	25,472			34.5
Key segment operating metrics:
Segment operating profit margin		31.4	%		27.3	%		15.0			32.7	%		27.1	%		20.7
Average FTE - Consulting		462			443			4.3			445			457			(2.6	)
Average FTE - Technology, Data & Process		56			57			(1.8	)		56			59			(5.1	)
Average utilization rates based on 1,850 hours		64	%		67	%		(4.5	)		68	%		67	%		1.5
Average bill rate	$	204		$	199			2.5		$	214		$	205			4.4

For the three months ended March 31, 2019 compared to the three months ended March 31, 2018, segment operating profit and segment operating profit margin decreased $0.3 million and 3.1 percentage points, respectively, mainly due to the impact of an all-hands segment meeting in the current year period.

The Energy segment provides advisory services to utilities, governmental agencies, manufacturers and investors. We provide our clients with advisory solutions in business strategy and planning, distributed energy resources and renewables, energy efficiency and demand response, sustainability, and grid modernization. In addition, we provide a broad array of benchmarking and research services.

Financial Services Advisory and Compliance
							2019 over
							2018
	For the three months ended						Increase
	ended March 31,						(Decrease)
	2019			2018			Percentage
Revenues before reimbursements (in 000s)	$	30,877		$	37,592			(17.9	)
Total revenues (in 000s)	$	32,593		$	41,719			(21.9	)
Segment operating profit (in 000s)	$	5,231		$	14,836			(64.7	)
Key segment operating metrics:
Segment operating profit margin		16.9	%		39.5	%		(57.2	)
Average FTE - Consulting		303			287			5.6
Average FTE - Managed Services		246			111			121.6
Average utilization rates based on 1,850 hours		63	%		84	%		(25.0	)
Average bill rate	$	274		$	302			(9.3	)

~~Three months ended September 30, 2018 compared to corresponding period in 2017~~26

~~RBR~~The ~~for~~Financial ~~this~~Services ~~segment~~Advisory ~~increased~~and ~~16.9%~~Compliance ~~for~~segment ~~the~~provides ~~three~~strategic, ~~months~~operational, ~~ended~~risk ~~September 30~~management, ~~2018~~investigative ~~compared~~and compliance advisory services to ~~the~~clients ~~three~~primarily ~~months~~in ~~ended~~the ~~September~~highly-regulated 30financial services industry, ~~2017. Increases~~including ~~were~~major ~~seen~~financial ~~across~~and ~~the~~insurance institutions. This segment asalso ~~demand~~provides ~~for~~anti-corruption ~~global~~solutions ~~commercial~~and ~~client~~anti-money ~~engagements~~laundering consulting, ~~government~~litigation ~~work~~support and ~~market~~tax ~~research~~compliance ~~remained~~services ~~strong~~to clients in a broad variety of industries.

~~Average~~Three ~~FTE – Consulting increased 4.3% for the three~~ months ended ~~September~~March 3031, ~~2018~~2019 compared to ~~the~~corresponding ~~three~~period ~~months~~in ~~ended September 30, 2017 due to hiring to meet future anticipated demand. Average FTE – Technology, Data & Process remained flat for the three months ended September 30,~~ 2018 compared to the three months ended September 30, 2017. Utilization decreased 4.5% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. Average bill rate increased 2.5% to $204, mainly due to project mix and annual increases.

~~For~~RBR for this segment decreased 17.9% for the three months ended ~~September~~March 3031, ~~2018~~2019 compared to the three months ended ~~September~~March 3031, ~~2017~~2018. The decrease in RBR was primarily due to a faster-than-expected wind-down of a large monitorship engagement, ~~segment~~simultaneous ~~operating~~curtailed ~~profit~~spending from a number of larger clients and ~~segment~~continued ~~operating~~start-up ~~profit~~delays ~~margin~~on ~~increased~~certain ~~$2.8~~new ~~million~~engagements ~~and~~during ~~4.1~~the ~~percentage~~first ~~points,~~quarter ~~respectively~~of 2019. Segment ~~These~~leadership ~~results~~continues ~~were~~to ~~attributable~~be tofocused ~~the~~on ~~RBR~~conversion ~~growth~~of pipeline into backlog of new engagements.

