10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016

OR

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

For the transition period from to

Commission File Number 0-25837

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	36-2681268
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

233 South Wacker Drive-Suite 4900

Chicago, Illinois

60606-6303

(Address of Principal Executive Offices)

(312) 496-1200

(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 of time that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

Large accelerated filer	¨	Accelerated filer	x
Non-Accelerated filer	¨(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

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 21, 2016, there were 18,582,574 shares of the Company’s common stock outstanding.

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015	1
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015	2
	Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 2016	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	4
	Unaudited Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 6.	Exhibits	27
SIGNATURE		28

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	September 30, 2016			December 31, 2015
	(Unaudited)
Current assets:
Cash and cash equivalents	$	99,975		$	190,452
Accounts receivable, net	114,726			76,058
Prepaid expenses	23,936			19,197
Other current assets	14,867			18,447
Income taxes recoverable	5,451			4,809
Total current assets	258,955			308,963
Non-current assets:
Property and equipment, net	36,137			36,498
Assets designated for retirement and pension plans	17,438			16,857
Investments	17,268			14,145
Other non-current assets	11,233			11,115
Goodwill	155,313			131,122
Other intangible assets, net	20,154			18,687
Deferred income taxes	37,277			35,331
Total non-current assets	294,820			263,755
Total assets	$	553,775		$	572,718
Current liabilities:
Accounts payable	$	9,644		$	6,150
Accrued salaries and employee benefits	120,102			158,875
Deferred revenue, net	31,713			29,724
Other current liabilities	25,103			31,239
Income taxes payable	3,897			3,442
Total current liabilities	190,459			229,430
Non-current liabilities:
Accrued salaries and employee benefits	30,363			32,690
Retirement and pension plans	39,921			35,949
Other non-current liabilities	27,267			19,847
Total non-current liabilities	97,551			88,486
Total liabilities	288,010			317,916
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at September 30, 2016 and December 31, 2015	—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,585,777 shares issued, 18,578,176 and 18,379,398 shares outstanding at September 30, 2016 and December 31, 2015, respectively	196			196
Treasury stock at cost, 1,007,601 and 1,206,379 shares at September 30, 2016 and December 31, 2015, respectively	(32,915		)	(39,583		)
Additional paid in capital	229,318			232,358
Retained earnings	60,050			52,572
Accumulated other comprehensive income	9,116			9,259
Total stockholders’ equity	265,765			254,802
Total liabilities and stockholders’ equity	$	553,775		$	572,718

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Revenue before reimbursements (net revenue)	$	143,519		$	138,421		$	422,569		$	386,619
Reimbursements	4,720			4,429			13,773			12,396
Total revenue	148,239			142,850			436,342			399,015
Operating expenses:
Salaries and employee benefits	95,355			95,724			288,015			264,914
General and administrative expenses	36,158			29,764			106,986			92,928
Reimbursed expenses	4,720			4,429			13,773			12,396
Total operating expenses	136,233			129,917			408,774			370,238
Operating income	12,006			12,933			27,568			28,777
Non-operating income (expense):
Interest, net	42			(54		)	172			(300		)
Other, net	340			(1,742		)	418			(1,696		)
Net non-operating income (expense)	382			(1,796		)	590			(1,996		)
Income before income taxes	12,388			11,137			28,158			26,781
Provision for income taxes	5,448			3,647			13,238			10,909
Net income	6,940			7,490			14,920			15,872
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(717		)	(347		)	(1,173		)	(1,645		)
Net unrealized gain (loss) on available-for-sale investments	519			(941		)	1,030			(802		)
Unrealized loss on cash flow hedge	—			—			—			(78		)
Other comprehensive loss, net of tax	(198		)	(1,288		)	(143		)	(2,525		)
Comprehensive income	$	6,742		$	6,202		$	14,777		$	13,347
Basic weighted average common shares outstanding	18,577			18,372			18,528			18,318
Dilutive common shares	273			277			273			277
Diluted weighted average common shares outstanding	18,850			18,649			18,801			18,595
Basic net income per common share	$	0.37		$	0.41		$	0.81		$	0.87
Diluted net income per common share	$	0.37		$	0.40		$	0.79		$	0.85
Cash dividends paid per share	$	0.13		$	0.13		$	0.39		$	0.39

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

									Additional Paid in Capital			Retained Earnings			Accumulated Other Compre- hensive Income			Total
	Common Stock			Treasury Stock
	Shares	Amount		Shares		Amount
Balance at December 31, 2015	19,586	$	196	1,206		$	(39,583	)	$	232,358		$	52,572		$	9,259		$	254,802
Net income	—	—		—		—			—			14,920			—			14,920
Other comprehensive loss, net of tax	—	—		—		—			—			—			(143		)	(143		)
Treasury and common stock transactions:
Stock-based compensation	—	—		—		—			5,055			—			—			5,055
Vesting of equity, net of tax withholdings	—	—		(167	)	5,636			(8,324		)	—			—			(2,688		)
Re-issuance of treasury stock	—	—		(31	)	1,032			(470		)	—			—			562
Cash dividends declared ($0.39 per share)	—	—		—		—			—			(7,252		)	—			(7,252		)
Dividend equivalents on restricted stock units	—	—		—		—			—			(190		)	—			(190		)
Tax surplus related to stock-based compensation	—	—		—		—			699			—			—			699
Balance at September 30, 2016	19,586	$	196	1,008		$	(32,915	)	$	229,318		$	60,050		$	9,116		$	265,765

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
Cash flows—operating activities:
Net income	$	14,920		$	15,872
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	11,676			9,983
Deferred income taxes	(1,731		)	(153		)
Stock-based compensation expense	5,055			3,684
Accretion expense related to earnout payments	198			861
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	(33,267		)	(40,582		)
Accounts payable	2,270			(1,311		)
Accrued expenses	(47,130		)	(5,361		)
Deferred revenue	1,298			3,921
Income taxes payable, net	(76		)	(3,101		)
Retirement and pension plan assets and liabilities	3,009			69
Prepaid expenses	(4,228		)	(1,054		)
Other assets and liabilities, net	(1,008		)	(2,868		)
Net cash used in operating activities	(49,014		)	(20,040		)
Cash flows—investing activities:
Restricted cash	7,228			—
Acquisition of businesses	(27,722		)	—
Capital expenditures	(2,179		)	(13,897		)
Purchases of available for sale investments	(2,361		)	(1,402		)
Proceeds from sales of available for sale investments	510			630
Net cash used in investing activities	(24,524		)	(14,669		)
Cash flows—financing activities:
Debt repayment	—			(29,500		)
Debt issuance costs	—			(422		)
Cash dividends paid	(7,442		)	(7,496		)
Payment of employee tax withholdings on equity transactions	(2,676		)	(878		)
Acquisition earnout payments	(7,461		)	(5,496		)
Net cash used in financing activities	(17,579		)	(43,792		)
Effect of exchange rates fluctuations on cash and cash equivalents	640			(3,891		)
Net decrease in cash and cash equivalents	(90,477		)	(82,392		)
Cash and cash equivalents at beginning of period	190,452			211,352
Cash and cash equivalents at end of period	$	99,975		$	128,960
Supplemental Schedule of Non-Cash Activities:
Term loan facility retirement	$	—		$	(26,500	)
Subsequent drawing on line of credit	—			26,500

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

4

HEIDRICK & STRUGGLES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All tables in thousands, except share and per share figures)

(Unaudited)

1. Basis of Presentation of Interim Financial Information

The accompanying unaudited Condensed Consolidated Financial Statements of Heidrick & Struggles International, Inc. and subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Significant items subject to estimates and assumptions include revenue recognition, income taxes, interim effective tax rate and assessment of goodwill and other intangible assets for impairment. Estimates are subject to a degree of uncertainty and actual results could differ from these estimates. These financial statements and notes are to be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 10, 2016.

2. Summary of Significant Accounting Policies

A complete listing of the Company’s significant accounting policies is discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Recently Issued Financial Accounting Standards

In August 2016, the Financial Accounting Standards Board ("FASB") issued accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice as to how certain cash receipts and cash payments should be presented and classified. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company has evaluated the standard and noted the guidance for contingent consideration payments made after a business combination are applicable to the Condensed Consolidated Statements of Cash Flows. The Company currently classifies all contingent consideration payments as financing activities. The impact of this change is not expected to be significant to the classification of these activities on the Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions including the income tax accounting, classification of awards as either equity or liabilities, the accounting for forfeitures and classification on the statement of cash flows. The standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company is planning to early adopt this standard during the fourth quarter of 2016. The impact of this change is not expected to be significant to Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, intended to improve financial reporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments including the recognition of unrealized changes in fair value within net income. The standard is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU requires that an entity recognizes revenue to depict the transfer of promised goods or services to customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for these goods or services. The effective date has been deferred for one year to the interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was interim and annual reporting periods beginning after December 15, 2016.

5

The guidance permits the use of either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a retrospective approach with the cumulative effect upon initial adoption recognized at the date of adoption. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

3. Allowance for Doubtful Accounts

The activity of the allowance for doubtful accounts for the nine months ended September 30, 2016 is as follows:

Balance at December 31, 2015	$	5,376
Provision charged to income	1,475
Write-offs	(3,944		)
Foreign currency translation	(19		)
Balance at September 30, 2016	$	2,888

4. Property and Equipment, net

The components of the Company’s property and equipment are as follows:

	September 30, 2016			December 31, 2015
Leasehold improvements	$	42,187		$	40,583
Office furniture, fixtures and equipment	17,079			16,234
Computer equipment and software	30,884			28,648
Property and equipment, gross	90,150			85,465
Accumulated depreciation	(54,013		)	(48,967		)
Property and equipment, net	$	36,137		$	36,498

Depreciation expense for the three months ended September 30, 2016 and 2015 was $2.4 million and $2.2 million, respectively. Depreciation expense for the nine months ended September 30, 2016 and 2015 was $7.0 million and $6.5 million, respectively.

5. Investments

The Company has a U.S. non-qualified deferred compensation plan that consists primarily of U.S. marketable securities and mutual funds, all of which are valued using Level 1 inputs (See Note 6, Fair Value Measurements). The fair value for these investments was $17.3 million and $14.1 million as of September 30, 2016 and December 31, 2015, respectively. The aggregate cost basis for these investments was $13.2 million and $11.1 million as of September 30, 2016 and December 31, 2015, respectively.

6. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted prices in active markets for identical assets and liabilities.

• Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

6

The following tables provide a summary of the fair value measurements at September 30, 2016 and December 31, 2015 for each major category of assets and liabilities measured at fair value on a recurring basis:

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At September 30, 2016
U.S. non-qualified deferred compensation plan	$	17,268	$	—	$	—		$	17,268
Assets designated for retirement and pension plans	—		18,790		—			18,790
Acquisition earnout accruals	—		—		(9,790		)	(9,790		)
	$	17,268	$	18,790	$	(9,790	)	$	26,268

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At December 31, 2015
U.S. non-qualified deferred compensation plan	$	14,145	$	—	$	—		$	14,145
Assets designated for retirement and pension plans	—		18,164		—			18,164
Acquisition earnout accruals	—		—		(12,033		)	(12,033		)
	$	14,145	$	18,164	$	(12,033	)	$	20,276

The Level 2 assets above are fair valued using a market approach. The Level 3 liabilities include accruals for future earnout payments related to prior acquisitions, the values of which are determined based on discounted cash flow models. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, and accounts payable, to approximate the fair value of the respective assets and liabilities at September 30, 2016 and December 31, 2015 based upon the short-term nature of the assets and liabilities.

The following table provides a reconciliation of the beginning and ending balance of Level 3 assets and liabilities for the nine months ended September 30, 2016.

	Acquisition Earnout Accruals
Balance at December 31, 2015	$	(12,033	)
Acquisition earnouts (Note 7)	(5,039		)
Co Company earnout amendment (Note 7)	(577		)
Earnout accretion	(198		)
Earnout payments	7,461
Foreign currency translation	596
Balance at September 30, 2016	$	(9,790	)

7. Acquisitions

Philosophy IB, LLP

On September 1, 2016, the Company acquired substantially all of the assets of Philosophy IB, LLP ("Philosophy IB"), a New Jersey-based leadership, organization development and management consulting firm for $6.0 million, which was funded from existing cash. The former owners of Philosophy IB are eligible to receive an additional cash consideration based on two components: achieving revenue milestones generated from its software products from September 2016 through August 2019 and percentage of consulting revenue achieved over the period September 2016 to August 2019, subject to a profitability test. The Company estimates the value of future cash consideration to be between $0.8 million and $1.5 million. Due to the timing of the acquisition, the Company is currently performing the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill.

7

JCA Group Limited

On August 4, 2016, the Company acquired JCA Group Limited ("JCA Group"), a UK-based provider of executive search, succession planning and coaching services, and, from the partners thereof, the entire partnership interest in JCA Partners LLP for £11.2 million (equivalent to $14.5 million at September 30, 2016) of initial consideration, which was funded from existing cash. The former owners of JCA Group are eligible to receive additional cash consideration upon the realization of specific revenue milestones achieved over the period August 2016 through August 2018. When estimating the value of future cash consideration, the Company has accrued £2.7 million (equivalent to $3.5 million) as of September 30, 2016. The Company recorded $3.5 million of intangible assets related to customer relationships and $15.5 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit. Due to the timing of the acquisition, the Company has not completed the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill.

Decision Strategies International, Inc.

