EXHIBIT 99.2
 
HURON CONSULTING GROUP INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
 
The following unaudited pro forma financial information reflects the estimated effect of the acquisition of Glass & Associates, Inc. (“Glass”) by Huron Consulting Group Inc. (the “Company”).

The unaudited pro forma consolidated balance sheet as of December 31, 2006 combines the respective balance sheets of the Company and Glass as if the acquisition was consummated as of the balance sheet date. The unaudited pro forma consolidated statement of income for the year ended December 31, 2006 combine the respective statements of income of the Company and Glass as if the acquisition was consummated at the beginning of the period presented.

The unaudited pro forma balance sheet and consolidated statement of income are based on the purchase method of accounting and the pro forma adjustments as described in the accompanying notes. Such pro forma adjustments give effect to transactions that are directly attributable to the acquisition and are factually supportable.

Pursuant to the stock purchase agreement, additional purchase consideration is payable in cash to the sellers of Glass if specific performance targets are met over the next four years. The amount of additional purchase consideration that may become payable is not determinable at this time and therefore, the pro forma statements do not reflect the potential impact of such contingent payments.

The allocation of the purchase price is preliminary and is subject to refinement pending the completion of a valuation of the intangible assets acquired.

The unaudited pro forma financial information should be read in conjunction with Glass’ audited financial statements and notes thereto as of and for the year ended December 31, 2006, which are filed as Exhibit 99.1 to this Current Report on Form 8-K/A, as well as the Company’s consolidated financial statements and notes thereto as of and for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K.

The unaudited pro forma consolidated financial information is not necessarily indicative of what actually would have occurred if the acquisition had been effective for the periods presented and should not be taken as representative of our future consolidated results of operations or financial position.
 
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Huron Consulting Group Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 2006
(In thousands)
 
   
 
Company
 
 
Glass
 
 
Pro Forma Adjustments
 
 
Note
 
Pro Forma Consolidated
 
Assets
                               
Current assets:
                               
Cash and cash equivalents
 
$
16,572
 
$
2,533
 
$
(10,000
)
 
1
 
$
9,105
 
Receivables from clients, net
   
41,848
   
543
   
¾
         
42,391
 
Unbilled services, net 
   
22,627
   
498
   
¾
         
23,125
 
Income tax receivable
   
3,637
   
¾
   
¾
         
3,637
 
Deferred income taxes
   
15,290
   
¾
   
¾
         
15,290
 
Other current assets
   
6,435
   
243
   
¾
         
6,678
 
Total current assets
   
106,409
   
3,817
   
(10,000
)
       
100,226
 
Property and equipment, net 
   
27,742
   
215
   
¾
         
27,957
 
Deferred income taxes 
   
5,433
   
¾
   
¾
         
5,433
 
Deposits and other assets 
   
2,294
   
23
   
(364
)
 
1
   
1,953
 
Intangible assets, net 
   
4,238
   
¾
   
5,000
   
2
   
9,238
 
Goodwill 
   
53,328
   
4,721
   
(4,721
)
 
3
   
81,928
 
                 
28,600
   
2
       
Total assets 
 
$
199,444
 
$
8,776
 
$
18,515
   
 
 
$
226,735
 
                                 
Liabilities and Stockholders’ Equity
                               
Current liabilities:
                               
Accounts payable
 
$
2,684
 
$
561
 
$
¾
       
$
3,245
 
Accrued expenses
   
12,712
   
155
   
677
   
1
   
16,994
 
                 
3,200
   
1
       
                 
250
   
1
       
Accrued payroll and related benefits
   
41,649
   
1,746
   
¾
         
43,395
 
Deferred revenues / client retainers
   
4,035
   
651
   
¾
         
4,686
 
Current portion of bank borrowings
   
8,000
   
1,000
   
(1,000
)
 
3
   
8,000
 
Current portion of notes payable and capital lease obligations
   
1,282
   
2,637
   
(2,637
)
 
3
   
1,282
 
Total current liabilities
   
70,362
   
6,750
   
490
         
77,602
 
Non-current liabilities:
                               
Deferred compensation and other liabilities
   
1,169
   
¾
   
¾
         
1,169
 
Notes payable and capital lease obligations, net of current portion
   
1,000
   
618
   
(618
)
 
3
   
1,000
 
Bank borrowings, net of current portion
   
¾
   
¾
   
20,000
   
1
   
20,000
 
Deferred lease incentives
   
10,333
   
51
   
¾
         
10,384
 
Total non-current liabilities
   
12,502
   
669
   
19,382
         
32,553
 
Stockholders’ equity 
   
116,580
   
1,357
   
(1,357
)
 
3
   
116,580
 
Total liabilities and stockholders’ equity 
 
$
199,444
 
$
8,776
 
$
18,515
       
$
226,735
 
 
See accompanying notes.
 