~~Nine~~Average FTE – Consulting increased 5.6% for the three months ended ~~September~~March 3031, 2019 compared to the three months ended March 31, 2018 due to hiring in the prior year. Average FTE – Managed Services increased 121.6% for the three months ended March 31, 2019 compared to ~~corresponding~~the ~~period~~three months ended March 31, 2018 due to hiring for a new managed services engagement to outsource a client’s anti-money laundering and transaction monitoring capabilities. Utilization decreased 25.0% for the three months ended March 31, 2019 compared to the three months ended March 31, 2018, mainly due to the particularly high level in ~~2017~~the prior year as well as the lower volume of work in the first quarter of 2019 discussed above. Average bill rate decreased 9.3% to $274 for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 due to project mix.

~~RBR~~For ~~for this segment increased 11.8% for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, ~~mainly~~segment ~~due~~operating toprofit ~~organic~~decreased ~~growth~~$9.6 ~~across~~million ~~the~~and segment ~~partially~~operating ~~offset~~profit margin decreased 22.6 percentage points driven by lower ~~government~~RBR ~~related~~and ~~work~~higher ~~for~~wages ~~the~~and ~~year~~benefits relating to ~~date~~the ~~2018~~increased ~~period~~FTE levels and costs of investments for future growth, including senior hires.

Average FTE – Consulting decreased 2.6% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to actions taken during 2017 and Average FTE –Technology, Data & Process decreased 5.1% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Utilization increased 1.5% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to increased demand. Average bill rate increased 4.4% to $214, mainly due to annual increases and project mix. Changes to these key operating metrics are the result of factors similar to those discussed above for the three month period.

For the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, segment operating profit and segment operating profit margin increased $8.8 million and 5.6 percentage points, respectively. These results were attributable to the RBR growth as well as cost saving measures taken during 2017.

Financial Services Advisory and Compliance
							2018 over									2018 over
							2017									2017
	For the three months ended						Increase			For the nine months						Increase
	ended September 30,						(Decrease)			ended September 30,						(Decrease)
	2018			2017			Percentage			2018			2017			Percentage
Revenues before reimbursements (in 000s)	$	34,996		$	34,578			1.2		$	109,574		$	94,116			16.4
Total revenues (in 000s)	$	37,870		$	40,993			(7.6	)	$	119,869		$	107,952			11.0
Segment operating profit (in 000s)	$	11,482		$	15,034			(23.6	)	$	39,705		$	37,389			6.2
Key segment operating metrics:
Segment operating profit margin		32.8	%		43.5	%		(24.6	)		36.2	%		39.7	%		(8.8	)
Average FTE - Consulting		302			264			14.4			296			268			10.4
Average FTE - Technology, Data & Process		173			93			86.0			133			91			46.2
Average utilization rates based on 1,850 hours		73	%		84	%		(13.1	)		80	%		79	%		1.3
Average bill rate	$	284		$	311			(8.7	)	$	289		$	295			(2.0	)

The Financial Services Advisory and Compliance segment provides strategic, operational, risk management, investigative and compliance advisory services to clients primarily in the highly-regulated financial services industry, including major financial and insurance institutions. This segment also provides anti-corruption solutions and anti-money laundering consulting, litigation support and tax compliance to clients in a broad variety of industries.

Three months ended September 30, 2018 compared to corresponding period in 2017

RBR on a continuing basis (excluding transaction advisory services) for this segment increased 1.2% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017, reflecting continued strength in our key markets.

Average FTE – Consulting increased 14.4% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to hiring to meet increased demand and expand certain areas of expertise. Average FTE – Technology, Data & Process increased 86.0% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to hiring for a new managed services engagement to outsource a client’s anti-money laundering and transaction monitoring capabilities. Utilization decreased 13.1% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017, mainly due to the unusually high level in the prior year as well as hiring to meet current and anticipated demand. Average bill rate decreased 8.7% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to project mix.

For the three months ended September 30, 2018 compared to the three months ended September 30, 2017, segment operating profit decreased $3.6 million driven by higher wages and benefits relating to the increased FTE levels and costs of additional temporary project-based resources that are not included in the FTE metric. Segment operating profit margin decreased 10.7 percentage points as costs mentioned above outpaced RBR growth.

Nine months ended September 30, 2018 compared to corresponding period in 2017

RBR for this segment increased 16.4% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. The increase in RBR was primarily due to increased demand for financial crime, sanctions and operational efficiency engagements with our larger financial services clients.