On February 29, 2016, the Company acquired substantially all of the assets of Decision Strategies International, Inc. ("DSI"), a Pennsylvania-based business consulting firm and its wholly owned subsidiary, Decision Strategies International (UK) Limited. DSI specializes in advising organizations and institutions on strategic planning and decision making in uncertain operating environments, leadership development and talent strategy. Total consideration for the acquisition of DSI's assets was approximately $9.0 million and was funded from existing cash. The former owners of DSI are eligible to receive an additional cash consideration payment in 2019 based on revenue targets to be achieved in 2017 and 2018. When estimating the value of future cash consideration, the Company has accrued $1.7 million as of September 30, 2016. The Company recognized $0.1 million and $0.2 million of accretion expense included in General and administrative expenses during the three and nine months ended September 30, 2016, respectively. The Company recorded $3.2 million of intangible assets related to customer relationships and $5.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

Co Company Limited

 On October 1, 2015, the Company acquired Co Company, a UK-based management consulting firm that specializes in organizational development for £7.1 million (equivalent to $9.2 million and $10.4 million at September 30, 2016 and December 31, 2015, respectively) of initial consideration, pursuant to a stock purchase, which was funded from existing cash.  The former owners of Co Company are eligible to receive additional cash consideration upon the realization of specific revenue and EBITDA Margin milestones achieved over the period October 2015 through December 2018. On August 25, 2016, the Company and the former owners of Co Company entered into a Deed of Amendment (the "Amendment") to the Share Purchase Agreement dated October 1, 2015. The Amendment adjusts the target fee revenue and targeted EBITDA margin for each remaining earn out period taking into consideration the unanticipated acquisitions completed subsequent to the Share Purchase Agreement. The new targets shall include subsequent acquisitions and take effect retrospectively from January 1, 2016. When estimating the fair value of future cash consideration, the Company has accrued £2.9 million (equivalent to $3.8 million and $4.3 million) as of September 30, 2016 and December 31, 2015, of which $0.2 million was paid during the second quarter of 2016. As a result of the Amendment and related adjustment of the earnout liability, the Company recognized $0.5 million and $0.2 million of income in General and administrative expenses during the three and nine months ended September 30, 2016, respectively. The Company recorded $2.9 million of intangible assets and $10.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

Scambler MacGregor Executive Search Pty Limited

In November 2013, the Company acquired Scambler MacGregor, an Australian-based retained Executive Search boutique in the financial services industry for 1.1 million Australian dollars (equivalent to $0.8 million at both September 30, 2016 and December 31, 2015) of initial consideration, pursuant to a stock purchase, which was funded from existing cash. In December 2013, the Company paid an additional $0.1 million related to the final working capital settlement. The former owners of Scambler MacGregor are eligible to receive earnout payments of up to 2.8 million Australian dollars (equivalent to $2.1 million and $2.0 million as of September 30, 2016 and December 31, 2015, respectively) based on the achievement of certain revenue metrics over the period November 2013 through December 2018, of which $0.4 million and $0.7 million was paid during the nine months ended September 30, 2016 and 2015, respectively. When estimating the fair value of future earnout payments, the Company had accrued 1.1 million Australian dollars and 1.6 million Australian dollars (equivalent to $0.9 million and $1.2 million) as of September 30, 2016 and December 31, 2015, respectively. The Company also recorded $0.4 million of intangible assets and $2.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

8

Senn-Delaney Leadership Consulting Group, LLC

In December 2012, the Company acquired Senn-Delaney Leadership Consulting Group, LLC, a global leader of corporate culture shaping. Under the terms of the purchase agreement, the Company paid $53.5 million at closing for 100 percent of the equity of Senn Delaney. The agreement also included additional cash consideration up to $15.0 million based on the realization of specific earnings milestones achieved over the period December 2012 through December 2015, of which $6.8 million, $4.8 million and $3.4 million was paid during the second quarter of 2016, 2015 and 2014, respectively. The Company had accrued $6.6 million at December 31, 2015 for the remaining cash consideration, which was paid during the nine months ended September 30, 2016. The Company recognized zero and $0.3 million of accretion expense during the three months ended September 30, 2016 and 2015, respectively, and $0.2 million and $0.8 million of accretion expense during the nine months ended September 30, 2016 and 2015, respectively. Accretion expense is included in General and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income. At December 31, 2015, the Company held $6.5 million in a retention escrow that was paid to certain key executives of Senn Delaney in January 2016 for remaining with the Company for three years subsequent to the acquisition. The Company recognized zero and $0.5 million of compensation expense during the three months ended June 30, 2016 and 2015, respectively, and zero and $1.6 million of compensation expense during the nine months ended September 30, 2016 and 2015, respectively. Compensation expense is included in Salaries and employee benefits in the Condensed Consolidated Statements of Comprehensive Income.

8. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2016 are as follows:

	Executive Search and Leadership Consulting							Culture Shaping
	Americas		Europe			Asia Pacific					Total
Balance at December 31, 2015	$	81,626	$	10,745		$	9,211	$	29,540		$	131,122
DSI acquisition	5,673		—			—		—			5,673
JCA Group acquisition	—		15,535			—		—			15,535
Philosophy IB acquisition	4,253		—			—		—			4,253
Foreign currency translation	196		(1,719		)	488		(235		)	(1,270		)
Balance at September 30, 2016	$	91,748	$	24,561		$	9,699	$	29,305		$	155,313

On September 1, 2016, the Company acquired Philosophy IB and included the fair value of the acquired assets and liabilities as of the acquisition date in the Consolidated Balance Sheets. The Company also included $4.3 million of goodwill related to the acquisition in the Americas segment. On August 4, 2016, the Company acquired JCA Group and included the fair value of the acquired assets and liabilities as of the acquisition date in the Consolidated Balance Sheets. The Company also included $15.5 million of goodwill related to the acquisition in the Europe segment. On February 29, 2016, the Company acquired DSI and included the fair value of the acquired assets and liabilities as of the acquisition date in the Condensed Consolidated Balance Sheets. The Company also included $5.7 million of goodwill related to the acquisition in the Americas segment.

Due to the timing of the acquisitions, the Company has not completed the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill for JCA Group and Philosophy IB.

9

Other Intangible Assets, net

The Company’s other intangible assets, net by segment, are as follows:

	September 30, 2016		December 31, 2015
Executive Search and Leadership Consulting
Americas	$	3,221	$	764
Europe	4,828		2,548
Asia Pacific	149		209
Total Executive Search and Leadership Consulting	8,198		3,521
Culture Shaping	11,956		15,166
Total other intangible assets, net	$	20,154	$	18,687

The Company identified client relationships of $3.5 million as a part of the JCA Group acquisition and included the fair value in the Europe segment. Due to the timing of the acquisitions, the Company has not completed its evaluation of identifying other intangible assets from goodwill for JCA Group and Philosophy IB.

The Company identified client relationships of $3.2 million and as part of the DSI acquisitions and included the fair value in the Americas segment.

The carrying amount of amortizable intangible assets and the related accumulated amortization are as follows:

	Weighted Average Life (in years)	September 30, 2016							December 31, 2015
		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Client relationships	7.8	$	31,503	$	(20,214	)	$	11,289	$	25,414	$	(17,550	)	$	7,864
Trade name	15.0	9,077		(4,077		)	5,000		9,251		(3,416		)	5,835
Software	7.0	7,200		(3,857		)	3,343		7,200		(3,086		)	4,114
Non-compete	5.0	570		(307		)	263		586		(117		)	469
Technology	3.0	389		(130		)	259		442		(37		)	405
Total intangible assets	9.4	$	48,739	$	(28,585	)	$	20,154	$	42,893	$	(24,206	)	$	18,687

Intangible asset amortization expense for the three months ended September 30, 2016 and 2015 was $1.6 million and $1.2 million, respectively. Intangible asset amortization expense for the nine months ended September 30, 2016 and 2015 was $4.7 million and $3.5 million, respectively

The Company's estimated future amortization expense related to intangible assets as of September 30, 2016 for the years ended December 31st is as follows:

Remainder of 2016	$	1,709
2017	5,434
2018	4,204
2019	3,242
2020	1,853
Thereafter	3,712
Total	$	20,154

9. Other Non-Current Liabilities

The components of other non-current liabilities are as follows:

	September 30, 2016		December 31, 2015
Premise related costs	$	18,066	$	17,790
Accrued earnout payments	7,831		788
Other	1,370		1,269
Total other non-current liabilities	$	27,267	$	19,847

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10. Line of Credit

On June 30, 2015, the Company entered into a Second Amended and Restated Credit Agreement (the “Restated Credit Agreement”). The Restated Credit Agreement amended and restated the Credit Agreement executed on June 22, 2011 (the “Credit Agreement”). Pursuant to the Restated Credit Agreement, the Company replaced its Revolving Facility and Term Facility (“Existing Facility”) with a single senior unsecured revolving line of credit with an aggregate commitment of up to $100 million, which includes a sublimit of $25 million for letters of credit, and a $50 million expansion feature (the “Replacement Facility”). The Replacement Facility will mature on June 30, 2020. Borrowings under the Restated Credit Agreement bear interest at the Company’s election at the existing Alternate Base Rate (as defined in the Credit Agreement) or Adjusted LIBOR Rate (as defined in the Credit Agreement) plus a spread as determined by the Company’s leverage ratio.

Borrowings under the Replacement Facility may be used for working capital, capital expenditures, Permitted Acquisitions (as defined in the Credit Agreement) and for other general corporate purposes of the Company and its subsidiaries. The obligations under the Replacement Facility are guaranteed by certain of the Company’s subsidiaries.

As of September 30, 2016 and December 31, 2015, the Company had no outstanding borrowings under the Restated Credit Agreement and the Company was in compliance with the financial and other covenants under the Restated Credit Agreement and no event of default existed.

11. Stock-Based Compensation

The Company’s 2012 Heidrick & Struggles GlobalShare Program (the “2012 Program”) provides for grants of stock options, stock appreciation rights, and other stock-based awards that are valued based upon the grant date fair value of shares. These awards may be granted to directors, selected employees and independent contractors. The 2012 Program originally authorized 1,300,000 shares of Common Stock for issuance pursuant to awards under the plan.

On May 22, 2014, the stockholders of the Company approved an amendment to the 2012 Program to increase the number of shares of Common Stock reserved for issuance under the 2012 Program by 700,000 shares. As of September 30, 2016, 1,397,410 awards have been issued under the 2012 Program and 1,003,228 shares remain available for future awards, which includes 400,638 forfeited awards. The 2012 Program provides that no awards can be granted after May 24, 2022.

The Company measures its stock-based compensation costs based on the grant date fair value of the awards and recognizes these costs in the financial statements over the requisite service period.

A summary of information with respect to stock-based compensation is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Salaries and employee benefits	$	1,155	$	1,094	$	4,492	$	3,234
General and administrative expenses	—		—		563		450
Income tax benefit related to stock-based compensation included in net income	437		259		2,005		1,301

Restricted Stock Units

Restricted stock unit activity for the nine months ended September 30, 2016:

	Number of Restricted Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	473,935		$	19.98
Granted	207,405		22.92
Vested and converted to common stock	(119,455	)	20.02
Forfeited	(24,612	)	22.81
Outstanding on September 30, 2016	537,273		20.97

As of September 30, 2016, there was $4.4 million of pre-tax unrecognized compensation expense related to unvested restricted stock units, which is expected to be recognized over a weighted average of 2.0 years.

Performance Stock Units

The Company grants performance stock units to certain of its senior executives. The performance stock units are generally subject to a cliff vesting at the end of a three year period. The vesting will vary between 0%—200% based on the attainment of operating income goals over the three year vesting period. The performance stock units are expensed on a straight-line basis over the three year vesting period.

In 2014, the Company granted market-based performance stock units to the Chief Executive Officer. The market-based awards vest after a two year service period and if the price of the Company’s common stock exceeds specified targets. The fair value of the market-based awards was determined using the Monte-Carlo simulation model. A Monte Carlo simulation model uses stock price volatility and other variables to estimate the probability of satisfying the market conditions and the resulting fair value of the award. Compensation costs related to the market-based awards are recognized regardless of whether the market condition is satisfied, as long as the requisite service has been provided. All of the market-based performance conditions were satisfied such that all 125,000 performance stock units granted to the Chief Executive Officer vested upon the completion of the two year service period in February 2016.

Performance stock unit activity for the nine months ended September 30, 2016:

	Number of Performance Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	272,024		$	18.28
Granted	125,388		22.98
Vested and converted to common stock	(160,600	)	15.51
Outstanding on September 30, 2016	236,812		22.64

As of September 30, 2016, there was $2.6 million of pre-tax unrecognized compensation expense related to unvested performance stock units, which is expected to be recognized over a weighted average of 2.1 years.

12. Income Taxes

The Company reported income before taxes of $12.4 million and $11.1 million and an income tax provision of $5.4 million and $3.6 million for the three months ended September 30, 2016 and 2015, respectively. The increase in the income tax provision was due to higher consolidated income before taxes of $1.3 million and the mix of income.

The Company reported income before taxes of $28.2 million and $26.8 million and an income tax provision of $13.2 million and $10.9 million for the nine months ended September 30, 2016 and 2015, respectively. The increase in the income tax provision was due to higher consolidated income before taxes of $1.4 million and the mix of income.

13. Changes in Accumulated Other Comprehensive Income

The changes in Accumulated other comprehensive income (“AOCI”) by component for the nine months ended September 30, 2016 is summarized below:

	Available- for- Sale Securities		Foreign Currency Translation			Pension			AOCI
Balance at December 31, 2015	$	2,394	$	8,561		$	(1,696	)	$	9,259
Other comprehensive income / (loss) before classification, net of tax	709		(1,173		)	—			(464		)
Amount reclassified from AOCI (1)	321		—			—			321
Net current period other comprehensive income / (loss)	1,030		(1,173		)	—			(143		)
Balance at September 30, 2016	$	3,424	$	7,388		$	(1,696	)	$	9,116

(1) Available-for-Sale Securities reclassifications from AOCI are included in Other, net in the Condensed Consolidated Statement of Comprehensive Income.

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14. Segment Information

The Company operates its executive search and leadership consulting services in the Americas; Europe (which includes Africa); and Asia Pacific (which includes the Middle East) and operates its culture shaping business as a separate segment.

For segment purposes, reimbursements of out-of-pocket expenses classified as revenue and other operating income are reported separately and, therefore, are not included in the results of each segment. The Company believes that analyzing trends in revenue before reimbursements (net revenue), analyzing operating expenses as a percentage of net revenue, and analyzing operating income more appropriately reflects its core operations.

The revenue and operating income (loss) by segment are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Executive Search and Leadership Consulting
Americas	$	78,198	$	78,265	$	237,557	$	218,560
Europe	32,895		25,946		91,017		69,679
Asia Pacific	23,801		25,031		67,325		72,712
Total Executive Search and Leadership Consulting	134,894		129,242		395,899		360,951
Culture Shaping	8,625		9,179		26,670		25,668
Revenue before reimbursements (net revenue)	143,519		138,421		422,569		386,619
Reimbursements	4,720		4,429		13,773		12,396
Total	$	148,239	$	142,850	$	436,342	$	399,015

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating income (loss):
Executive Search and Leadership Consulting
Americas	$	18,552		$	18,193		$	56,817		$	50,563
Europe	2,371			1,470			2,429			1,018
Asia Pacific	2,029			2,630			5,179			8,088
Total Executive Search and Leadership Consulting	22,952			22,293			64,425			59,669
Culture Shaping	41			1,539			(1,928		)	2,948
Total Segments	22,993			23,832			62,497			62,617
Global Operations Support	(10,987		)	(10,899		)	(34,929		)	(33,840		)
Total	$	12,006		$	12,933		$	27,568		$	28,777

15. Guarantees

The Company has issued cash collateralized bank guarantees and letter of credit backed bank guarantees supporting certain obligations, primarily the payment of office lease obligations and business license requirements for certain of its subsidiaries in Europe and Asia Pacific. The bank guarantees were made to secure the respective agreements and are for the terms of the agreements, which extend through 2018. For each bank guarantee issued, the Company would have to perform under the guarantee if the subsidiary defaults on a lease payment. The maximum amount of undiscounted payments the Company would be required to make in the event of default on all outstanding guarantees is approximately $2.5 million as of September 30, 2016. The Company has not accrued for these arrangements as no event of default exists or is expected to exist.