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Huron Consulting Group Inc.
Unaudited Pro Forma Consolidated Statement of Income
For The Year Ended December 31, 2006
(In thousands, except per share amounts)
 
 
   
Company
 
Glass
 
Pro Forma Adjustments
 
Note
 
Pro Forma Consolidated
 
Revenues and reimbursable expenses:
                               
Revenues 
 
$
288,588
 
$
24,331
 
$
¾
       
$
312,919
 
Reimbursable expenses 
   
33,330
   
2,067
   
¾
         
35,397
 
Total revenues and reimbursable expenses
   
321,918
   
26,398
   
¾
         
348,316
 
Direct costs and reimbursable expenses (exclusive of depreciation and
    amortization shown in operating expenses):
                               
Direct costs 
   
163,569
   
19,584
   
(2,235
)
 
4
   
178,143
 
                 
(2,775
)
 
5
       
Intangible assets amortization 
   
2,207
   
¾
   
1,300
   
6
   
3,507
 
Reimbursable expenses 
   
33,506
   
2,067
   
¾
         
35,573
 
Total direct costs and reimbursable expenses
   
199,282
   
21,651
   
(3,710
)
       
217,223
 
Operating expenses:
                               
Selling, general and administrative 
   
65,926
   
4,444
   
(33
)
 
5
   
69,837
 
                 
(500
)
 
7
       
Depreciation and amortization 
   
9,201
   
86
   
1,190
   
6
   
10,477
 
Total operating expenses
   
75,127
   
4,530
   
657
         
80,314
 
Operating income 
   
47,509
   
217
   
3,053
         
50,779
 
Other expense 
   
(687
)
 
(131
)
 
(1,180
)
 
8
   
(1,998
)
Income before provision for income taxes 
   
46,822
   
86
   
1,873
         
48,781
 
Provision benefit for income taxes 
   
20,133
   
¾
   
801
   
9
   
20,934
 
Net income 
 
$
26,689
 
$
86
 
$
1,072
       
$
27,847
 
                                 
Earnings per share:
                               
Basic 
 
$
1.63
                   
$
1.70
 
Diluted 
 
$
1.54
                   
$
1.61
 
                                 
Weighted average shares used in calculating earnings per share:
                               
Basic 
   
16,359
                     
16,359
 
Diluted 
   
17,320
                     
17,320
 

See accompanying notes.
 
- 3 -


Huron Consulting Group Inc.
Notes to Unaudited Pro Forma Financial Information

 
(1)  
 This adjustment is to record the funding and costs of the acquisition, which consisted of the following (in thousands):

Cash paid at closing
 
$
10,000
 
Borrowings
   
20,000
 
Working capital adjustment accrual 
   
677
 
IRS Section 338(h)(10) election  
   
3,200
 
Transaction costs 
   
364
 
Finders fee 
   
250
 
Total purchase price
 
$
34,491
 

In connection with the acquisition, the Company borrowed $20.0 million under its bank credit agreement to fund the acquisition of Glass. Such borrowings bear a current interest rate of 5.9%.  Also, pursuant to the stock purchase agreement, the purchase price will include a working capital adjustment.
 
 
(2)  
 The purchase price was allocated, based on a preliminary valuation, as follows (in thousands):

Net assets purchased
 
$
3,404
 
Liabilities assumed
   
(2,513
)
Customer contracts
   
1,300
 
Customer relationships
   
1,500
 
Non-competition agreements
   
2,200
 
Goodwill
   
28,600
 
Total purchase price
 
$
34,491
 

 
(3)  
This adjustment is to eliminate Glass’ debt, which the Company did not assume, and to eliminate Glass’ historical goodwill and equity as part of purchase accounting.

 
(4)  
This adjustment is to record contractual obligations pursuant to employment agreements entered into between the Company and certain Glass employees in connection with the   acquisition and to reverse their respective salaries recorded on Glass’ financial statements.

 
(5)  
This adjustment is to reverse bonuses paid by Glass to its employees relating to the acquisition.

 
(6)  
This adjustment is to record estimated amortization expense for identifiable intangible assets, calculated as follows (in thousands):

Intangible Asset
 
Value
 
Estimated
Useful Life
 
2006
Amortization
 
                     
Customer contracts
 
$
1,300
   
6 months
 
$
1,300
 
                     
Customer relationships
 
$
1,500
   
24 months
 
$
750
 
Non-competition agreements
 
$
2,200
   
60 months
   
440
 
               
$
1,190
 
 
- 4 -


Huron Consulting Group Inc.
Notes to Unaudited Pro Forma Financial Information (continued)


(7)  
This adjustment is to reverse legal fees incurred by Glass relating to the acquisition.

 
(8)  
This adjustment is to record interest expense relating to borrowings of $20.0 million on the acquisition date, calculated as follows (in thousands):

Borrowings
 
$
20,000
 
Interest rate (on acquisition date)
   
5.9
%
Interest expense
 
$
1,180
 
 
The $20.0 million of borrowings bear interest at LIBOR plus a spread, which is based on the Company’s debt to earnings before interest, depreciation and amortization ratio, as specified in the credit agreement. A variance of 0.125% in the interest rate would have a $25,000 pro forma effect on pre-tax income.

 
(9)  
This adjustment is to record the income tax effect of the afore-mentioned pro forma adjustments and also to record an income tax provision as if Glass had filed its income tax returns on a consolidated basis with the Company, calculated as follows (in thousands):

Salaries adjustment (see note 4 above)
 
$
(2,235
)
Bonus adjustment (see note 5 above)
   
(2,808
)
Intangible assets amortization expense (see note 6 above)
   
2,490
 
Legal fees reversal (see note 7 above) 
   
(500
)
Interest expense (see note 8 above) 
   
1,180
 
Income before taxes, before pro forma adjustments 
   
(86
)
Subtotal (income) / expense
   
(1,959
)
Tax rate 
   
40.9
%
Provision for taxes
 
$
801
 
 
- 5 -