Average FTE – Consulting increased 10.4% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Average FTE – Technology, Data & Process increased 46.2% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Changes to these key operating metrics are the result of factors similar to those discussed above for the three month period. Utilization increased 1.3% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to higher demand in the first half of the year partially offset by recent hiring. Average bill rate decreased 2.0% to $289.

For the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, segment operating profit increased $2.3 million due to higher RBR and segment operating profit margin decreased 3.5 percentage points for reasons similar to those discussed above.

Liquidity and Capital Resources

Our cash flow activities were as follows (in thousands) for the ~~nine~~three months ended ~~September~~March 3031,

		2018		2017
		2019		2018
Net cash provided by operating activities	$	43,389		$	31,819
Net cash used in operating activities	$	(31,139	)	$	(34,847	)
Net cash provided by (used in) investing activities	$	414,789		$	(31,420	)
Net cash used in investing activities	$	(9,007	)	$	(5,750	)
Net cash used in financing activities	$	(188,659	)	$	(316	)
Net cash (used in) provided by financing activities	$	(59,537	)	$	38,818

AsGenerally, aour ~~result~~primary ofsources ~~the disposition~~ of ~~SaleCo~~cash ~~that~~are ~~was~~cash ~~completed~~flows onfrom ~~August~~operations ~~24,~~and ~~2018~~borrowings weunder ~~realized~~our ~~$426~~credit facility.1 ~~million~~First ofquarter ~~proceeds~~operating ~~net~~cash ofrequirements ~~transaction~~are ~~costs~~generally ~~which~~higher ~~excluded~~due ~~approximately $49.0 million in cash taxes~~ to bepayment ~~paid.~~of ~~During~~our ~~the~~annual ~~three~~incentive ~~months~~bonuses ~~ended~~while ~~September~~subsequent ~~30,~~quarters’ ~~2018,~~operating wecash ~~paid~~requirements ~~off~~are ~~our~~generally ~~debt, paid a dividend and increased our share repurchase activity~~lower. ~~Cash~~Our ~~and~~ cash equivalents asare ofprimarily ~~September~~limited ~~30,~~to ~~2018,~~money ~~were~~market ~~$277.4~~accounts ~~million,~~or ~~which~~‘A’ werated ~~expect to use for additional share repurchases~~securities, ~~dividends~~with ~~and~~maturity ~~investments~~dates inof ~~our~~90 ~~key~~days ~~growth~~or ~~markets~~less. ~~See Note 3 – Dispositions and Discontinued Operations and Note 11 – Bank Debt to the notes to our unaudited financial statements.~~

~~Generally,~~We ~~our~~calculate ~~primary~~accounts ~~sources~~receivable ofdays ~~cash~~sales ~~include~~outstanding ~~cash~~(“DSO”) ~~flows~~by ~~from~~dividing ~~operations~~the ~~and~~accounts ~~borrowings~~receivable ~~under~~balance, ~~our~~net ~~credit~~of ~~facility.~~reserves ~~First~~and ~~quarter~~deferred ~~operating~~revenue ~~cash~~credits, ~~requirements~~at ~~are~~the ~~generally~~end ~~higher due to payment~~ of ~~our~~the ~~annual~~quarter, ~~incentive~~by ~~bonuses~~daily ~~while~~revenues. ~~subsequent~~Daily ~~quarters’~~revenues ~~operating~~are ~~cash~~calculated ~~requirements~~by ~~are~~taking ~~generally~~quarterly ~~lower.~~revenue ~~Our~~divided ~~cash~~by ~~equivalents~~90 days, ~~are~~approximately ~~primarily~~equal ~~limited~~ to ~~money~~the ~~market~~number ~~accounts~~of ordays ~~‘A’~~in ~~rated~~a ~~securities,~~quarter. ~~with~~DSO ~~maturity~~was ~~dates~~73 ofdays 90at ~~days~~March or31, ~~less~~2019.

We calculate accounts receivable days sales outstanding (“DSO”) by dividing the accounts receivable, net and contract assets balance, net of reserves and deferred revenue credits, at the end of the quarter by daily revenues. Daily revenues are calculated by taking quarterly revenue divided by 90 days, approximately equal to the number of days in a quarter. DSO was 75 days at September 30, 2018, compared to 73 days at December 31, 2017.

