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Table of Contents



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 30, 2020
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-50976 
HURON CONSULTING GROUP INC.
(Exact name of registrant as specified in its charter)
 
Delaware 01-0666114
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer
Identification Number)
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices)
(Zip Code)
(312) 583-8700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareHURNNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting 
Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of October 26, 2020, 22,871,243 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.


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Huron Consulting Group Inc.
HURON CONSULTING GROUP INC.
INDEX
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Table of Contents



PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited) 
September 30,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents$74,745 $11,604 
Receivables from clients, net of allowances of $8,520 and $8,907, respectively94,644 116,571 
Unbilled services, net of allowances of $2,734 and $2,994, respectively78,346 79,937 
Income tax receivable244 2,376 
Prepaid expenses and other current assets11,853 14,248 
Total current assets259,832 224,736 
Property and equipment, net34,879 38,413 
Deferred income taxes, net11,425 1,145 
Long-term investments66,122 54,541 
Operating lease right-of-use assets50,499 54,954 
Other non-current assets58,944 52,177 
Intangible assets, net22,250 31,625 
Goodwill586,730 646,680 
Total assets$1,090,681 $1,104,271 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$4,838 $7,944 
Accrued expenses and other current liabilities23,646 18,554 
Accrued payroll and related benefits105,276 141,605 
Current maturities of long-term debt540 529 
Current maturities of operating lease liabilities9,058 7,469 
Deferred revenues31,768 28,443 
Total current liabilities175,126 204,544 
Non-current liabilities:
Deferred compensation and other liabilities44,699 28,635 
Long-term debt, net of current portion250,917 208,324 
Operating lease liabilities, net of current portion64,318 69,233 
Deferred income taxes, net555 8,070 
Total non-current liabilities360,489 314,262 
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,444,128 and 25,144,764 shares issued at September 30, 2020 and December 31, 2019, respectively247 247 
Treasury stock, at cost, 2,571,266 and 2,425,430 shares at September 30, 2020 and December 31, 2019, respectively(129,438)(128,348)
Additional paid-in capital454,153 460,781 
Retained earnings220,146 237,849 
Accumulated other comprehensive income9,958 14,936 
Total stockholders’ equity555,066 585,465 
Total liabilities and stockholders’ equity$1,090,681 $1,104,271 
The accompanying notes are an integral part of the consolidated financial statements.
1

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HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited) 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Revenues and reimbursable expenses:
Revenues$205,304 $219,289 $645,780 $644,488 
Reimbursable expenses2,860 23,636 25,133 65,787 
Total revenues and reimbursable expenses208,164 242,925 670,913 710,275 
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs145,459 143,034 451,221 422,442 
Amortization of intangible assets and software development costs1,370 1,162 4,005 3,450 
Reimbursable expenses2,840 23,571 25,095 65,897 
Total direct costs and reimbursable expenses149,669 167,767 480,321 491,789 
Operating expenses and other losses (gains), net
Selling, general and administrative expenses38,561 48,123 126,864 151,409 
Restructuring charges59 127 1,777 2,156 
Litigation and other gains (630)(150)(1,571)
Depreciation and amortization6,176 6,962 18,483 21,285 
Goodwill impairment charges  59,816  
Total operating expenses and other losses (gains), net44,796 54,582 206,790 173,279 
Operating income (loss)13,699 20,576 (16,198)45,207 
Other income (expense), net:
Interest expense, net of interest income(2,259)(4,374)(7,516)(13,156)
Other income (expense), net2,035 (82)687 2,830 
Total other income (expense), net(224)(4,456)(6,829)(10,326)
Income (loss) from continuing operations before taxes13,475 16,120 (23,027)34,881 
Income tax expense (benefit)2,388 2,414 (5,413)7,256 
Net income (loss) from continuing operations11,087 13,706 (17,614)27,625 
Loss from discontinued operations, net of tax(29)(52)(89)(195)
Net income (loss)$11,058 $13,654 $(17,703)$27,430 
Net earnings (loss) per basic share:
Net income (loss) from continuing operations$0.50 $0.62 $(0.81)$1.26 
Loss from discontinued operations, net of tax   (0.01)
Net income (loss)$0.50 $0.62 $(0.81)$1.25 
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations$0.50 $0.61 $(0.81)$1.23 
Loss from discontinued operations, net of tax   (0.01)
Net income (loss)$0.50 $0.61 $(0.81)$1.22 
Weighted average shares used in calculating earnings (loss) per share:
Basic21,905 22,052 21,868 21,973 
Diluted22,175 22,561 21,868 22,425 
Comprehensive income:
Net income (loss)$11,058 $13,654 $(17,703)$27,430 
Foreign currency translation adjustments, net of tax381 (630)(294)(673)
Unrealized gain (loss) on investment, net of tax4,885 1,168 (1,051)7,740 
Unrealized loss on cash flow hedging instruments, net of tax(243)(149)(3,633)(998)
Other comprehensive income (loss)5,023 389 (4,978)6,069 
Comprehensive income (loss)$16,081 $14,043 $(22,681)$33,499 
The accompanying notes are an integral part of the consolidated financial statements.