16. Commitments and Contingencies

Litigation

The Company has contingent liabilities from various pending claims and litigation matters arising in the ordinary course of the Company’s business, some of which involve claims for damages that are substantial in amount. Some of these matters are covered by insurance. Based upon information currently available, the Company believes the ultimate resolution of such claims and litigation, including the “UK Employee Benefits Trust” matter discussed below, will not have a material adverse effect on its financial condition, results of operations or liquidity.

12

UK Employee Benefits Trust

On January 27, 2010, HM Revenue & Customs (“HMRC”) in the United Kingdom notified the Company that it was challenging the tax treatment of certain of the Company’s contributions in the United Kingdom to an Employee Benefits Trust between 2002 and 2008. HMRC alleges that these contributions should have been subject to Pay As You Earn tax and Class 1 National Insurance Contributions in the United Kingdom. HMRC is proposing an adjustment to the Company’s payroll tax liability for the affected years. The aggregate amount of HMRC’s proposed adjustment is approximately £3.9 million (equivalent to $5.1 million) at September 30, 2016. The Company has appealed the proposed adjustment. At this time, the Company believes that the likelihood of an unfavorable outcome with respect to the proposed adjustment is not probable and the potential amount of any loss cannot be reasonably estimated. The Company also believes that the amount of any final adjustment would not be material to the Company’s financial condition.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as other sections of this report on Form 10-Q contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are not historical facts, but instead represent only our beliefs, assumptions, expectations, estimates, forecasts and projections regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These statements include statements other than historical information or statements of current condition and may relate to our future plans and objectives and results. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

Factors that may affect the outcome of the forward-looking statements include, among other things, leadership changes; our ability to attract, integrate, manage and retain qualified consultants and senior leaders; our ability to develop and maintain strong, long-term relationships with our clients; fluctuations in the global and local economies and our ability to execute successfully our strategies; social or political instability in markets where we operate, the impact of the U.K. referendum to leave the European Union (Brexit); the impact of foreign currency exchange rate fluctuations; unfavorable tax law changes and tax authority rulings; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; our ability to realize our tax losses; the timing of the establishment or reversal of valuation allowance on deferred tax assets; the mix of profit and loss by country; our ability to integrate future acquisitions; our reliance on information management systems; any impairment of our goodwill and other intangible assets; and the ability to align our cost structure and headcount with net revenue. For more information on the factors that could affect the outcome of forward-looking statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2015, under Risk Factors in Item 1A. We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Overview

Our Business. We are a leadership advisory firm providing executive search, culture shaping services and leadership consulting. We help our clients build leadership teams by facilitating the recruitment, management and development of senior executives. We provide our services to a broad range of clients through the expertise of over 350 consultants located in major cities around the world.

Executive Search. We partner with respected organizations globally to build and sustain the best leadership teams in the world, with a specialized focus on the placement of top-level senior executives. We believe focusing on top-level senior executives provides the opportunity for several advantages including access to and influence with key decision makers, increased potential for recurring search and consulting engagements, higher fees per executive search, enhanced brand visibility, and a leveraged global footprint. Working at the top of client organizations also facilitates the attraction and retention of high-caliber consultants who desire to serve top industry executives and their leadership needs.

Our executive search services are provided on a retained basis. Revenue before reimbursements of out-of-pocket expenses (“net revenue”) consists of retainers and indirect expenses billed to clients. For each assignment, we enter into a contract with our client that outlines the general terms and conditions of the assignment. Typically, we are paid a retainer for our executive search services equal to approximately one-third of the estimated first year compensation for the position to be filled. In addition, generally, if the actual compensation of a placed candidate exceeds the estimated compensation, we often are authorized to bill the client for one-third of the excess. Indirect expenses are calculated as a percentage of the retainer with certain dollar limits per search. We generally bill our clients for our retainer and indirect expenses in one-third increments over a three-month period commencing in the month of a client's acceptance of the contract.

On August 4, 2016, we acquired JCA Group Limited ("JCA Group") a UK-based provider of executive search, succession planning and coaching services.

Culture Shaping. Our culture shaping business uses its proprietary technology to analyze and interpret organizational cultures and drivers and partner with clients to administer methods that develop alignment on leadership teams and desired organizational outcomes. Culture Shaping is currently less than 10% of our net revenue. Our culture shaping services generate revenue through a combination of professional service and license fees related to the engagement. Net revenue associated with culture shaping consulting is recognized proportionally as services are performed. Net revenue associated with licenses to use culture shaping proprietary materials is typically recognized over the term of the arrangement.

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Leadership Consulting. Leadership consulting works with clients to accelerate performance at the strategic, organization, team and individual leader levels. Leadership Consulting is currently less than 10% of our net revenue. Our leadership consulting services generate revenue primarily through the professional fees generated for each engagement which are generally based on the size of the project and scope of services. Depending on the terms of the agreement, net revenue from leadership consulting is either recognized proportionally as services are performed or in accordance with the completion of the engagement deliverables. On September 1, 2016, we acquired Philosophy IB, LLP, a leadership, organizational development and management consulting firm. On February 29, 2016, we acquired Decision Strategies International, Inc., which specializes in advising organizations and institutions on strategic planning and decision making in certain operating environments, leadership development and talent strategy. On October 1, 2015, we acquired Co Company Limited, an organizational development consulting firm.

Key Performance Indicators

We manage and assess Heidrick & Struggles’ performance through various means, with the primary financial and operational measures including net revenue, operating income, operating margin, Adjusted EBITDA (non-GAAP), and Adjusted EBITDA margin (non-GAAP). Executive Search and Leadership Consulting performance is also measured using consultant headcount and consultant productivity. Specific to Executive Search, confirmation trends and average revenue per search or project are used to measure performance.

Revenue is driven by market conditions and a combination of the number of executive search engagements and leadership consulting and culture shaping projects and the average revenue per search or project. With the exception of compensation expense, incremental increases in revenue do not necessarily result in proportionate increases in costs, particularly operating and administrative expenses, thus potentially improving operating margins.

The number of consultants, confirmation trends, number of searches or projects completed, productivity levels and the average revenue per search or project will vary from quarter to quarter, affecting net revenue and operating margin.

Our Compensation Model

At the Executive Search consultant level there are fixed and variable components of compensation. Individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible. A portion of the reward is based upon individual performance against a series of non-financial measures. Credit towards the variable portion of an Executive Search consultant’s compensation is earned by generating net revenue for winning and executing work. Each quarter, we review and update the expected annual performance of all Executive Search consultants and accrue variable compensation accordingly. The amount of variable compensation that is accrued for each Executive Search consultant is based on a tiered payout model. Overall Company performance determines the amount available for total variable compensation. The more net revenue that is generated by the consultant, the higher the percentage credited towards the consultant’s variable compensation and thus accrued by our Company as expense. The mix of individual consultants who generate the revenue can significantly affect the total amount of compensation expense recorded, which directly impacts operating margin. As a result, the variable portion of the compensation expense may fluctuate significantly from quarter to quarter. The total variable compensation is discretionary and is based on Company-wide financial targets approved by the Human Resources and Compensation Committee of the Board of Directors.

A portion of our Executive Search consultants’ and management cash bonuses is deferred and paid over a three-year vesting period. The compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period. This service period begins on January 1 of the respective fiscal year and continues through the deferral date, which coincides with our bonus payments in the first quarter of the following year, and for an additional three year vesting period. The deferrals are recorded in Accrued salaries and employee benefits and Other non-current liabilities in the Condensed Consolidated Balance Sheets.

Fourth Quarter 2016 Outlook

We are currently forecasting 2016fourth quarter net revenue of between $142 million and $152 million. Our 2016fourth quarter guidance is based upon, among other things, management’s assumptions for the anticipated volume of new executive search confirmations and leadership consulting and culture shaping projects, the current backlog, consultant productivity, consultant retention, the seasonality of our business and average currency rates in September 2016.

Our 2016 guidance is subject to a number of risks and uncertainties, including those discussed under Item 1A - Risk Factors in our 2015 Annual Report on Form 10-K. As such, actual results could vary from these projections.

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Results of Operations

The following table summarizes, for the periods indicated, our results of operations as a percentage of revenue before reimbursements (net revenue): 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Revenue before reimbursements (net revenue)	100.0	%	100.0	%	100.0	%	100.0	%
Reimbursements	3.3		3.2		3.3		3.2
Total revenue	103.3		103.2		103.3		103.2
Operating expenses:	—		—		—		—
Salaries and employee benefits	66.4		69.2		68.2		68.5
General and administrative expenses	25.2		21.5		25.3		24.0
Reimbursed expenses	3.3		3.2		3.3		3.2
Total operating expenses	94.9		93.9		96.7		95.8
Operating income	8.4		9.3		6.5		7.4
Non-operating income (expense):
Interest, net	—		—		—		(0.1	)
Other, net	0.2		(1.3	)	0.1		(0.4	)
Net non-operating income (expense)	0.3		(1.3	)	0.1		(0.5	)
Income before income taxes	8.6		8.0		6.7		6.9
Provision for income taxes	3.8		2.6		3.1		2.8
Net income	4.8	%	5.4	%	3.5	%	4.1	%

Note: Totals and sub-totals may not equal the sum of individual line items due to rounding.

We operate our executive search and leadership consulting services in the Americas; Europe (which includes Africa); and Asia Pacific (which includes the Middle East) and operate our culture shaping business as a separate segment (See Note 14, Segment Information).

The following tables set forth, for the periods indicated, our revenue and operating income by segment (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Executive Search and Leadership Consulting
Americas	$	78,198	$	78,265	$	237,557	$	218,560
Europe	32,895		25,946		91,017		69,679
Asia Pacific	23,801		25,031		67,325		72,712
Total Executive Search and Leadership Consulting	134,894		129,242		395,899		360,951
Culture Shaping	8,625		9,179		26,670		25,668
Revenue before reimbursements (net revenue)	143,519		138,421		422,569		386,619
Reimbursements	4,720		4,429		13,773		12,396
Total	$	148,239	$	142,850	$	436,342	$	399,015

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating income (loss):
Executive Search and Leadership Consulting
Americas	$	18,552		$	18,193		$	56,817		$	50,563
Europe	2,371			1,470			2,429			1,018
Asia Pacific	2,029			2,630			5,179			8,088
Total Executive Search and Leadership Consulting	22,952			22,293			64,425			59,669
Culture Shaping	41			1,539			(1,928		)	2,948
Total Segments	22,993			23,832			62,497			62,617
Global Operations Support	(10,987		)	(10,899		)	(34,929		)	(33,840		)
Total	$	12,006		$	12,933		$	27,568		$	28,777

Three Months Ended September 30, 2016 Compared to the Three Months Ended September 30, 2015

Total revenue. Consolidated total revenue increased $5.4 million, or 3.8%, to $148.2 million in 2016 from $142.9 million in 2015. The increase in total revenue was due primarily to the increase in revenue before reimbursements (net revenue).

Revenue before reimbursements (net revenue). Consolidated net revenue increased $5.1 million, or 3.7%, to $143.5 million for the three months ended September 30, 2016 from $138.4 million for the three months ended September 30, 2015. Foreign exchange rate fluctuations decreased revenue by $0.6 million, or less than one percentage point. Executive Search and Leadership Consulting net revenue was $134.9 million, an increase of $5.7 million compared to the three months ended September 30, 2015. The increase in Executive Search and Leadership Consulting net revenue is primarily due to our recent acquisitions, as well as growth in all practice groups, with the exception of the Financial Services and Global Technology & Services practice groups. Culture Shaping net revenue was $8.6 million for the three months ended September 30, 2016, a decrease of $0.6 million compared to the three months ended September 30, 2015.

The number of Executive Search and Leadership Consulting consultants was 356 as of September 30, 2016 compared to 334 as of September 30, 2015, with our recent acquisitions contributing 23 consultants to 2016. Productivity, as measured by annualized net Executive Search and Leadership Consulting revenue per consultant was $1.5 million for the three months ended September 30, 2016 compared to $1.6 million for the three months ended September 30, 2015. Specific to Executive Search, our primary business, the number of confirmed searches increased 5.7% compared to the third quarter of 2015. The average revenue per executive search decreased to $113,700 in the third quarter of 2016 compared to $121,200 in the third quarter of 2015.

Salaries and employee benefits. Consolidated salaries and employee benefits expense decreased $0.4 million, or 0.4%, to $95.4 million for the three months ended September 30, 2016 from $95.7 million for the three months ended September 30, 2015. The decrease was primarily due to lower variable compensation partially offset by increased fixed compensation of $7.3 million. Fixed compensation increased due to higher compensation related to our four recent acquisitions, higher base salaries and benefit costs, new hires over the last year with incentives and minimum guarantees that are part of the consultant hiring process, and $1.3 million of investments in new and existing partners in our Culture Shaping business. As a result of higher fixed compensation expense and an increase in the use of third-party consultants, whose costs are included in General and administrative expenses, variable compensation declined $7.7 million in the quarter reflecting the overall profitability of the business.

In the 2016 third quarter we had an average of 1,770 employees compared to an average of 1,548 employees in the 2015 third quarter. Foreign exchange rate fluctuations increased salaries and employee benefits expense by $0.1 million, or less than one percent, in the third quarter of 2016.

As a percentage of net revenue, salaries and employee benefits expense was 66.4% in in the third quarter of 2016 as compared to 69.2% for the same period in the prior year.

General and administrative expenses. Consolidated general and administrative expenses increased $6.4 million, or 21.5%, to $36.2 million for the three months ended September 30, 2016. The increase was due to ongoing general and administrative expenses related to our four recent acquisitions including the use of third-party consultants in these businesses to execute work, higher professional service fees supporting technology implementation, training and development, marketing and audit fees,

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higher unbilled travel and business development expense, higher temporary help and hiring fees, and an increase in technology subscription costs reflecting additional headcount throughout the business for cloud-based services.

Foreign exchange rate fluctuations did not impact general and administrative expense in the third quarter of 2016.

As a percentage of net revenue, general and administrative expenses were 25.2% in the third quarter of 2016 compared to 21.5% in the third quarter of 2015.

Operating income. Consolidated operating income was $12.0 million for the three months ended September 30, 2016, compared to $12.9 million for the three months ended September 30, 2015. The net impact of foreign exchange rate fluctuations decreased operating income by $0.7 million.