Operating Activities

Net cash ~~provided~~used byin operating activities was $4331.41 million and $3134.8 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, respectively. ~~The~~Cash used by ~~change~~operating activities ~~for~~during the ~~nine~~first ~~months~~quarter ~~ended~~2019 ~~September~~decreased ~~30,~~compared ~~2018~~to ~~compared~~the prior year’s comparable period due to a reduction in the ~~nine~~amounts ~~months~~invested ~~ended~~in ~~September~~working 30capital, ~~2017~~which was ~~primarily~~partially ~~due~~offset toby ~~higher~~lower ~~cash~~net income ~~and~~in ~~lower~~the ~~working~~current ~~capital~~year ~~requirements~~period.

Investing Activities

Net cash ~~provided~~used by investing activities was $~~414~~9.80 million ~~for the nine months ended September 30, 2018~~ and ~~net cash used by investing activities was~~ $315.48 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2017.~~2019 ~~For~~and ~~the nine months ended September 30,~~ 2018, ~~cash provided by investing activities was due to net proceeds received as a result of the divestiture of SaleCo partially offset by capital expenditures of $11~~respectively.3 ~~million. Capital~~The ~~expenditures~~increase ~~for the nine months ended September 30, 2017~~ was ~~higher~~primarily ~~than the same period in 2018~~ due to ~~the~~acquisition ~~build-out~~related ofactivities ~~our~~during ~~new~~the ~~corporate~~current ~~headquarters~~year’s ~~in Chicago in 2017~~period.

Financing Activities

Net cash used in financing activities was $~~188~~59.75 million ~~and $0.3 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 ~~and~~compared ~~September~~to ~~30,~~cash ~~2017,~~provided ~~respectively~~by financing activities of $38.8 ~~During~~million for the ~~nine~~three months ended ~~September~~March 3031, 2018,. ~~using~~The ~~the~~three ~~proceeds~~months ~~from~~ended ~~the~~March ~~divestiture of SaleCo~~31, we2018 ~~paid~~include ~~down~~borrowings ~~our~~due ~~bank debt~~ to ~~zero~~bonus payments, ~~paid~~while aduring ~~cash dividend of $2.2 million and increased our share repurchases from~~ the ~~prior~~three ~~year by $27.4 million for a total of $55.5 million. During the nine~~ months ended ~~September~~March 3031, ~~2017,~~2019 we ~~had~~used aexcess ~~net~~cash ~~borrowings~~for ofsuch purposes.

3327

Common stock purchases using excess cash were $3942.31 million ~~mainly~~higher for the three months ended March 31, 2019 compared to ~~fund~~the ~~our~~three ~~capital~~months ~~expenditures~~ended March 31, ~~and~~2018. The ~~re-purchased~~three months ended March 31, 2019 include a $282.0 million ofdividend ~~our shares~~payment, as ~~part~~we ofstarted ~~our~~paying ~~share~~dividends ~~repurchase~~in ~~program~~the third quarter of 2018.

Debt, Commitments and Capital

For further information regarding our debt, see Note 1112 – Bank Debt to the notes to our unaudited consolidated financial statements. For further information regarding our lease commitments, see Note 11 – Leases to the notes to our unaudited consolidated financial statements.

AtSince ~~September~~the 30inception of our share repurchase program through March 31, ~~2018~~2019, we ~~had~~have ~~total~~repurchased ~~contractual~~an ~~obligations~~aggregate of 18,165,750 shares of our common stock for approximately $~~144~~335.52 million. ~~The~~At ~~following~~March ~~table~~31, ~~shows~~2019, we had approximately $24.7 million remaining for share repurchases under the ~~components~~board ofauthorization effective May 7, 2018. On April 18, 2019, our ~~significant~~board ~~commitments~~of atdirectors ~~September~~amended 30the existing program, ~~2018~~allowing byfor the ~~scheduled~~repurchase ~~years~~of up to $175.0 million of ~~payments~~our ~~(in~~common ~~thousands):~~stock effective as of May 1, 2019 through December 31, 2021. See Part II, Item 2 of this report for additional information on the share repurchases made during the three months ended March 31, 2019.