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HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
(Unaudited)
Three Months Ended September 30,
Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income
Stockholders’
Equity
SharesAmountSharesAmount
Balance at June 30, 202024,586,236 $246 (2,786,798)$(128,646)$450,391 $209,088 $4,935 $536,014 
Comprehensive income11,058 5,023 16,081 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations51,860 1 (4,130)(212)211  
Exercise of stock options6,800  179 179 
Share-based compensation3,372 3,372 
Shares redeemed for employee tax withholdings(12,468)(580)(580)
Balance at September 30, 202024,644,896 $247 (2,803,396)$(129,438)$454,153 $220,146 $9,958 $555,066 
Balance at June 30, 201924,711,193 $247 (2,742,826)$(127,133)$463,190 $209,882 $22,175 $568,361 
Comprehensive income13,654 389 14,043 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations58,164 1 (3,741)(169)168  
Exercise of stock options10,000  235 235 
Share-based compensation5,664 5,664 
Shares redeemed for employee tax withholdings(12,657)(746)(746)
Balance at September 30, 201924,779,357 $248 (2,759,224)$(128,048)$469,257 $223,536 $22,564 $587,557 
Nine Months Ended September 30,
Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income
Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 201924,603,308 $247 (2,763,302)$(128,348)$460,781 $237,849 $14,936 $585,465 
Comprehensive income(17,703)(4,978)(22,681)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations321,986 3 94,180 6,707 (6,710) 
Exercise of stock options33,600  825 825 
Share-based compensation20,135 20,135 
Shares redeemed for employee tax withholdings(134,274)(7,797)(7,797)
Share repurchases(313,998)(3)(20,878)(20,881)
Balance at September 30, 202024,644,896 $247 (2,803,396)$(129,438)$454,153 $220,146 $9,958 $555,066 
Balance at December 31, 201824,418,252 $244 (2,671,962)$(124,794)$452,573 $196,106 $16,495 $540,624 
Comprehensive income27,430 6,069 33,499 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations331,105 4 21,433 1,952 (1,956) 
Exercise of stock options30,000  703 703 
Share-based compensation17,937 17,937 
Shares redeemed for employee tax withholdings(108,695)(5,206)(5,206)
Balance at September 30, 201924,779,357 $248 (2,759,224)$(128,048)$469,257 $223,536 $22,564 $587,557 
The accompanying notes are an integral part of the consolidated financial statements.
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HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
20202019
Cash flows from operating activities:
Net income (loss)$(17,703)$27,430 
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization22,511 25,410 
Non-cash lease expense5,844 6,413 
Lease impairment charge 805 
Share-based compensation18,559 18,094 
Amortization of debt discount and issuance costs595 8,066 
Goodwill impairment charges59,816  
Allowances for doubtful accounts539 191 
Deferred income taxes(16,125)(262)
Loss on sale of business102  
Change in fair value of contingent consideration liabilities (1,506)
Changes in operating assets and liabilities, net of divestiture:
(Increase) decrease in receivables from clients, net23,493 (6,817)
(Increase) decrease in unbilled services, net1,597 (30,163)
(Increase) decrease in current income tax receivable / payable, net9,455 10,561 
(Increase) decrease in other assets(3,426)(4,160)
Increase (decrease) in accounts payable and other liabilities(5,272)(3,565)
Increase (decrease) in accrued payroll and related benefits(25,290)(1,850)
Increase (decrease) in deferred revenues3,290 3,098 
Net cash provided by operating activities77,985 51,745 
Cash flows from investing activities:
Purchases of property and equipment, net(5,731)(10,024)
Purchases of investment securities(13,000) 
Investment in life insurance policies(2,026)(4,434)
Purchases of businesses(801)(2,500)
Capitalization of internally developed software costs(6,830)(7,462)
Net cash used in investing activities(28,388)(24,420)
Cash flows from financing activities:
Proceeds from exercises of stock options825 703 
Shares redeemed for employee tax withholdings(7,797)(5,206)
Share repurchases(22,115) 
Proceeds from bank borrowings283,000 105,500 
Repayments of bank borrowings(240,396)(105,885)
Payments for debt issuance costs (1,498)
Payments of contingent consideration liabilities (4,674)
Net cash provided by (used in) financing activities13,517 (11,060)
Effect of exchange rate changes on cash27 38 
Net increase in cash and cash equivalents63,141 16,303 
Cash and cash equivalents at beginning of the period11,604 33,107 
Cash and cash equivalents at end of the period$74,745 $49,410 
Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:
Property and equipment expenditures and capitalized software included in accounts payable, accrued expenses and accrued payroll and related benefits$2,049 $3,085 
Operating lease right-of-use asset obtained in exchange for operating lease liability$1,456 $3,628 
The accompanying notes are an integral part of the consolidated financial statements.