Net non-operating income (expense). Net non-operating income was $0.4 million for the three months ended September 30, 2016 an increase of $2.2 million from net non-operating expense of $1.8 million for the three months ended September 30, 2015.

Interest, net was zero in the third quarter of 2016 compared to $0.1 million of expense in 2015. Interest expense decreased $0.1 million due the repayment of outstanding debt in the third quarter of 2015.

Other, net was $0.3 million of income and $1.7 million of expense for the three months ended September 30, 2016 and 2015, respectively. Other, net increased due to lower net losses on available for sale securities compared to the prior year and decreased losses on the disposal of fixed assets.

Income taxes. See Note 12, Income Taxes.

Executive Search and Leadership Consulting

Americas

The Americas segment reported net revenue of $78.2 million for the three months ended September 30, 2016, a decrease of less than one percent, from $78.3 million for the three months ended September 30, 2015. The decrease in net revenue was driven by decreases in the Financial Services and Global Technology & Services practice groups, partially offset by growth in the Consumer Markets and Industrial practice groups. The revenue from DSI also partially offset the revenue decline. Foreign exchange rate fluctuations increased net revenue by less than one percentage point. The number of consultants within the Americas segment was 164 as of September 30, 2016 compared to 152 at September 30, 2015, with DSI and Philosophy IB each contributing three consultants to 2016.

Salaries and employee benefits expense decreased $3.0 million from the third quarter of 2015. Fixed compensation increased $2.7 million due to higher base salaries and payroll taxes of $1.4 million due to an increase in headcount. Variable compensation decreased $5.7 million due to lower bonus accruals.

General and administrative expense increased $2.6 million primarily due to the acquisition of DSI in February 2016 and higher unbilled travel and business development costs.

The Americas region reported operating income of $18.6 million for the three months ended September 30, 2016, an increase of $0.4 million compared to $18.2 million for the three months ended September 30, 2015.

Europe

The Europe segment reported net revenue of $32.9 million for the three months ended September 30, 2016, an increase of 26.8%, from $25.9 million for the three months ended September 30, 2015. All industry practice groups contributed to net revenue growth except for the Education, Nonprofit & Social Enterprise practice group. Also contributing to this growth was the Company's acquisition of Co Company in October 2015 and JCA Group in August of 2016. Foreign exchange rate fluctuations reduced net revenue by approximately four percentage points. The number of consultants within the Europe segment was 103 as of September 30, 2016 compared to 91 at September 30, 2015, with Co Company and JCA Group contributing six and 11 consultants to 2016, respectively.

Salaries and employee benefits expense increased $3.0 million from the third quarter of 2015. Fixed compensation increased $3.0 million due to increased minimum guarantees and higher base salaries and payroll taxes, primarily from merit increases and additional headcount related to the Co Company and JCA Group acquisitions. Variable compensation remained unchanged compared to the third quarter of 2015.

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General and administrative expense increased $3.0 million from the third quarter of 2015 primarily as a result of ongoing general and administrative expenses related to our recent acquisitions and the use of third-party consultants in Co Company's business to execute work along with increased professional services.

The Europe segment reported operating income of $2.4 million for the three months ended September 30, 2016, an increase of $0.9 million compared to the three months ended September 30, 2015.

Asia Pacific

The Asia Pacific segment reported net revenue of $23.8 million for the three months ended September 30, 2016, a decrease of 4.9% from $25.0 million for the three months ended September 30, 2015. The decrease in net revenue was across all industry practice groups except for the Consumer Markets and Healthcare and Life Sciences practice groups. Foreign exchange rate fluctuations increased net revenue by approximately three percentage points. The number of consultants within the Asia Pacific segment was 89 as of September 30, 2016 compared to 91 at September 30, 2015.

Salaries and employee benefits expense decreased $1.4 million from the third quarter of 2015. The decrease in salaries and employee benefits expense is due to lower variable compensation of $2.2 million from lower bonus accruals for consultant performance. Fixed compensation increased $0.8 million compared to the prior year related to an increase in average headcount.

General and administrative expense increased $0.8 million from the third quarter of 2015 due to higher professional services, higher unbilled travel and business development cost and higher office occupancy expenses.

The Asia Pacific segment had operating income of $2.0 million for the three months ended September 30, 2016, a decrease of $0.6 million from the third quarter of 2015.

Culture Shaping

The Culture Shaping segment reported net revenue of $8.6 million for the three months ended September 30, 2016, a decrease of 6.0% from $9.2 million for the three months ended September 30, 2015. The decrease is the result of a lower volume of client work.

Salaries and employee benefits expense increased $0.5 million from the third quarter of 2015 due to investments in new and existing consultants.

General and administrative expenses increased $0.4 million from the third quarter of 2015 primarily due to higher professional services and internal travel expenses, partially offset by lower hiring fees and temporary labor costs.

The Culture Shaping segment reported operating income of zero for the three months ended September 30, 2016, a decrease of $1.5 million compared to the three months ended September 30, 2015.

Global Operations Support

Global Operations Support expenses for the three months ended September 30, 2016 increased $0.1 million, or 1.0%, to $11.0 million from $10.9 million for the three months ended September 30, 2015.

Salaries and employee benefits expense increased $0.5 million due to higher base salaries and payroll taxes and bonus accruals for management and support personnel.

General and administrative expense decreased $0.4 million due to lower internal travel costs.

Nine Months Ended September 30, 2016 Compared to the Nine Months Ended September 30, 2015

Total revenue. Consolidated total revenue increased $37.3 million, or 9.4%, to $436.3 million in 2016 from $399.0 million in 2015. The increase in total revenue was due primarily to the increase in revenue before reimbursements (net revenue).

Revenue before reimbursements (net revenue). Consolidated net revenue increased $36.0 million, or 9.3%, to $422.6 million for the nine months ended September 30, 2016 from $386.6 million for the nine months ended September 30, 2015. Foreign exchange rate fluctuations decreased revenue by $4.3 million, or 1.1%. Executive Search and Leadership Consulting net revenue was $395.9 million, an increase of $34.9 million compared to the nine months ended September 30, 2015. The

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increase in Executive Search and Leadership Consulting net revenue is primarily due to our recent acquisitions, as well as growth in all practice groups except for the Education, Nonprofit & Social Enterprise practice group. Culture Shaping net revenue was $26.7 million for the nine months ended September 30, 2016, an increase of $1.0 million compared to the nine months ended September 30, 2015.

The number of Executive Search and Leadership Consulting consultants was 356 as of September 30, 2016 compared to 334 as of September 30, 2015, with our recent acquisitions contributing 23 consultants to 2016. Productivity, as measured by annualized net Executive Search and Leadership Consulting revenue per consultant was $1.5 million for each of the nine months ended September 30, 2016 and 2015, respectively. Specific to Executive Search, our primary business, the number of confirmed searches increased 6% compared to the nine months ended September 30, 2015. The average revenue per executive search decreased to $110,800 for the nine months ended September 30, 2016 compared to $111,200 for the nine months ended September 30, 2015.

Salaries and employee benefits. Consolidated salaries and employee benefits expense increased $23.1 million, or 8.7%, to $288.0 million for the nine months ended September 30, 2016 from $264.9 million for the nine months ended September 30, 2015. The decrease was primarily due to lower variable compensation partially offset by increased fixed compensation of $24.7 million. Fixed compensation increased due to higher compensation related to our four recent acquisitions, new hires over the last year with incentives and minimum guarantees that are part of the consultant hiring process, $5.2 million of investments in new and existing partners in our Culture Shaping business and severance related to the repositioning of the Leadership Consulting business. As a result of higher fixed compensation expense and an increase in the use of third-party consultants, whose costs are included in General and administrative expenses, variable compensation decreased $1.6 million in the quarter reflecting the overall profitability of the business.

For the nine months ended September 30, 2016 we had an average of 1,721 employees compared to an average of 1,520 employees for the nine months ended September 30, 2015. Foreign exchange rate fluctuations decreased salaries and employee benefits expense by $2.5 million, or approximately one percentage point.

As a percentage of net revenue, salaries and employee benefits expense was 68.2% for the nine months ended September 30, 2016 compared to 68.5% for the same period in the prior year.

General and administrative expenses. Consolidated general and administrative expenses increased $14.1 million, or 15.1%, to $107.0 million for the nine months ended September 30, 2016. The increase was due to ongoing general and administrative expenses related to our recent four acquisitions primarily from the use of third-party consultants in these businesses to execute work, the repositioning of our Leadership Consulting business of $1.5 million, higher professional service fees supporting technology implementation and training and development fees, higher unbilled travel and business development expense, and an increase in technology subscription costs reflecting additional headcount throughout the business for cloud-based services.

Foreign exchange rate fluctuations decreased general and administrative expense by $0.9 million, or approximately one percentage point.

As a percentage of net revenue, general and administrative expenses were 25.3% for the nine months ended September 30, 2016 compared to 24.0% for the nine months ended September 30, 2015.

Operating income. Consolidated operating income was $27.6 million for the nine months ended September 30, 2016, compared to $28.8 million for the nine months ended September 30, 2015. The net impacts of foreign exchange rate fluctuations reduced operating income by $0.9 million.

Net non-operating income (expense). Net non-operating income was $0.6 million for the nine months ended September 30, 2016, an increase of $2.6 million from net non-operating expense of $2.0 million for the nine months ended September 30, 2015.

Interest, net was $0.2 million of income for the nine months ended September 30, 2016 compared to $0.3 million of expense in 2015. Interest expense decreased $0.5 million due the repayment of outstanding debt in the third quarter of 2015, which had been outstanding during the nine months ended September 30, 2015.

Other, net was income of $0.4 million for the nine months ended September 30, 2016 and expense of $1.7 million for the nine months ended September 30, 2015. Other, net increased due to lower net losses on available for sale securities compared to the prior year and decreased losses on the disposal of fixed assets.

Income taxes. See Note 12, Income Taxes.

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Executive Search and Leadership Consulting

Americas

The Americas segment reported net revenue of $237.6 million for the nine months ended September 30, 2016, an increase of 8.7%, from $218.6 million for the nine months ended September 30, 2015. The increase in net revenue was driven by our DSI acquisition and growth in all practice groups except the Industrial practice group. Foreign exchange rate fluctuations reduced net revenue by less than one percentage point. The number of consultants within the Americas segment increased to 164 as of September 30, 2016 compared to 152 at September 30, 2015, with DSI and Philosophy IB each contributing three consultants to 2016.

Salaries and employee benefits expense increased $8.9 million compared to the prior year. Fixed compensation increased $10.8 million primarily due to higher base salaries and payroll taxes of $3.7 million, higher minimum guarantees and sign-on bonuses of $2.3 million and increased deferred compensation due to market fluctuations. Variable compensation decreased $1.9 million due to lower bonus accruals.

General and administrative expense increased $3.9 million primarily as a result of ongoing general and administrative expenses related to our recent acquisition of DSI and its use of third-party consultants to execute work, higher office occupancy costs and higher unbilled travel and business development cost.

The Americas region reported operating income of $56.8 million for the nine months ended September 30, 2016, an increase of $6.2 million compared to $50.6 million for the nine months ended September 30, 2015.

Europe

The Europe segment reported net revenue of $91.0 million for the nine months ended September 30, 2016, an increase of 30.6%, from $69.7 million for the nine months ended September 30, 2015. All industry practice groups contributed to net revenue growth except for the Education, Nonprofit & Social Enterprise practice group. Contributing to this growth were the Company's acquisitions of Co Company in October 2015 and JCA Group in August 2016. Foreign exchange rate fluctuations reduced net revenue by approximately four percentage points. The number of consultants within the Europe segment increased to 103 as of September 30, 2016 compared to 91 at September 30, 2015, with Co Company and JCA Group contributing six and 11 consultants to 2016, respectively.

Salaries and employee benefits expense increased $10.9 million from the nine months ended September 30, 2015. Fixed compensation increased $8.0 million due to higher base salaries and payroll taxes of $5.6 million primarily from merit increases, additional headcount related to the Co Company and JCA Group acquisitions, higher minimum guarantees of $1.7 million and costs related to the repositioning of our Leadership Consulting business of $0.6 million. Variable compensation increased $3.0 million due to higher bonus accruals for consultant performance.

General and administrative expense increased $9.0 million compared to the nine months ended September 30, 2015 primarily as a result of ongoing general and administrative expenses related to our recent acquisitions, including the use of third-party external consultants to execute work, $1.5 million of costs associated with repositioning of our Leadership Consulting business and higher unbilled travel and business development cost.

The Europe segment reported operating income of $2.4 million for the nine months ended September 30, 2016, an increase of $1.4 million compared to the nine months ended September 30, 2015.

Asia Pacific

The Asia Pacific segment reported net revenue of $67.3 million for the nine months ended September 30, 2016, a decrease of 7.4% from $72.7 million for the nine months ended September 30, 2015. The decrease in net revenue was across all industry practice groups. Foreign exchange rate fluctuations reduced net revenue by less than one percentage point. The number of consultants within the Asia Pacific segment decreased to 89 as of September 30, 2016 as compared to 91 at September 30, 2015.

Salaries and employee benefits expense decreased $2.9 million compared to the nine months ended September 30, 2015. The decrease in salaries and employee benefits expense is due to lower variable compensation of $4.7 million from lower bonus accruals for consultant performance partially offset by an increase in fixed compensation $1.8 million as a result of headcount increases and the timing of merit increases.

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General and administrative expense increased $0.5 million compared to the nine months ended September 30, 2015 primarily due to higher office occupancy expenses and higher unbilled travel and business development cost, partially offset by lower litigation expenses.

The Asia Pacific segment had operating income of $5.2 million for the nine months ended September 30, 2016, a decrease of $2.9 million from the prior year.

Culture Shaping

The Culture Shaping segment reported net revenue of $26.7 million for the nine months ended September 30, 2016, an increase of 3.9% from $25.7 million for the nine months ended September 30, 2015. The increase is the result of a higher volume of client work.

Salaries and employee benefits expense increased $4.7 million compared to the nine months ended September 30, 2015 due to investments in new and existing consultants.

General and administrative expenses increased $1.2 million compared to the nine months ended September 30, 2015 primarily due to third-party external consultant costs.

The Culture Shaping segment reported an operating loss of $1.9 million for the nine months ended September 30, 2016, a decrease of $4.9 million compared to $2.9 million of operating income for the nine months ended September 30, 2015.

Global Operations Support

Global Operations Support expenses for the nine months ended September 30, 2016 increased $1.1 million, or 3.2%, to $34.9 million.

Salaries and employee benefits expense increased $1.5 million due to additional stock-based compensation expense related to meeting the vesting requirements of the performance share awards for the chief executive officer.