Contractual Obligations	Total		2018		2019 to 2020		2021 to 2022		Thereafter
Deferred acquisition liabilities (a)	$	3,620	$	1,593	$	2,027	$	-	$	-
Lease commitments (b) (c)		140,881		7,673		51,697		35,221		46,290
Total contractual obligations	$	144,501	$	9,266	$	53,724	$	35,221	$	46,290

(a) At September 30, 2018, we had $3.6 million in liabilities relating to contingent and definitive acquisition liability obligations which were recorded at estimated fair value and discounted to present value. Settlement of certain obligations is contingent upon certain acquired businesses meeting performance targets. Assuming each of these acquired businesses reaches its maximum target, our maximum deferred contingent acquisition liability would be $6.9 million at September 30, 2018.

(b) Includes amounts relating to discontinued operations.

Since inception of our share repurchase program through September 30, 2018, we have repurchased an aggregate of 13,347,364 shares of our common stock for approximately $224.6 million. At September 30, 2018, we had approximately $135.4 million remaining for share repurchases under the board authorization effective May 1, 2017. On April 19. 2017, our board of directors authorized an increase in our share repurchase authorization to $100.0 million for the 32-month period ending December 31, 2019 and on May 7, 2018, our board again increased it to a total of $175.0 million through December 31, 2020. See Part II, Item 2 of this report for additional information on the share repurchases made during the three months ended September 30, 2018.

We believe that our current cash and cash equivalents, future cash flows from operations and borrowings under our credit facility will provide adequate liquidity to fund anticipated short-term and long-term operating activities. However, in the event we make significant cash expenditures in the future for major acquisitions or other unanticipated activities, we may require more liquidity than is currently available to us under our credit facility and may need to raise additional funds through debt or equity financing, as appropriate. In addition, if our lenders are not able to fund their commitments due to disruptions in the financial markets or otherwise, our liquidity could be negatively impacted.

Off-balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future impact on our financial condition or results of operations.

Critical Accounting Policies

OnThere ~~January 1, 2018, we adopted Topic 606, see Note 4 – Revenue Recognition to the notes to our financial statements for updates to our revenue recognition policy. Other than the above, there~~ have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in our ~~2017~~2018 Form 10-K.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

At ~~September~~March 3031, ~~2018~~2019, our cash equivalents were primarily limited to money market accounts or ‘A’ rated securities, with maturity dates of 90 days or less. These financial instruments are subject to interest rate risk and will decline in value if interest rates rise. Because of the short periods to maturity of these instruments, an increase in interest rates would not have a material effect on our financial position or results of operations.

We operate in various foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. At ~~September~~March 3031, ~~2018~~2019, we had net assets of approximately $1516.35 million with a functional currency of the Canadian Dollar and $11.0 million with a functional currency of the Euro and $3.7 million with a functional currency of the U.K. Pound Sterling related to our non-U.S. operations. At March 31, 2019, we had net assets denominated in non-functional currencies of approximately $3.7 million. As such, a ten percent change in the value of the local currencies would have resulted in a $0.4 million foreign currency gain or loss in our results of operations. Excess cash balances held outside the U.S. are immaterial to our overall financial position, and therefore, we have limited exposure to repatriating funds back to the U.S.

Dollar and $15.0 million with a functional currency of the Euro and net liabilities of approximately $0.3 million with a functional currency of the U.K. Pound Sterling related to our non-U.S. operations. At September 30, 2018, we had net liabilities denominated in non-functional currencies of approximately $12.7 million. As such, a ten percent change in the value of the local currencies would have resulted in a $1.3 million foreign currency gain or loss in our results of operations. Excess cash balances held outside the U.S. are immaterial to our overall financial position, and therefore, we have limited exposure to repatriating funds back to the U.S.

Item 4.

Controls and Procedures.

(1)	Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time frames specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

financial officer, as appropriate, to allow timely decisions regarding required disclosure. Any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

An evaluation of the effectiveness of the design and operation of the disclosure controls and procedures, as of the end of the period covered by this report, was made under the supervision and with the participation of our management including our principal executive officer and principal financial officer. Based upon this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective.

We ~~have~~implemented ~~revised~~internal ~~certain~~ controls, ~~including~~to ~~those~~ensure ~~over~~we ~~dispositions~~adequately ~~for~~evaluated aour ~~more~~contracts ~~significant~~and ~~transaction.~~properly Inassessed ~~addition,~~the weimpact ~~have~~of ~~added~~Topic ~~controls~~842 to facilitate the adoption on January 1, 2019, as awell ~~result~~as ofour ~~entering~~on-going ~~into~~accounting. There ~~the~~have ~~Transition~~been ~~Services~~no ~~Agreement~~other ~~with~~significant ~~Ankura~~changes ~~which~~in ~~requires~~our usinternal tocontrol ~~maintain~~over ~~books~~financial ~~and~~reporting ~~records~~during the first quarter of ~~two~~2019 ~~separate~~that ~~companies~~have onmaterially aaffected, ~~single~~or ~~enterprise~~are ~~resources~~reasonably ~~planning~~likely ~~system~~to materially affect, our internal control over financial reporting.