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HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

1. Description of Business
Huron is a global consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, Huron helps clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, Huron creates sustainable results for the organizations it serves.
2. Basis of Presentation and Significant Accounting Policies
The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three and nine months ended September 30, 2020 and 2019. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.
Preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and related disclosures. The business and economic uncertainty resulting from the coronavirus (COVID-19) pandemic has made such estimates and assumptions more difficult to predict. Accordingly, actual results and outcomes could differ from those estimates.
In the third quarter of 2020, we identified an error on our previously reported consolidated balance sheet as of March 31, 2020 and June 30, 2020, which resulted in an overstatement of unbilled services by $0.6 million and $0.8 million, respectively. The error also impacted our previously reported consolidated statement of operations for the three months ended March 31, 2020 and June 30, 2020, which resulted in an overstatement of revenues by $0.6 million and $0.2 million, respectively, and an overstatement of net income by $0.4 million and $0.2 million, respectively. For the six months ended June 30, 2020, the error resulted in an overstatement of revenues and net income by $0.8 million and $0.6 million, respectively. This error related to a revenue recognition calculation error for a specific fee component of one contract within our Healthcare segment. This error was corrected in the third quarter of 2020 by decreasing revenues and unbilled services by $0.8 million, and resulted in a $0.6 million decrease to net income in the third quarter of 2020. This error, which was not material to the first, second, or third quarter 2020 results, had no impact on our consolidated balance sheet as of September 30, 2020 or our consolidated statement of operations for the nine months ended September 30, 2020.
3. New Accounting Pronouncements
Recently Adopted
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which provides a new current expected credit loss model to account for credit losses on certain financial assets, including trade receivables. That model requires an entity to estimate lifetime credit losses based on relevant historical information, adjusted for current conditions and reasonable and supportable forecasts that could affect the collectability of the reported amount. The ASU also makes targeted amendments to the current impairment model for available-for-sale debt securities, which includes requiring the recognition of an allowance rather than a direct write-down of the investment, which may be reversed in the event that the credit of an issuer improves. We adopted ASU 2016-13 effective January 1, 2020, which did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies certain disclosure requirements related to fair value measurements. We adopted ASU 2018-13 effective January 1, 2020, which had no impact on the amounts reported on our consolidated financial statements. We updated our disclosures within the notes to our consolidated financial statements as required by ASU 2018-13.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes, related to the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies other aspects of the accounting for franchise taxes and enacted changes in tax laws or tax rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. On January 1, 2020, we elected to early adopt ASU 2019-12 on a modified retrospective basis for those amendments that are not applied on a prospective basis. The adoption of ASU 2019-12 did not have a material impact on our consolidated financial statements.
4. Goodwill and Intangible Assets
The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2020.

Healthcare

Business
Advisory
EducationTotal
Balance as of December 31, 2019:
Goodwill$636,810 $302,057 $103,889 $1,042,756 
Accumulated impairment losses(208,081)(187,995) (396,076)
Goodwill, net as of December 31, 2019428,729 114,062 103,889 646,680 
Goodwill recorded in connection with a business acquisition (1)
  495 495 
Goodwill impairment charge (59,816) (59,816)
Foreign currency translation (629) (629)
Goodwill, net as of September 30, 2020$428,729 $53,617 $104,384 $586,730 
(1)On August 1, 2020, we completed the acquisition of B3i Analytics, LLC, a software firm that provides a software as a solution ("SaaS") application to leverage internal and external data to help higher education institutions forecast research revenue. The results of operations of the acquired business is included in our consolidated financial statements and results of operations of our Education segment from the date of acquisition. This acquisition is not significant to our consolidated financial statements.