General and administrative expense decreased $0.4 million due to decreases in internal travel costs and office occupancy expenses that were partially offset by increased professional services.

Liquidity and Capital Resources

General. We continually evaluate our liquidity requirements, capital needs and availability of capital resources based on our operating needs. We believe that our available cash balances together with the funds expected to be generated from operations and funds available under our committed revolving credit facility will be sufficient to finance our operations for the foreseeable future, as well as to finance the cash payments associated with our cash dividends and stock repurchase program.

We pay the non-deferred portion of annual bonuses in the first quarter following the year in which they are earned. Employee bonuses are accrued throughout the year and are based on our performance and the performance of the individual employee.

Lines of credit. On June 30, 2015, we entered into a Second Amended and Restated Credit Agreement (the “Restated Credit Agreement”). The Restated Credit Agreement amended and restated the Credit Agreement executed on June 22, 2011 (the “Credit Agreement”). Pursuant to the Restated Credit Agreement, we replaced our Revolving Facility and Term Facility (“Existing Facility”) with a single senior unsecured revolving line of credit with an aggregate commitment of up to $100 million, which includes a sublimit of $25 million for letters of credit, and a $50 million expansion feature (the “Replacement Facility”). The Replacement Facility will mature on June 30, 2020. Borrowings under the Restated Credit Agreement bear interest at our election at the existing Alternate Base Rate (as defined in the Credit Agreement) or Adjusted LIBOR Rate (as defined in the Credit Agreement) plus a spread as determined by our leverage ratio. As of September 30, 2016, we did not have any borrowings outstanding under the Restated Credit Agreement.

We were in compliance with the financial and other covenants under the Restated Credit Agreement and no event of default existed.

Cash and cash equivalents. Cash and cash equivalents at September 30, 2016, December 31, 2015 and September 30, 2015 were $100.0 million, $190.5 million and $129.0 million, respectively. The $100.0 million of cash and cash equivalents at September 30, 2016 includes $51.0 million held by our foreign subsidiaries. A portion of the $51.0 million is considered permanently reinvested in these foreign subsidiaries. If these funds were required to satisfy obligations in the U.S., the

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repatriation of these funds could cause us to incur additional U.S. income taxes or foreign withholding taxes. Any additional taxes could be offset, in part or in whole, by foreign tax credits. The amount of such taxes and application of tax credits would be dependent on the income tax laws and other circumstances at the time these amounts are repatriated. Based on these variables, it is not practicable to determine the income tax liability that might be incurred if these earnings were to be repatriated.

Cash flows used in operating activities. For the nine months ended September 30, 2016, cash used in operating activities was $49.0 million. This use of cash was primarily the result of a reduction in accrued expenses due to cash bonus payments of $145.0 million related to 2015 and prior year cash bonus deferrals with 2016 variable compensation accruals of $101.0 million partially offsetting these payments, an increase in accounts receivable of $33.3 million, the payment of $6.5 million for the retention bonus paid to certain key executives related to the Senn Delaney acquisition and an increase in prepaid expenses of $4.2 million. These uses of cash were partially offset by a net income of $14.9 million, depreciation and amortization expense of $11.7 million, stock compensation expense of $5.1 million an increase in accounts payable of $2.3 million and an increase in deferred revenue of $1.3 million.

For the nine months ended September 30, 2015, cash used in operating activities was $20.0 million, principally reflecting an increase in accounts receivable of $40.6 million and a decrease in accrued expenses of $5.4 million, partially offset by net income of $15.9 million. The accrued expense decrease reflects approximately $113 million of bonus payments for 2014 and prior year cash deferrals partially offset by 2015 bonus accruals of $93.6 million.

Cash flows used in investing activities. Cash used in investing activities was $24.5 million for the nine months ended September 30, 2016 primarily due to our recent acquisitions of JCA Group, DSI and Philosophy IB for $14.9 million, $9.0 million and $6.0 million, respectively. This use of cash was partially offset by a reduction in restricted cash of $7.2 million primarily due to a release of funds for the retention bonuses paid to certain key executives related to the Senn Delaney acquisition.

Cash used in investing activities was $14.7 million for the nine months ended September 30, 2015 primarily due to capital expenditures of $13.9 million and net purchases of available for sale securities of $1.4 million. Capital expenditures primarily related to the office build out for our new Chicago office space.

Cash flows used in financing activities. Cash used in financing activities for the nine months ended September 30, 2016 was $17.6 million primarily due to earnout payments for Senn Delaney, Scambler MacGregor and Co Company acquisitions of $6.8 million, $0.4 million and $0.2 million, respectively, cash dividend payments of $7.4 million and the payment of employee tax withholdings on equity transactions of $2.7 million.

Cash used in financing activities for the nine months ended September 30, 2015 was $43.8 million primarily due to debt repayments of $29.5 million, cash dividend payments of $7.5 million and earnout payments of $5.5 million related to the Senn Delaney and Scambler MacGregor acquisitions.

Off-Balance Sheet Arrangements. We do not have material off-balance sheet arrangements, special purpose entities, trading activities of non-exchange traded contracts or transactions with related parties.

Application of Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared using accounting principles generally accepted in the United States of America. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 10, 2016, and in Note 2, Summary of Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements included in Item 1. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. If actual amounts are ultimately different from previous estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the

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financial statements. Management believes its critical accounting policies that reflect its more significant estimates and assumptions relate to revenue recognition, income taxes, interim effective tax rate and assessment of goodwill and other intangible assets for impairment. See Application of Critical Accounting Policies and Estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 10, 2016.

Recently Issued Financial Accounting Standards

In August 2016, the Financial Accounting Standards Board ("FASB") issued accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice as to how certain cash receipts and cash payments should be presented and classified. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company has evaluated the standard and noted the guidance for contingent consideration payments made after a business combination are applicable to the Condensed Consolidated Statements of Cash Flows. The Company currently classifies all contingent consideration payments as financing activities. The impact of this change is not expected to be significant to the classification of these activities on the Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions including the income tax accounting, classification of awards as either equity or liabilities, the accounting for forfeitures and classification on the statement of cash flows. The standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company is planning to early adopt this standard during the fourth quarter of 2016. The impact of this change is not expected to be significant to Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, intended to improve financial reporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments including the recognition of unrealized changes in fair value within net income. The standard is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU requires that an entity recognizes revenue to depict the transfer of promised goods or services to customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for these goods or services. The effective date has been deferred for one year to the interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was interim and annual reporting periods beginning after December 15, 2016. The guidance permits the use of either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a retrospective approach with the cumulative effect upon initial adoption recognized at the date of adoption. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency market risk. With our operations in the Americas, Europe and Asia Pacific, we conduct business using various currencies. Revenue earned in each country is generally matched with the associated expenses incurred, thereby reducing currency risk to earnings. However, because certain assets and liabilities are denominated in currencies other than the U.S. dollar, changes in currency rates may cause fluctuations in the valuation of such assets and liabilities. As the local currency of our subsidiaries has generally been designated as the functional currency, we are affected by the translation of foreign currency financial statements into U.S. dollars. A 10% change in the average exchange rate for currencies of all foreign countries in which we operate would have increased or decreased our net income for the nine months ended September 30, 2016 by $0.4 million. For financial information by geographic segment, see Note 14, Segment Information, in the Notes to Condensed Consolidated Financial Statements.

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures as defined in the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) Rule 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to the Company’s management, including its 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.

Management of the Company, with the participation of the principal executive officer and the principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2016. Based on the evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2016.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information presented in Note 16, Commitments and Contingencies, to our Condensed Consolidated Financial Statements within this Quarterly Report on Form 10-Q is incorporated herein by reference.

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Item 6. Exhibits

Exhibit No.	Description
*31.1	Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of the Company’s Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of the Company’s Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*101.INS	XBRL Instance Document
*101.SCH	XBRL Taxonomy Extension Schema Document
*101.CAL	XBRL Taxonomy Calculation Linkbase Document
*101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB	XBRL Taxonomy Extension Label Linkbase Document
*101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

27

SIGNATURE

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

Date: October 26, 2016

Heidrick & Struggles International, Inc.

(Registrant)

/s/ Stephen A. Bondi

Stephen A. Bondi

Vice President, Controller

28

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Tracy R. Wolstencroft, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Heidrick & Struggles International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	October 26, 2016	/s/ Tracy R. Wolstencroft
		Tracy R. Wolstencroft
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard W. Pehlke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Heidrick & Struggles International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	October 26, 2016	/s/ Richard W. Pehlke
		Richard W. Pehlke
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Heidrick & Struggles International, Inc., a Delaware corporation (the “Company”), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 26, 2016	/s/ Tracy R. Wolstencroft
		Tracy R. Wolstencroft
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Heidrick & Struggles International, Inc., a Delaware corporation (the “Company”), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 26, 2016	/s/ Richard W. Pehlke
		Richard W. Pehlke
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 21, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	HSII
Entity Registrant Name	HEIDRICK & STRUGGLES INTERNATIONAL INC
Entity Central Index Key	0001066605
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,582,574

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 99,975	$ 190,452
Accounts receivable, net	114,726	76,058
Prepaid expenses	23,936	19,197
Other current assets	14,867	18,447
Income taxes recoverable	5,451	4,809
Total current assets	258,955	308,963
Non-current assets:
Property and equipment, net	36,137	36,498
Assets designated for retirement and pension plans	17,438	16,857
Investments	17,268	14,145
Other non-current assets	11,233	11,115
Goodwill	155,313	131,122
Other intangible assets, net	20,154	18,687
Deferred income taxes	37,277	35,331
Total non-current assets	294,820	263,755
Total assets	553,775	572,718
Current liabilities:
Accounts payable	9,644	6,150
Accrued salaries and employee benefits	120,102	158,875
Deferred revenue, net	31,713	29,724
Other current liabilities	25,103	31,239
Income taxes payable	3,897	3,442
Total current liabilities	190,459	229,430
Accrued Salaries And Employee Benefits Noncurrent	30,363	32,690
Non-current liabilities:
Retirement and pension plans	39,921	35,949
Other non-current liabilities	27,267	19,847
Total non-current liabilities	97,551	88,486
Total liabilities	288,010	317,916
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at June 30, 2016 and December 31, 2015	0	0
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,585,777 shares issued, 18,577,230 and 18,379,398 shares outstanding at June 30, 2016 and December 31, 2015, respectively	196	196
Treasury stock at cost, 1,008,547 and 1,206,379 shares at June 30, 2016 and December 31, 2015, respectively	(32,915)	(39,583)
Additional paid in capital	229,318	232,358
Retained earnings	60,050	52,572
Accumulated other comprehensive income	9,116	9,259
Total stockholders’ equity	265,765	254,802
Total liabilities and stockholders’ equity	$ 553,775	$ 572,718

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	19,585,777	19,585,777
Common stock, shares outstanding	18,578,176	18,379,398
Treasury stock, shares	1,007,601	1,206,379

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Revenue before reimbursements (net revenue)	$ 143,519	$ 138,421	$ 422,569	$ 386,619
Reimbursements	4,720	4,429	13,773	12,396
Total revenue	148,239	142,850	436,342	399,015
Operating expenses:
Salaries and employee benefits	95,355	95,724	288,015	264,914
General and administrative expenses	36,158	29,764	106,986	92,928
Reimbursed expenses	4,720	4,429	13,773	12,396
Total operating expenses	136,233	129,917	408,774	370,238
Operating income	12,006	12,933	27,568	28,777
Non-operating income (expense):
Interest, net	42	(54)	172	(300)
Other, net	340	(1,742)	418	(1,696)
Net non-operating income (expense)	382	(1,796)	590	(1,996)
Income before income taxes	12,388	11,137	28,158	26,781
Provision for income taxes	5,448	3,647	13,238	10,909
Net income	6,940	7,490	14,920	15,872
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(717)	(347)	(1,173)	(1,645)
Net unrealized gain (loss) on available-for-sale investments	519	(941)	1,030	(802)
Unrealized loss on cash flow hedge	0	0	0	(78)
Other comprehensive income (loss), net of tax	(198)	(1,288)	(143)	(2,525)
Comprehensive income	$ 6,742	$ 6,202	$ 14,777	$ 13,347
Basic weighted average common shares outstanding (in shares)	18,577	18,372	18,528	18,318
Dilutive common shares (in shares)	273	277	273	277
Diluted weighted average common shares outstanding (in shares)	18,850	18,649	18,801	18,595
Basic net income per common share (in USD per share)	$ 0.37	$ 0.41	$ 0.81	$ 0.87
Diluted net income per common share (in USD per share)	0.37	0.40	0.79	0.85
Cash dividends paid per share (in USD per share)	$ 0.13	$ 0.13	$ 0.39	$ 0.39

XML

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Beginning balance at Dec. 31, 2015	$ 254,802	$ 196	$ (39,583)	$ 232,358	$ 52,572	$ 9,259
Beginning balance, shares at Dec. 31, 2015	18,379,398	19,586,000	1,206,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 14,920				14,920
Other comprehensive income, net of tax	(143)					(143)
Treasury and common stock transactions:
Stock-based compensation	5,055			5,055
Vesting of equity, net of tax withholdings	(2,688)		$ (5,636)	(8,324)
Vesting of equity, net of tax withholdings, shares			(167,000)
Re-issuance of treasury stock	(562)		$ (1,032)	(470)
Re-issuance of treasury stock, shares			(31,000)
Cash dividends declared ($0.26 per share)	(7,252)				(7,252)
Dividend equivalents on restricted stock units	(190)				(190)
Tax deficit related to stock-based compensation	699			699
Ending balance at Sep. 30, 2016	$ 265,765	$ 196	$ (32,915)	$ 229,318	$ 60,050	$ 9,116
Ending balance, shares at Sep. 30, 2016	18,578,176	19,586,000	1,008,000

XML

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2016 $ / shares
Cash dividends per share	$ 0.39

