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Huron Consulting Group Inc. Reports Operating Results (10-Q)

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Nov 05, 2009
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Huron Consulting Group Inc. (HURN, Financial) filed Quarterly Report for the period ended 2009-09-30.

Huron Consulting Group Inc. is the parent company of Huron Consulting Services LLC an independent provider of financial and operational consulting services. Huron's experienced and credentialed professionals employ their expertise in accounting finance economics and operations to a wide variety of both financially sound and distressed organizations including Fortune 500 companies medium-sized businesses leading academic institutions healthcare organizations and the law firms that represent these various organizations. Huron Consulting Group Inc. has a market cap of $502.9 million; its shares were traded at around $23.37 with a P/E ratio of 11.7 and P/S ratio of 0.7.

Highlight of Business Operations:

On July 31, 2009, we announced our intention to restate our financial statements due to the accounting errors discussed below under Restatement of Previously-Issued Financial Statements. Immediately prior to our announcement of our intention to restate our financial statements the price of our common stock was $44.35 per share. As of the close of business on August 3, 2009, the business day following such announcement, the price of our common stock was $13.69 per share. As a result of the significant decline in our stock price, we determined that an event had occurred that may indicate the carrying value of our goodwill may have been impaired. Accordingly, we engaged in an impairment analysis with respect to the carrying value of our goodwill, as of August 3, 2009, in connection with the preparation of our financial statements for the quarter ended September 30, 2009.

Based on the result of the first step of the goodwill impairment analysis, we determined that the fair values of our Accounting and Financial Consulting and Corporate Consulting reporting units were less than their carrying values while the fair values of our Health and Education Consulting and Legal Consulting reporting units exceeded their carrying values by 32% and 61%, respectively. As such, we applied the second step of the goodwill impairment test to our Accounting and Financial Consulting and Corporate Consulting reporting units. Based on the result of the second step of the goodwill impairment analysis, we determined that the carrying values of the goodwill associated with these reporting units exceeded their implied fair values, resulting in a $106.0 million non-cash pretax goodwill impairment charge. This impairment charge was recognized to reduce the carrying value of goodwill in our Accounting and Financial Consulting reporting unit by $59.0 million and our Corporate Consulting reporting unit by $47.0 million. As a result of the charge recognized during the third quarter, the carrying amount of our goodwill was reduced to $401.7 million at September 30, 2009. As described below under Restatement of Previously-Issued Financial Statements, under the definition of consolidated EBITDA under the Credit Agreement, as amended, the impairment charge will be an add back for the period ended September 30, 2009

Read the The complete ReportHURN is in the portfolios of Ron Baron of Baron Funds.

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