First Quarter 2020 Goodwill Impairment Charges
The worldwide spread of the coronavirus (COVID-19) in the first quarter of 2020 created significant volatility, uncertainty and disruption to the global economy. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how we expect it will continue to negatively impact our clients, employees and business partners. While the COVID-19 pandemic did not have a significant impact on our consolidated revenues in the first quarter of 2020, we expected it to have an unfavorable impact on sales, increase uncertainty in the backlog and negatively impact full year 2020 results. The services provided by our Strategy and Innovation and Life Sciences reporting units within our Business Advisory segment focus on strategic solutions for healthy, well-capitalized companies to identify new growth opportunities, which may be considered by our clients to be more discretionary in nature, and the duration of the projects within these practices are typically short-term. Therefore, due to the uncertainty caused by the COVID-19 pandemic, we are cautious about near-term results for these two reporting units. Based on our internal projections and the preparation of our financial statements for the quarter ended March 31, 2020, and considering the expected decrease in demand due to the COVID-19 pandemic, during the first quarter of 2020 we believed that the fair value of these two reporting units no longer exceeded their carrying values and performed an interim impairment test on both reporting units as of March 31, 2020.
Based on the estimated fair values of the Strategy and Innovation and Life Sciences reporting units, we recorded non-cash pretax goodwill impairment charges of $49.9 million and $9.9 million, respectively, in the first quarter of 2020. The $49.9 million non-cash pretax charge related to the Strategy and Innovation reporting unit reduced the goodwill balance of the reporting unit to $37.5 million. The $9.9 million non-cash pretax charge related to the Life Sciences reporting unit reduced the goodwill balance of the reporting unit to zero.
Our goodwill impairment test was performed by comparing the fair value of each of the Strategy and Innovation and Life Sciences reporting units with its respective carrying value and recognizing an impairment charge for the amount by which the carrying value exceeded the fair value. To estimate the fair value of each reporting unit, we relied on a combination of the income approach and the market approach, with a fifty-fifty weighting.
In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected after-tax cash flows that will be generated by each reporting unit and then discounting those cash flows to present value, reflecting the relevant risks associated with each
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
reporting unit and the time value of money. This approach requires the use of significant estimates and assumptions, including long-term projections of future cash flows, market conditions, and discount rates that reflects the risk inherent in the future cash flows. In estimating future cash flows, we relied on internally generated seven-year forecasts. For periods after the seven-year forecast, we assumed a long-term annual revenue growth rate of 3.0% for both the Strategy and Innovation and Life Sciences reporting units and a long-term EBITDA margin of 24.8% and 6.7%, respectively. Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information. Our discounted cash flow analysis assumed weighted average cost of capital discount rates of 16.0% and 10.5% for the Strategy and Innovation and Life Sciences reporting units, respectively.
In the market approach, we utilized the guideline company method, which involved calculating valuation revenue multiples based on operating data from guideline publicly traded companies. Multiples derived from guideline companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. These multiples were evaluated and adjusted based on specific characteristics of the Strategy and Innovation and Life Sciences reporting units relative to the selected guideline companies and applied to the reporting units' operating data to arrive at an indication of value. The range of revenue multiples used in the valuation of the Strategy and Innovation and Life Sciences reporting units was 1.20x to 1.70x and 0.30x to 0.40x, respectively.
Concurrently with the goodwill impairment tests performed over the Strategy and Innovation and Life Sciences reporting units, we evaluated whether any indicators exist that would lead us to believe that the fair values of our Healthcare, Education, and Business Advisory reporting units may not exceed their carrying values. Based on our internal projections, consideration of the impact of the COVID-19 pandemic on these reporting units, and review of the amounts by which the fair values of these reporting units exceeded their carrying values in the most recent quantitative goodwill impairment analysis performed, we did not identify any indicators that would lead us to believe that the fair values of these reporting units may not exceed their carrying values as of March 31, 2020.