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows—operating activities:
Net income	$ 14,920	$ 15,872
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	11,676	9,983
Deferred income taxes	(1,731)	(153)
Stock-based compensation expense	5,055	3,684
Accretion expense related to earnout payments	198	861
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	(33,267)	(40,582)
Accounts payable	2,270	(1,311)
Accrued expenses	(47,130)	(5,361)
Deferred revenue	1,298	3,921
Income taxes payable, net	(76)	(3,101)
Retirement and pension plan assets and liabilities	3,009	69
Prepaid expenses	(4,228)	(1,054)
Other assets and liabilities, net	(1,008)	(2,868)
Net cash used in operating activities	(49,014)	(20,040)
Cash flows—investing activities:
Restricted cash	7,228	0
Payments to Acquire Businesses, Gross	(27,722)	0
Capital expenditures	(2,179)	(13,897)
Purchases of available for sale investments	(2,361)	(1,402)
Proceeds from sales of available for sale investments	510	630
Net cash used in investing activities	(24,524)	(14,669)
Cash flows—financing activities:
Debt repayment	0	(29,500)
Debt issuance costs	0	(422)
Cash dividends paid	(7,442)	(7,496)
Payment of employee tax withholdings on equity transactions	(2,676)	(878)
Acquisition earnout payments	(7,461)	(5,496)
Net cash used in financing activities	(17,579)	(43,792)
Effect of exchange rates fluctuations on cash and cash equivalents	640	(3,891)
Net decrease in cash and cash equivalents	(90,477)	(82,392)
Cash and cash equivalents at beginning of period	190,452	211,352
Cash and cash equivalents at end of period	99,975	128,960
Supplemental Schedule of Non-cash Financing Activities:
Term loan facility retirement (Note 12)	0	26,500
Subsequent drawing on line of credit (Note 12)	$ 0	$ 26,500

XML

Basis of Presentation of Interim Financial Information

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation of Interim Financial Information

Basis of Presentation of Interim Financial Information

The accompanying unaudited Condensed Consolidated Financial Statements of Heidrick & Struggles International, Inc. and subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Significant items subject to estimates and assumptions include revenue recognition, income taxes, interim effective tax rate and assessment of goodwill and other intangible assets for impairment. Estimates are subject to a degree of uncertainty and actual results could differ from these estimates. These financial statements and notes are to be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 10, 2016.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

A complete listing of the Company’s significant accounting policies is discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Recently Issued Financial Accounting Standards

In August 2016, the Financial Accounting Standards Board ("FASB") issued accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice as to how certain cash receipts and cash payments should be presented and classified. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company has evaluated the standard and noted the guidance for contingent consideration payments made after a business combination are applicable to the Condensed Consolidated Statements of Cash Flows. The Company currently classifies all contingent consideration payments as financing activities. The impact of this change is not expected to be significant to the classification of these activities on the Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions including the income tax accounting, classification of awards as either equity or liabilities, the accounting for forfeitures and classification on the statement of cash flows. The standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company is planning to early adopt this standard during the fourth quarter of 2016. The impact of this change is not expected to be significant to Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, intended to improve financial reporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments including the recognition of unrealized changes in fair value within net income. The standard is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU requires that an entity recognizes revenue to depict the transfer of promised goods or services to customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for these goods or services. The effective date has been deferred for one year to the interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was interim and annual reporting periods beginning after December 15, 2016. The guidance permits the use of either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a retrospective approach with the cumulative effect upon initial adoption recognized at the date of adoption. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

XML

Allowance for Doubtful Accounts

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The activity of the allowance for doubtful accounts for the nine months ended September 30, 2016 is as follows:

Balance at December 31, 2015	$	5,376
Provision charged to income	1,475
Write-offs	(3,944		)
Foreign currency translation	(19		)
Balance at September 30, 2016	$	2,888

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Property and Equipment, net

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

The components of the Company’s property and equipment are as follows:

	September 30, 2016			December 31, 2015
Leasehold improvements	$	42,187		$	40,583
Office furniture, fixtures and equipment	17,079			16,234
Computer equipment and software	30,884			28,648
Property and equipment, gross	90,150			85,465
Accumulated depreciation	(54,013		)	(48,967		)
Property and equipment, net	$	36,137		$	36,498

Depreciation expense for the three months ended September 30, 2016 and 2015 was $2.4 million and $2.2 million, respectively. Depreciation expense for the nine months ended September 30, 2016 and 2015 was $7.0 million and $6.5 million, respectively.

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Investments

9 Months Ended

Sep. 30, 2016

Investments Schedule [Abstract]

Investments

Investments

The Company has a U.S. non-qualified deferred compensation plan that consists primarily of U.S. marketable securities and mutual funds, all of which are valued using Level 1 inputs (See Note 6, Fair Value Measurements). The fair value for these investments was $17.3 million and $14.1 million as of September 30, 2016 and December 31, 2015, respectively. The aggregate cost basis for these investments was $13.2 million and $11.1 million as of September 30, 2016 and December 31, 2015, respectively.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted prices in active markets for identical assets and liabilities.

• Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following tables provide a summary of the fair value measurements at September 30, 2016 and December 31, 2015 for each major category of assets and liabilities measured at fair value on a recurring basis:

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At September 30, 2016
U.S. non-qualified deferred compensation plan	$	17,268	$	—	$	—		$	17,268
Assets designated for retirement and pension plans	—		18,790		—			18,790
Acquisition earnout accruals	—		—		(9,790		)	(9,790		)
	$	17,268	$	18,790	$	(9,790	)	$	26,268

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At December 31, 2015
U.S. non-qualified deferred compensation plan	$	14,145	$	—	$	—		$	14,145
Assets designated for retirement and pension plans	—		18,164		—			18,164
Acquisition earnout accruals	—		—		(12,033		)	(12,033		)
	$	14,145	$	18,164	$	(12,033	)	$	20,276

The Level 2 assets above are fair valued using a market approach. The Level 3 liabilities include accruals for future earnout payments related to prior acquisitions, the values of which are determined based on discounted cash flow models. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, and accounts payable, to approximate the fair value of the respective assets and liabilities at September 30, 2016 and December 31, 2015 based upon the short-term nature of the assets and liabilities.

The following table provides a reconciliation of the beginning and ending balance of Level 3 assets and liabilities for the nine months ended September 30, 2016.

	Acquisition Earnout Accruals
Balance at December 31, 2015	$	(12,033	)
Acquisition earnouts (Note 7)	(5,039		)
Co Company earnout amendment (Note 7)	(577		)
Earnout accretion	(198		)
Earnout payments	7,461
Foreign currency translation	596
Balance at September 30, 2016	$	(9,790	)

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Acquisitions

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Acquisitions

Acquisitions

Philosophy IB, LLP

On September 1, 2016, the Company acquired substantially all of the assets of Philosophy IB, LLP ("Philosophy IB"), a New Jersey-based leadership, organization development and management consulting firm for $6.0 million, which was funded from existing cash. The former owners of Philosophy IB are eligible to receive an additional cash consideration based on two components: achieving revenue milestones generated from its software products from September 2016 through August 2019 and percentage of consulting revenue achieved over the period September 2016 to August 2019, subject to a profitability test. The Company estimates the value of future cash consideration to be between $0.8 million and $1.5 million. Due to the timing of the acquisition, the Company is currently performing the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill.

JCA Group Limited

On August 4, 2016, the Company acquired JCA Group Limited ("JCA Group"), a UK-based provider of executive search, succession planning and coaching services, and, from the partners thereof, the entire partnership interest in JCA Partners LLP for £11.2 million (equivalent to $14.5 million at September 30, 2016) of initial consideration, which was funded from existing cash. The former owners of JCA Group are eligible to receive additional cash consideration upon the realization of specific revenue milestones achieved over the period August 2016 through August 2018. When estimating the value of future cash consideration, the Company has accrued £2.7 million (equivalent to $3.5 million) as of September 30, 2016. The Company recorded $3.5 million of intangible assets related to customer relationships and $15.5 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit. Due to the timing of the acquisition, the Company has not completed the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill.

Decision Strategies International, Inc.

On February 29, 2016, the Company acquired substantially all of the assets of Decision Strategies International, Inc. ("DSI"), a Pennsylvania-based business consulting firm and its wholly owned subsidiary, Decision Strategies International (UK) Limited. DSI specializes in advising organizations and institutions on strategic planning and decision making in uncertain operating environments, leadership development and talent strategy. Total consideration for the acquisition of DSI's assets was approximately $9.0 million and was funded from existing cash. The former owners of DSI are eligible to receive an additional cash consideration payment in 2019 based on revenue targets to be achieved in 2017 and 2018. When estimating the value of future cash consideration, the Company has accrued $1.7 million as of September 30, 2016. The Company recognized $0.1 million and $0.2 million of accretion expense included in General and administrative expenses during the three and nine months ended September 30, 2016, respectively. The Company recorded $3.2 million of intangible assets related to customer relationships and $5.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

Co Company Limited

 On October 1, 2015, the Company acquired Co Company, a UK-based management consulting firm that specializes in organizational development for £7.1 million (equivalent to $9.2 million and $10.4 million at September 30, 2016 and December 31, 2015, respectively) of initial consideration, pursuant to a stock purchase, which was funded from existing cash.  The former owners of Co Company are eligible to receive additional cash consideration upon the realization of specific revenue and EBITDA Margin milestones achieved over the period October 2015 through December 2018. On August 25, 2016, the Company and the former owners of Co Company entered into a Deed of Amendment (the "Amendment") to the Share Purchase Agreement dated October 1, 2015. The Amendment adjusts the target fee revenue and targeted EBITDA margin for each remaining earn out period taking into consideration the unanticipated acquisitions completed subsequent to the Share Purchase Agreement. The new targets shall include subsequent acquisitions and take effect retrospectively from January 1, 2016. When estimating the fair value of future cash consideration, the Company has accrued £2.9 million (equivalent to $3.8 million and $4.3 million) as of September 30, 2016 and December 31, 2015, of which $0.2 million was paid during the second quarter of 2016. As a result of the Amendment and related adjustment of the earnout liability, the Company recognized $0.5 million and $0.2 million of income in General and administrative expenses during the three and nine months ended September 30, 2016, respectively. The Company recorded $2.9 million of intangible assets and $10.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

Scambler MacGregor Executive Search Pty Limited

In November 2013, the Company acquired Scambler MacGregor, an Australian-based retained Executive Search boutique in the financial services industry for 1.1 million Australian dollars (equivalent to $0.8 million at both September 30, 2016 and December 31, 2015) of initial consideration, pursuant to a stock purchase, which was funded from existing cash. In December 2013, the Company paid an additional $0.1 million related to the final working capital settlement. The former owners of Scambler MacGregor are eligible to receive earnout payments of up to 2.8 million Australian dollars (equivalent to $2.1 million and $2.0 million as of September 30, 2016 and December 31, 2015, respectively) based on the achievement of certain revenue metrics over the period November 2013 through December 2018, of which $0.4 million and $0.7 million was paid during the nine months ended September 30, 2016 and 2015, respectively. When estimating the fair value of future earnout payments, the Company had accrued 1.1 million Australian dollars and 1.6 million Australian dollars (equivalent to $0.9 million and $1.2 million) as of September 30, 2016 and December 31, 2015, respectively. The Company also recorded $0.4 million of intangible assets and $2.7 million of goodwill. The goodwill is primarily related to the acquired workforce and strategic fit.

Senn-Delaney Leadership Consulting Group, LLC

In December 2012, the Company acquired Senn-Delaney Leadership Consulting Group, LLC, a global leader of corporate culture shaping. Under the terms of the purchase agreement, the Company paid $53.5 million at closing for 100 percent of the equity of Senn Delaney. The agreement also included additional cash consideration up to $15.0 million based on the realization of specific earnings milestones achieved over the period December 2012 through December 2015, of which $6.8 million, $4.8 million and $3.4 million was paid during the second quarter of 2016, 2015 and 2014, respectively. The Company had accrued $6.6 million at December 31, 2015 for the remaining cash consideration, which was paid during the nine months ended September 30, 2016. The Company recognized zero and $0.3 million of accretion expense during the three months ended September 30, 2016 and 2015, respectively, and $0.2 million and $0.8 million of accretion expense during the nine months ended September 30, 2016 and 2015, respectively. Accretion expense is included in General and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income. At December 31, 2015, the Company held $6.5 million in a retention escrow that was paid to certain key executives of Senn Delaney in January 2016 for remaining with the Company for three years subsequent to the acquisition. The Company recognized zero and $0.5 million of compensation expense during the three months ended June 30, 2016 and 2015, respectively, and zero and $1.6 million of compensation expense during the nine months ended September 30, 2016 and 2015, respectively. Compensation expense is included in Salaries and employee benefits in the Condensed Consolidated Statements of Comprehensive Income.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2016 are as follows:

	Executive Search and Leadership Consulting							Culture Shaping
	Americas		Europe			Asia Pacific					Total
Balance at December 31, 2015	$	81,626	$	10,745		$	9,211	$	29,540		$	131,122
DSI acquisition	5,673		—			—		—			5,673
JCA Group acquisition	—		15,535			—		—			15,535
Philosophy IB acquisition	4,253		—			—		—			4,253
Foreign currency translation	196		(1,719		)	488		(235		)	(1,270		)
Balance at September 30, 2016	$	91,748	$	24,561		$	9,699	$	29,305		$	155,313

On September 1, 2016, the Company acquired Philosophy IB and included the fair value of the acquired assets and liabilities as of the acquisition date in the Consolidated Balance Sheets. The Company also included $4.3 million of goodwill related to the acquisition in the Americas segment. On August 4, 2016, the Company acquired JCA Group and included the fair value of the acquired assets and liabilities as of the acquisition date in the Consolidated Balance Sheets. The Company also included $15.5 million of goodwill related to the acquisition in the Europe segment. On February 29, 2016, the Company acquired DSI and included the fair value of the acquired assets and liabilities as of the acquisition date in the Condensed Consolidated Balance Sheets. The Company also included $5.7 million of goodwill related to the acquisition in the Americas segment.

Due to the timing of the acquisitions, the Company has not completed the fair value valuation for the acquired assets and liabilities, including identifying other intangible assets from goodwill for JCA Group and Philosophy IB.

Other Intangible Assets, net

The Company’s other intangible assets, net by segment, are as follows:

	September 30, 2016		December 31, 2015
Executive Search and Leadership Consulting
Americas	$	3,221	$	764
Europe	4,828		2,548
Asia Pacific	149		209
Total Executive Search and Leadership Consulting	8,198		3,521
Culture Shaping	11,956		15,166
Total other intangible assets, net	$	20,154	$	18,687

The Company identified client relationships of $3.5 million as a part of the JCA Group acquisition and included the fair value in the Europe segment. Due to the timing of the acquisitions, the Company has not completed its evaluation of identifying other intangible assets from goodwill for JCA Group and Philosophy IB.

The Company identified client relationships of $3.2 million and as part of the DSI acquisitions and included the fair value in the Americas segment.