3529

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings.

We are a party to a variety of legal proceedings that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, we believe that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on our results of operations or financial condition.

Item 1A.

Risk Factors.

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in our ~~2017~~2018 Form 10-K~~, other than provided below~~.

Our divestiture of SaleCo requires us to continue providing post-divestiture transition services and support, which may cause us to incur unanticipated costs and liabilities and adversely affect our business and results of operations.

Our divestiture of SaleCo involves a number of risks, including, among other things, certain indemnification risks and risks associated with the provision of transitional services. We have agreed to provide certain transition services to Ankura, such as technological support, services and leased space. In addition, Ankura will provide certain systems, services and leased space to us during the transition period. There are risks in providing and transitioning away from shared services, as they may incur unanticipated costs and liabilities, may divert our management’s and employees’ attention and may adversely affect our continuing business operations. This transition services agreement with Ankura may also lead to disputes over rights to certain shared property and over the allocation of costs and revenues for products and operations in connection with the transition services agreement. In addition, there are increased opportunities for errors inherent in maintaining the books and records of two separate unrelated companies on a single enterprise resources planning system.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

The following table sets forth repurchases of our common stock during the ~~third~~first quarter of ~~2018~~2019:

					Total Number of		Approximate
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (a)
					Shares Purchased as		Dollar Value of
Jan 1 - 31, 2019		756,931	$	24.75		756,931	$	59,416,340
					Part of Publicly		Shares That May Yet be
Feb 1 - 28, 2019		600,941	$	26.16		600,941	$	43,695,844
	Total Number of		Average Price		Announced Plans or		Purchased Under the Plans or
Mar 1 - 31, 2019		958,998	$	19.85		958,998	$	24,660,140
Period	Shares Purchased		Paid per Share		Programs		Programs(a)
Total		2,316,870	$	23.09		2,316,870	$	24,660,140
Jul 1 - 31, 2018		117,570	$	21.88		117,570	$	169,390,233
Aug 1 - 31, 2018		702,712	$	24.07		702,712	$	152,474,129
Sep 1 - 30, 2018		720,058	$	23.77		720,058	$	135,360,336
Total		1,540,340	$	23.76		1,540,340	$	135,360,336

(a) On ~~May~~April 1018, ~~2018~~2019, our board of directors ~~increased~~amended the ~~amount~~existing ~~available~~program, ~~under~~allowing for the ~~Company’s stock~~ repurchase ~~authorization~~of up to $175.0 million ~~and~~of ~~extended~~our ~~the~~common ~~authorization~~stock effective as of May 1, 2019 through December 31, ~~2020~~2021.

Item 6.

Exhibits.

The following exhibits are filed with this report:

Exhibit No.		Description
2.1		Amendment No. 1 to Equity Purchase Agreement, dated as of August 22, 2018, by and among the Company, Ankura and Ankura Consulting Worldwide, Inc.(incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed with the SEC on August 30, 2018).
2.2		Amendment No. 2 to Equity Purchase Agreement, dated as of August 23, 2018, by and among the Company, Ankura and Ankura Consulting Worldwide, Inc.(incorporated by reference to Exhibit 2.3 to our Current Report on Form 8-K filed with the SEC on August 30, 2018) (pursuant to Item 601(b)(2) of Regulation S-K, certain exhibits, schedules and similar attachments have been omitted; exhibits, schedules and other attachments will be provided to the Securities and Exchange Commission upon request).
31.1		Certification of Chief Executive Officer required by Rule 13a-14 of the Securities Exchange Act.
31.2		Certification of Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101		Interactive Data File.

3730

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Navigant Consulting, Inc.

By:		/s/ JULIE M. HOWARD
	Julie M. Howard
	Chairman and Chief Executive Officer

By:		/s/ STEPHEN R. LIEBERMAN
	Stephen R. Lieberman
	Executive Vice President and Chief Financial Officer

Date: ~~November~~April 926, ~~2018~~2019

3831

For the Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

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