In connection with the goodwill impairment tests performed on the Strategy and Innovation and Life Sciences reporting units as of March 31, 2020, we performed impairment tests on the long-lived assets allocated to the asset groups of the Strategy and Innovation and Life Sciences reporting units. Based on the impairment tests performed, we concluded that the long-lived assets allocated to the asset groups were not impaired as of March 31, 2020. We did not identify any indicators that would lead us to believe that the carrying values of the long-lived assets allocated to our other asset groups may not be recoverable as of March 31, 2020.
In the second and third quarters of 2020, we did not identify any indicators that would lead us to believe that the fair values of any of our reporting units may not exceed their carrying values, nor did we identify any indicators that would lead us to believe that the carrying values of the long-lived assets allocated to our asset groups may not be recoverable.
Intangible Assets
Intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following:
As of September 30, 2020As of December 31, 2019
Useful Life 
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Customer relationships3 to 13$83,287 $64,757 $87,577 $61,882 
Trade names5 to 628,930 26,788 28,930 25,894 
Technology and software55,800 5,053 5,694 4,321 
Non-competition agreements51,880 1,441 2,220 1,447 
Customer contracts2800 408 800 52 
Total$120,697 $98,447 $125,221 $93,596 
Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships and customer contracts, as well as certain trade names and technology and software, are amortized on an accelerated basis to correspond to the cash flows expected to be derived from the assets. All other intangible assets with finite lives are amortized on a straight-line basis.
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HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Intangible asset amortization expense was $3.2 million and $4.2 million for the three months ended September 30, 2020 and 2019, respectively; and $9.6 million and $13.0 million for the nine months ended September 30, 2020 and 2019. The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of September 30, 2020.
Year Ending December 31,Estimated Amortization Expense
2020$12,635 
2021$8,422 
2022$6,186 
2023$3,582 
2024$797 
Actual future amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, and other factors.
5. Revenues
For the three months ended September 30, 2020 and 2019, we recognized revenues of $205.3 million and $219.3 million, respectively. Of the $205.3 million recognized in the third quarter of 2020, we recognized revenues of $7.4 million from obligations satisfied, or partially satisfied, in prior periods, of which $5.7 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments and $1.7 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements. Of the $219.3 million recognized in the third quarter of 2019, we recognized revenues of $4.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $3.7 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments and $1.1 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements.
For the nine months ended September 30, 2020 and 2019, we recognized revenues of $645.8 million and $644.5 million, respectively. Of the $645.8 million recognized in the first nine months of 2020, we recognized revenues of $11.0 million from obligations satisfied, or partially satisfied, in prior periods, of which $6.5 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $4.5 million was primarily due to the release of allowances on unbilled services as a result of securing contract amendments. Of the $644.5 million recognized in the first nine months of 2019, we recognized revenues of $2.6 million from obligations satisfied, or partially satisfied, in prior periods, primarily due to the release of allowances on unbilled services due to securing contract amendments. During the first nine months of 2019, we recognized a $1.4 million decrease to revenues due to changes in the estimates of our variable consideration under performance-based billing arrangements.
As of September 30, 2020, we had $67.9 million of remaining performance obligations under engagements with original expected durations greater than one year. These remaining performance obligations exclude obligations under contracts with an original expected duration of one year or less, variable consideration which has been excluded from the total transaction price due to the constraint, and performance obligations under time-and-expense engagements which are recognized in the amount invoiced. Of the $67.9 million of performance obligations, we expect to recognize approximately $14.5 million as revenue in 2020, $34.2 million in 2021, and the remaining $19.2 million thereafter. Actual revenue recognition could differ from these amounts as a result of changes in the estimated timing of work to be performed, adjustments to estimated variable consideration in performance-based arrangements, or other factors.
Contract Assets and Liabilities
The payment terms and conditions in our customer contracts vary. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenues in the consolidated balance sheets.
Unbilled services include revenues recognized for services performed but not yet billed to clients. Services performed that we are not yet entitled to bill because certain events, such as the completion of the measurement period or client approval in performance-based engagements, must occur are recorded as contract assets and included within unbilled services, net. The contract asset balance as of September 30, 2020 and December 31, 2019 was $13.4 million and $12.6 million, respectively. The $0.8 million increase primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms.
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HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition policy. Our deferred revenues balance as of September 30, 2020 and December 31, 2019, was $31.8 million and $28.4 million, respectively. The $3.4 million increase primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three and nine months ended September 30, 2020, $3.0 million and $24.3 million, respectively, of revenues recognized were included in the deferred revenue balance as of December 31, 2019.
6. Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, outstanding common stock options, convertible senior notes, and outstanding warrants, to the extent dilutive. In periods for which we report a net loss from continuing operations, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss from continuing operations per share would be anti-dilutive. Earnings (loss) per share under the basic and diluted computations are as follows: 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Net income (loss) from continuing operations$11,087 $13,706 $(17,614)$27,625 
Loss from discontinued operations, net of tax(29)(52)(89)(195)
Net income (loss)$11,058 $13,654 $(17,703)$27,430 
Weighted average common shares outstanding – basic21,905 22,052 21,868 21,973 
Weighted average common stock equivalents270 509  452 
Weighted average common shares outstanding – diluted22,175 22,561 21,868 22,425 
Net earnings (loss) per basic share:
Net income (loss) from continuing operations$0.50 $0.62 $(0.81)$1.26 
Loss from discontinued operations, net of tax   (0.01)
Net income (loss)$0.50 $0.62 $(0.81)$1.25 
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations$0.50 $0.61 $(0.81)$1.23 
Loss from discontinued operations, net of tax   (0.01)
Net income (loss)$0.50 $0.61 $(0.81)$1.22 
The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above were as follows:
 As of September 30,
 20202019
Unvested restricted stock awards59  
Convertible senior notes 3,129 
Warrants related to the issuance of convertible senior notes 3,129 
Total anti-dilutive securities59 6,258 
See Note 7 “Financing Arrangements” for further information on the convertible senior notes and warrants related to the issuance of convertible notes.
As of September 30, 2020, we had a share repurchase program permitting us to repurchase up to $125 million of our common stock through October 31, 2020 (the “Share Repurchase Program”). In the first quarter of 2020, we repurchased and retired 313,998 shares for $20.9
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HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
million. The 313,998 shares repurchased and retired in the first quarter of 2020 were reflected as a reduction to our basic weighted average shares outstanding for the quarter ended March 31, 2020 based on the trade date of the share repurchase. Additionally, in the first quarter of 2020, we settled the repurchase of 18,000 shares for $1.2 million that were accrued as of December 31, 2019. These shares were reflected as a reduction to our basic weighted average shares outstanding in the fourth quarter of 2019 based on the trade date of the share repurchase. No shares were repurchased during the second or third quarters of 2020 nor were any shares repurchased during the first nine months of 2019. As of September 30, 2020, less than $0.1 million remained available for share repurchases. The Share Repurchase Program expired on October 31, 2020.
7. Financing Arrangements
A summary of the carrying amounts of our debt follows:
September 30,
2020
December 31,
2019
Senior secured credit facility$248,000 $205,000 
Promissory note due 20243,457 3,853 
Total long-term debt$251,457 $208,853 
Current maturities of long-term debt(540)(529)
Long-term debt, net of current portion$250,917 $208,324 
Below is a summary of the scheduled remaining principal payments of our debt as of September 30, 2020.
Principal Payments of Long-Term Debt
2020$133 
2021$544 
2022$559 
2023$575 
2024$249,646 
Convertible Notes
In September 2014, the Company issued $250 million principal amount of 1.25% convertible senior notes due 2019 (the “Convertible Notes”) in a private offering. The Convertible Notes were governed by the terms of an indenture between the Company and U.S. Bank National Association, as Trustee (the “Indenture”). The Convertible Notes were senior unsecured obligations of the Company and paid interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25%.
Prior to maturity, upon conversion, the Convertible Notes would have been settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. Our intent and policy was to settle conversions with a combination of cash and shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the Indenture.
Upon issuance, we separated the Convertible Notes into liability and equity components. The carrying value of the equity component representing the conversion option, which was recognized as a debt discount, was determined by deducting the fair value of the liability component from the proceeds of the Convertible Notes. The debt discount was amortized to interest expense using an effective interest rate of 4.751% over the term of the Convertible Notes. The equity component was not remeasured as it continued to meet the conditions for equity classification.
The transaction costs related to the issuance of the Convertible Notes were separated into liability and equity components based on their relative values. Transaction costs attributable to the liability component were recorded as a deduction to the carrying amount of the liability and amortized to interest expense over the term of the Convertible Notes; and transaction costs attributable to the equity component were netted with the equity component of the Convertible Notes in stockholders’ equity.
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HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The following table presents the amount of interest expense recognized related to the Convertible Notes for the periods presented.