The carrying amount of amortizable intangible assets and the related accumulated amortization are as follows:

	Weighted Average Life (in years)	September 30, 2016							December 31, 2015
		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Client relationships	7.8	$	31,503	$	(20,214	)	$	11,289	$	25,414	$	(17,550	)	$	7,864
Trade name	15.0	9,077		(4,077		)	5,000		9,251		(3,416		)	5,835
Software	7.0	7,200		(3,857		)	3,343		7,200		(3,086		)	4,114
Non-compete	5.0	570		(307		)	263		586		(117		)	469
Technology	3.0	389		(130		)	259		442		(37		)	405
Total intangible assets	9.4	$	48,739	$	(28,585	)	$	20,154	$	42,893	$	(24,206	)	$	18,687

Intangible asset amortization expense for the three months ended September 30, 2016 and 2015 was $1.6 million and $1.2 million, respectively. Intangible asset amortization expense for the nine months ended September 30, 2016 and 2015 was $4.7 million and $3.5 million, respectively

The Company's estimated future amortization expense related to intangible assets as of September 30, 2016 for the years ended December 31st is as follows:

Remainder of 2016	$	1,709
2017	5,434
2018	4,204
2019	3,242
2020	1,853
Thereafter	3,712
Total	$	20,154

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Other Non-Current Liabilities

9 Months Ended

Sep. 30, 2016

Other Liabilities Disclosure [Abstract]

Other Non-Current Liabilities

Other Non-Current Liabilities

The components of other non-current liabilities are as follows:

	September 30, 2016		December 31, 2015
Premise related costs	$	18,066	$	17,790
Accrued earnout payments	7,831		788
Other	1,370		1,269
Total other non-current liabilities	$	27,267	$	19,847

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Line of Credit

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Line of Credit

Line of Credit

On June 30, 2015, the Company entered into a Second Amended and Restated Credit Agreement (the “Restated Credit Agreement”). The Restated Credit Agreement amended and restated the Credit Agreement executed on June 22, 2011 (the “Credit Agreement”). Pursuant to the Restated Credit Agreement, the Company replaced its Revolving Facility and Term Facility (“Existing Facility”) with a single senior unsecured revolving line of credit with an aggregate commitment of up to $100 million, which includes a sublimit of $25 million for letters of credit, and a $50 million expansion feature (the “Replacement Facility”). The Replacement Facility will mature on June 30, 2020. Borrowings under the Restated Credit Agreement bear interest at the Company’s election at the existing Alternate Base Rate (as defined in the Credit Agreement) or Adjusted LIBOR Rate (as defined in the Credit Agreement) plus a spread as determined by the Company’s leverage ratio.

Borrowings under the Replacement Facility may be used for working capital, capital expenditures, Permitted Acquisitions (as defined in the Credit Agreement) and for other general corporate purposes of the Company and its subsidiaries. The obligations under the Replacement Facility are guaranteed by certain of the Company’s subsidiaries.

As of September 30, 2016 and December 31, 2015, the Company had no outstanding borrowings under the Restated Credit Agreement and the Company was in compliance with the financial and other covenants under the Restated Credit Agreement and no event of default existed.

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Stock-based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-Based Compensation

The Company’s 2012 Heidrick & Struggles GlobalShare Program (the “2012 Program”) provides for grants of stock options, stock appreciation rights, and other stock-based awards that are valued based upon the grant date fair value of shares. These awards may be granted to directors, selected employees and independent contractors. The 2012 Program originally authorized 1,300,000 shares of Common Stock for issuance pursuant to awards under the plan.

On May 22, 2014, the stockholders of the Company approved an amendment to the 2012 Program to increase the number of shares of Common Stock reserved for issuance under the 2012 Program by 700,000 shares. As of September 30, 2016, 1,397,410 awards have been issued under the 2012 Program and 1,003,228 shares remain available for future awards, which includes 400,638 forfeited awards. The 2012 Program provides that no awards can be granted after May 24, 2022.

The Company measures its stock-based compensation costs based on the grant date fair value of the awards and recognizes these costs in the financial statements over the requisite service period.

A summary of information with respect to stock-based compensation is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Salaries and employee benefits	$	1,155	$	1,094	$	4,492	$	3,234
General and administrative expenses	—		—		563		450
Income tax benefit related to stock-based compensation included in net income	437		259		2,005		1,301

Restricted Stock Units

Restricted stock unit activity for the nine months ended September 30, 2016:

	Number of Restricted Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	473,935		$	19.98
Granted	207,405		22.92
Vested and converted to common stock	(119,455	)	20.02
Forfeited	(24,612	)	22.81
Outstanding on September 30, 2016	537,273		20.97

As of September 30, 2016, there was $4.4 million of pre-tax unrecognized compensation expense related to unvested restricted stock units, which is expected to be recognized over a weighted average of 2.0 years.

Performance Stock Units

The Company grants performance stock units to certain of its senior executives. The performance stock units are generally subject to a cliff vesting at the end of a three year period. The vesting will vary between 0%—200% based on the attainment of operating income goals over the three year vesting period. The performance stock units are expensed on a straight-line basis over the three year vesting period.

In 2014, the Company granted market-based performance stock units to the Chief Executive Officer. The market-based awards vest after a two year service period and if the price of the Company’s common stock exceeds specified targets. The fair value of the market-based awards was determined using the Monte-Carlo simulation model. A Monte Carlo simulation model uses stock price volatility and other variables to estimate the probability of satisfying the market conditions and the resulting fair value of the award. Compensation costs related to the market-based awards are recognized regardless of whether the market condition is satisfied, as long as the requisite service has been provided. All of the market-based performance conditions were satisfied such that all 125,000 performance stock units granted to the Chief Executive Officer vested upon the completion of the two year service period in February 2016.

Performance stock unit activity for the nine months ended September 30, 2016:

	Number of Performance Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	272,024		$	18.28
Granted	125,388		22.98
Vested and converted to common stock	(160,600	)	15.51
Outstanding on September 30, 2016	236,812		22.64

As of September 30, 2016, there was $2.6 million of pre-tax unrecognized compensation expense related to unvested performance stock units, which is expected to be recognized over a weighted average of 2.1 years.

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company reported income before taxes of $12.4 million and $11.1 million and an income tax provision of $5.4 million and $3.6 million for the three months ended September 30, 2016 and 2015, respectively. The increase in the income tax provision was due to higher consolidated income before taxes of $1.3 million and the mix of income.

The Company reported income before taxes of $28.2 million and $26.8 million and an income tax provision of $13.2 million and $10.9 million for the nine months ended September 30, 2016 and 2015, respectively. The increase in the income tax provision was due to higher consolidated income before taxes of $1.4 million and the mix of income.

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Changes in Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income

The changes in Accumulated other comprehensive income (“AOCI”) by component for the nine months ended September 30, 2016 is summarized below:

	Available- for- Sale Securities		Foreign Currency Translation			Pension			AOCI
Balance at December 31, 2015	$	2,394	$	8,561		$	(1,696	)	$	9,259
Other comprehensive income / (loss) before classification, net of tax	709		(1,173		)	—			(464		)
Amount reclassified from AOCI (1)	321		—			—			321
Net current period other comprehensive income / (loss)	1,030		(1,173		)	—			(143		)
Balance at September 30, 2016	$	3,424	$	7,388		$	(1,696	)	$	9,116

(1) Available-for-Sale Securities reclassifications from AOCI are included in Other, net in the Condensed Consolidated Statement of Comprehensive Income.

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Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates its executive search and leadership consulting services in the Americas; Europe (which includes Africa); and Asia Pacific (which includes the Middle East) and operates its culture shaping business as a separate segment.

For segment purposes, reimbursements of out-of-pocket expenses classified as revenue and other operating income are reported separately and, therefore, are not included in the results of each segment. The Company believes that analyzing trends in revenue before reimbursements (net revenue), analyzing operating expenses as a percentage of net revenue, and analyzing operating income more appropriately reflects its core operations.

The revenue and operating income (loss) by segment are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Executive Search and Leadership Consulting
Americas	$	78,198	$	78,265	$	237,557	$	218,560
Europe	32,895		25,946		91,017		69,679
Asia Pacific	23,801		25,031		67,325		72,712
Total Executive Search and Leadership Consulting	134,894		129,242		395,899		360,951
Culture Shaping	8,625		9,179		26,670		25,668
Revenue before reimbursements (net revenue)	143,519		138,421		422,569		386,619
Reimbursements	4,720		4,429		13,773		12,396
Total	$	148,239	$	142,850	$	436,342	$	399,015

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating income (loss):
Executive Search and Leadership Consulting
Americas	$	18,552		$	18,193		$	56,817		$	50,563
Europe	2,371			1,470			2,429			1,018
Asia Pacific	2,029			2,630			5,179			8,088
Total Executive Search and Leadership Consulting	22,952			22,293			64,425			59,669
Culture Shaping	41			1,539			(1,928		)	2,948
Total Segments	22,993			23,832			62,497			62,617
Global Operations Support	(10,987		)	(10,899		)	(34,929		)	(33,840		)
Total	$	12,006		$	12,933		$	27,568		$	28,777

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Guarantees

9 Months Ended

Sep. 30, 2016

Guarantees [Abstract]

Guarantees

Guarantees

The Company has issued cash collateralized bank guarantees and letter of credit backed bank guarantees supporting certain obligations, primarily the payment of office lease obligations and business license requirements for certain of its subsidiaries in Europe and Asia Pacific. The bank guarantees were made to secure the respective agreements and are for the terms of the agreements, which extend through 2018. For each bank guarantee issued, the Company would have to perform under the guarantee if the subsidiary defaults on a lease payment. The maximum amount of undiscounted payments the Company would be required to make in the event of default on all outstanding guarantees is approximately $2.5 million as of September 30, 2016. The Company has not accrued for these arrangements as no event of default exists or is expected to exist.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

The Company has contingent liabilities from various pending claims and litigation matters arising in the ordinary course of the Company’s business, some of which involve claims for damages that are substantial in amount. Some of these matters are covered by insurance. Based upon information currently available, the Company believes the ultimate resolution of such claims and litigation, including the “UK Employee Benefits Trust” matter discussed below, will not have a material adverse effect on its financial condition, results of operations or liquidity.

UK Employee Benefits Trust

On January 27, 2010, HM Revenue & Customs (“HMRC”) in the United Kingdom notified the Company that it was challenging the tax treatment of certain of the Company’s contributions in the United Kingdom to an Employee Benefits Trust between 2002 and 2008. HMRC alleges that these contributions should have been subject to Pay As You Earn tax and Class 1 National Insurance Contributions in the United Kingdom. HMRC is proposing an adjustment to the Company’s payroll tax liability for the affected years. The aggregate amount of HMRC’s proposed adjustment is approximately £3.9 million (equivalent to $5.1 million) at September 30, 2016. The Company has appealed the proposed adjustment. At this time, the Company believes that the likelihood of an unfavorable outcome with respect to the proposed adjustment is not probable and the potential amount of any loss cannot be reasonably estimated. The Company also believes that the amount of any final adjustment would not be material to the Company’s financial condition.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Recent Financial Accounting Standards

Recently Issued Financial Accounting Standards

In August 2016, the Financial Accounting Standards Board ("FASB") issued accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice as to how certain cash receipts and cash payments should be presented and classified. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company has evaluated the standard and noted the guidance for contingent consideration payments made after a business combination are applicable to the Condensed Consolidated Statements of Cash Flows. The Company currently classifies all contingent consideration payments as financing activities. The impact of this change is not expected to be significant to the classification of these activities on the Consolidated Statements of Cash Flows.

In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions including the income tax accounting, classification of awards as either equity or liabilities, the accounting for forfeitures and classification on the statement of cash flows. The standard is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. The Company is planning to early adopt this standard during the fourth quarter of 2016. The impact of this change is not expected to be significant to Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, intended to improve financial reporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments including the recognition of unrealized changes in fair value within net income. The standard is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The ASU requires that an entity recognizes revenue to depict the transfer of promised goods or services to customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for these goods or services. The effective date has been deferred for one year to the interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was interim and annual reporting periods beginning after December 15, 2016. The guidance permits the use of either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients or (ii) a retrospective approach with the cumulative effect upon initial adoption recognized at the date of adoption. The Company is currently evaluating the impact of this accounting guidance. The effect is not known or reasonably estimable at this time.

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Allowance for Doubtful Accounts (Tables)
$ in Thousands

9 Months Ended

Sep. 30, 2016

USD ($)

Schedule of Allowance for Doubtful Accounts Receivable [Line Items]

Balance at September 30, 2015

$ 2,888

Schedule of Allowance for Doubtful Accounts Receivable [Table Text Block]

The activity of the allowance for doubtful accounts for the nine months ended September 30, 2016 is as follows:

Balance at December 31, 2015	$	5,376
Provision charged to income	1,475
Write-offs	(3,944		)
Foreign currency translation	(19		)
Balance at September 30, 2016	$	2,888

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Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Components of Company's Property and Equipment

The components of the Company’s property and equipment are as follows:

	September 30, 2016			December 31, 2015
Leasehold improvements	$	42,187		$	40,583
Office furniture, fixtures and equipment	17,079			16,234
Computer equipment and software	30,884			28,648
Property and equipment, gross	90,150			85,465
Accumulated depreciation	(54,013		)	(48,967		)
Property and equipment, net	$	36,137		$	36,498

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Levels of Inputs Used to Measure Fair Value of Assets

The following tables provide a summary of the fair value measurements at September 30, 2016 and December 31, 2015 for each major category of assets and liabilities measured at fair value on a recurring basis:

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At September 30, 2016
U.S. non-qualified deferred compensation plan	$	17,268	$	—	$	—		$	17,268
Assets designated for retirement and pension plans	—		18,790		—			18,790
Acquisition earnout accruals	—		—		(9,790		)	(9,790		)
	$	17,268	$	18,790	$	(9,790	)	$	26,268

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
At December 31, 2015
U.S. non-qualified deferred compensation plan	$	14,145	$	—	$	—		$	14,145
Assets designated for retirement and pension plans	—		18,164		—			18,164
Acquisition earnout accruals	—		—		(12,033		)	(12,033		)
	$	14,145	$	18,164	$	(12,033	)	$	20,276

Reconciliation of Beginning and Ending Balance of Level 3 Assets and Liabilities

The following table provides a reconciliation of the beginning and ending balance of Level 3 assets and liabilities for the nine months ended September 30, 2016.

	Acquisition Earnout Accruals
Balance at December 31, 2015	$	(12,033	)
Acquisition earnouts (Note 7)	(5,039		)
Co Company earnout amendment (Note 7)	(577		)
Earnout accretion	(198		)
Earnout payments	7,461
Foreign currency translation	596
Balance at September 30, 2016	$	(9,790	)

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The Company's estimated future amortization expense related to intangible assets as of September 30, 2016 for the years ended December 31st is as follows:

Remainder of 2016	$	1,709
2017	5,434
2018	4,204
2019	3,242
2020	1,853
Thereafter	3,712
Total	$	20,154

Changes in Carrying Amount of Goodwill by Segment

Changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2016 are as follows:

	Executive Search and Leadership Consulting							Culture Shaping
	Americas		Europe			Asia Pacific					Total
Balance at December 31, 2015	$	81,626	$	10,745		$	9,211	$	29,540		$	131,122
DSI acquisition	5,673		—			—		—			5,673
JCA Group acquisition	—		15,535			—		—			15,535
Philosophy IB acquisition	4,253		—			—		—			4,253
Foreign currency translation	196		(1,719		)	488		(235		)	(1,270		)
Balance at September 30, 2016	$	91,748	$	24,561		$	9,699	$	29,305		$	155,313

Summary of Other Intangible Assets Net by Segment

The Company’s other intangible assets, net by segment, are as follows:

	September 30, 2016		December 31, 2015
Executive Search and Leadership Consulting
Americas	$	3,221	$	764
Europe	4,828		2,548
Asia Pacific	149		209
Total Executive Search and Leadership Consulting	8,198		3,521
Culture Shaping	11,956		15,166
Total other intangible assets, net	$	20,154	$	18,687

Carrying Amount of Amortizable Intangible Assets and Related Accumulated Amortization

The carrying amount of amortizable intangible assets and the related accumulated amortization are as follows:

	Weighted Average Life (in years)	September 30, 2016							December 31, 2015
		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Client relationships	7.8	$	31,503	$	(20,214	)	$	11,289	$	25,414	$	(17,550	)	$	7,864
Trade name	15.0	9,077		(4,077		)	5,000		9,251		(3,416		)	5,835
Software	7.0	7,200		(3,857		)	3,343		7,200		(3,086		)	4,114
Non-compete	5.0	570		(307		)	263		586		(117		)	469
Technology	3.0	389		(130		)	259		442		(37		)	405
Total intangible assets	9.4	$	48,739	$	(28,585	)	$	20,154	$	42,893	$	(24,206	)	$	18,687

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Other Non-Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Other Liabilities Disclosure [Abstract]

Components of Other Non-Current Liabilities

The components of other non-current liabilities are as follows:

	September 30, 2016		December 31, 2015
Premise related costs	$	18,066	$	17,790
Accrued earnout payments	7,831		788
Other	1,370		1,269
Total other non-current liabilities	$	27,267	$	19,847

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Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Information with Respect to Stock-based Compensation

A summary of information with respect to stock-based compensation is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Salaries and employee benefits	$	1,155	$	1,094	$	4,492	$	3,234
General and administrative expenses	—		—		563		450
Income tax benefit related to stock-based compensation included in net income	437		259		2,005		1,301

Restricted Stock Unit Activity

Restricted stock unit activity for the nine months ended September 30, 2016:

	Number of Restricted Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	473,935		$	19.98
Granted	207,405		22.92
Vested and converted to common stock	(119,455	)	20.02
Forfeited	(24,612	)	22.81
Outstanding on September 30, 2016	537,273		20.97

Performance Stock Unit Activity

Performance stock unit activity for the nine months ended September 30, 2016:

	Number of Performance Stock Units		Weighted- Average Grant-date Fair Value
Outstanding on December 31, 2015	272,024		$	18.28
Granted	125,388		22.98
Vested and converted to common stock	(160,600	)	15.51
Outstanding on September 30, 2016	236,812		22.64

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Changes in Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income ("AOCI") by Component

The changes in Accumulated other comprehensive income (“AOCI”) by component for the nine months ended September 30, 2016 is summarized below:

	Available- for- Sale Securities		Foreign Currency Translation			Pension			AOCI
Balance at December 31, 2015	$	2,394	$	8,561		$	(1,696	)	$	9,259
Other comprehensive income / (loss) before classification, net of tax	709		(1,173		)	—			(464		)
Amount reclassified from AOCI (1)	321		—			—			321
Net current period other comprehensive income / (loss)	1,030		(1,173		)	—			(143		)
Balance at September 30, 2016	$	3,424	$	7,388		$	(1,696	)	$	9,116

(1) Available-for-Sale Securities reclassifications from AOCI are included in Other, net in the Condensed Consolidated Statement of Comprehensive Income.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Revenue and Operating Income (Loss), by Segment

The revenue and operating income (loss) by segment are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Executive Search and Leadership Consulting
Americas	$	78,198	$	78,265	$	237,557	$	218,560
Europe	32,895		25,946		91,017		69,679
Asia Pacific	23,801		25,031		67,325		72,712
Total Executive Search and Leadership Consulting	134,894		129,242		395,899		360,951
Culture Shaping	8,625		9,179		26,670		25,668
Revenue before reimbursements (net revenue)	143,519		138,421		422,569		386,619
Reimbursements	4,720		4,429		13,773		12,396
Total	$	148,239	$	142,850	$	436,342	$	399,015

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating income (loss):
Executive Search and Leadership Consulting
Americas	$	18,552		$	18,193		$	56,817		$	50,563
Europe	2,371			1,470			2,429			1,018
Asia Pacific	2,029			2,630			5,179			8,088
Total Executive Search and Leadership Consulting	22,952			22,293			64,425			59,669
Culture Shaping	41			1,539			(1,928		)	2,948
Total Segments	22,993			23,832			62,497			62,617
Global Operations Support	(10,987		)	(10,899		)	(34,929		)	(33,840		)
Total	$	12,006		$	12,933		$	27,568		$	28,777

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Allowance for Doubtful Accounts - Summary of Allowance for Doubtful Accounts (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at December 31, 2014	$ 5,376
Provision charged to income	1,475
Write-offs	(3,944)
Currency	$ (19)

XML

Property and Equipment, Net - Components of Company's Property and Equipment (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 90,150	$ 85,465
Accumulated depreciation	(54,013)	(48,967)
Property and equipment, net	36,137	36,498
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	42,187	40,583
Office Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	17,079	16,234
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 30,884	$ 28,648

XML

Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 2.4	$ 2.2	$ 7.0	$ 6.5

XML

Investments - Components of Company's Investments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Long-term investments	$ 17,268	$ 14,145
U.S. Non-Qualified Deferred Compensation Plan [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Available for sale securities	$ 17,268	$ 14,145

XML

Investments - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Long-term Investments	$ 17,268	$ 14,145
U.S. Non-Qualified Deferred Compensation Plan [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Aggregate cost basis for investments	13,200	11,100
Fair Value, Inputs, Level 1 [Member] | U.S. Non-Qualified Deferred Compensation Plan [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Long-term Investments	$ 17,300	$ 14,100

XML

Fair Value Measurements - Levels of Inputs Used to Measure Fair Value of Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets designated for retirement and pension plans	$ 18,790	$ 18,164
Acquisition earnout accruals	9,790	12,033
Total fair value of assets	26,268	20,276
U.S. Non-Qualified Deferred Compensation Plan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	17,268	14,145
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total fair value of assets	17,268	14,145
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Non-Qualified Deferred Compensation Plan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	17,268	14,145
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets designated for retirement and pension plans	18,790	18,164
Total fair value of assets	18,790	18,164
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Acquisition earnout accruals	9,790	12,033
Total fair value of assets	$ (9,790)	$ (12,033)

XML

Fair Value Measurements - Reconciliation of Beginning and Ending Balance of Level 3 Assets and Liabilities (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Fair Value, Asset and Liabilities Measured on Recurring and Nonrecurring Basis, Level 3 [Roll Forward]
Beginning balance, acquisition earnout accruals	$ 12,033
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Acquisition Earnout Amendment, Fair Value	(577)
Earnout payments	7,461	$ 5,496
Ending balance, acquisition earnout accruals	9,790
Fair Value, Inputs, Level 3 [Member]
Fair Value, Asset and Liabilities Measured on Recurring and Nonrecurring Basis, Level 3 [Roll Forward]
Beginning balance, acquisition earnout accruals	12,033
Ending balance, acquisition earnout accruals	9,790
Fair Value, Inputs, Level 3 [Member] | Acquisition Earnout Accruals [Member]
Fair Value, Asset and Liabilities Measured on Recurring and Nonrecurring Basis, Level 3 [Roll Forward]
Beginning balance, acquisition earnout accruals	12,033
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Business Combination, Acquisition Earnout, Fair Value	5,039
Earnout Accretion Fair Value Disclosure	(198)
Earnout Payments Fair Value Disclosure	7,461
Foreign currency translation	596
Ending balance, acquisition earnout accruals	$ 9,790

XML

Acquisitions - Additional Information (Detail) $ in Thousands, £ in Millions, AUD in Millions					1 Months Ended	3 Months Ended						6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 01, 2016 USD ($)	Aug. 04, 2016 USD ($)	Dec. 31, 2015 USD ($)	Oct. 01, 2015 USD ($)	Dec. 31, 2012 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2016	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2016 GBP (£)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 AUD	Aug. 04, 2016 GBP (£)	Aug. 04, 2016 USD ($)	Feb. 29, 2016 USD ($)	Dec. 31, 2015 GBP (£)	Dec. 31, 2015 USD ($)	Dec. 31, 2015 AUD	Oct. 01, 2015 GBP (£)	Oct. 01, 2015 USD ($)	Nov. 30, 2013 AUD
Business Acquisition [Line Items]
Acquisition earnout payments													$ (7,461)	$ (5,496)
Philosophy IB [Member]
Business Acquisition [Line Items]
Acquisition date	September 1, 2016	August 4, 2016
Consideration paid to purchase	$ 6,000
JCA Group Limited [Member]
Business Acquisition [Line Items]
Consideration paid to purchase																			£ 11.2	$ 14,500
Accrued additional cash consideration																£ 2.7	$ 3,500
Finite-lived Intangible Assets Acquired						$ 3,500
Goodwill acquired		$ 15,500
Decision Strategies International [Member]
Business Acquisition [Line Items]
Acquisition date												2/29/2016
Consideration paid to purchase																					$ 9,000
Accrued additional cash consideration																	1,700
Identifiable intangible assets																					$ 3,200
General and administrative expense of acquisition related costs						(100)							(200)
Co Company [Member]
Business Acquisition [Line Items]
Acquisition date												October 1, 2015
Consideration paid to purchase																	9,200						$ 10,400		£ 7.1
Acquisition earnout payments							$ 200
Accrued additional cash consideration																£ 2.9	3,800					£ 2.9	4,300
Identifiable intangible assets																										$ 2,900
Goodwill acquired				$ 10,700
General and administrative expense of acquisition related costs						500							(200)
Scambler MacGregor [Member]
Business Acquisition [Line Items]
Acquisition date												11/30/2013
Consideration paid to purchase																	800						800				AUD 1.1
Additional payments relates to final working capital settlement															$ 100
Estimated fair value of future earnout payments associated with acquisition																	2,100						2,000				AUD 2.8
Acquisition earnout payments													(400)	(700)
Accrued additional cash consideration																	$ 900	AUD 1.1					1,200	AUD 1.6
Identifiable intangible assets															400
Goodwill acquired															$ 2,700
Senn Delaney [Member]
Business Acquisition [Line Items]
Acquisition date												December 31, 2012
Consideration paid to purchase					$ 53,500
Acquisition earnout payments							$ (6,800)			$ (4,800)	$ (3,400)
Percentage of equity of acquired company					100.00%
Additional cash consideration			$ 6,600		$ 15,000
Specific earnings milestones achieved period								Period December 2012 through December 2015
General and administrative expense of acquisition related costs						0			$ (300)				(200)	(800)
Retention escrow paid																							$ 6,500
Compensation expense						$ 0			$ 500				$ 0	$ 1,600
Minimum [Member] | Philosophy IB [Member]
Business Acquisition [Line Items]
Estimated fair value of future earnout payments associated with acquisition	800
Maximum [Member] | Philosophy IB [Member]
Business Acquisition [Line Items]
Estimated fair value of future earnout payments associated with acquisition	$ 1,500

XML

Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill by Segment (Detail) - USD ($) $ in Thousands				6 Months Ended	9 Months Ended
	Sep. 01, 2016	Aug. 04, 2016	Feb. 29, 2016	Jun. 30, 2016	Sep. 30, 2016
Goodwill [Roll Forward]
Balance at December 31, 2015				$ 131,122	$ 131,122
Foreign currency translation					(1,270)
Balance at June 30, 2016					155,313
Executive Search and Leadership Consulting [Member] | Americas [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period					4,253
Goodwill [Roll Forward]
Balance at December 31, 2015				81,626	81,626
Foreign currency translation					196
Balance at June 30, 2016					91,748
Executive Search and Leadership Consulting [Member] | Europe [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period					15,500
Goodwill [Roll Forward]
Balance at December 31, 2015				10,745	10,745
Foreign currency translation					(1,719)
Balance at June 30, 2016					24,561
Executive Search and Leadership Consulting [Member] | Asia Pacific [Member]
Goodwill [Roll Forward]
Balance at December 31, 2015				9,211	9,211
Foreign currency translation					488
Balance at June 30, 2016					9,699
Culture Shaping [Member]
Goodwill [Roll Forward]
Balance at December 31, 2015				$ 29,540	29,540
Foreign currency translation					(235)
Balance at June 30, 2016					29,305
Decision Strategies International [Member]
Goodwill [Line Items]
Business Acquisition, Date of Acquisition				2/29/2016
Decision Strategies International [Member] | Executive Search and Leadership Consulting [Member] | Americas [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period			$ 5,673		$ 5,673
JCA Group Limited [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period		$ 15,500
JCA Group Limited [Member] | Executive Search and Leadership Consulting [Member] | Americas [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period		$ 15,500
Philosophy IB [Member]
Goodwill [Line Items]
Business Acquisition, Date of Acquisition	September 1, 2016	August 4, 2016
Philosophy IB [Member] | Executive Search and Leadership Consulting [Member] | Americas [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period	$ 4,253

XML

Goodwill and Other Intangible Assets - Summary of Other Intangible Assets Net by Segment (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 20,154	$ 18,687
Executive Search and Leadership Consulting [Member]
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	8,198	3,521
Executive Search and Leadership Consulting [Member] | Americas [Member]
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	3,221	764
Executive Search and Leadership Consulting [Member] | Europe [Member]
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	4,828	2,548
Executive Search and Leadership Consulting [Member] | Asia Pacific [Member]
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	149	209
Culture Shaping [Member]
Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 11,956	$ 15,166

XML

Goodwill and Other Intangible Assets - Carrying Amount of Amortizable Intangible Assets and Related Accumulated Amortization (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	9 years 5 months
Gross Carrying Amount	$ 48,739	$ 42,893
Accumulated Amortization	(28,585)	(24,206)
Net Carrying Amount	$ 20,154	18,687
Client Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	7 years 10 months
Gross Carrying Amount	$ 31,503	25,414
Accumulated Amortization	(20,214)	(17,550)
Net Carrying Amount	$ 11,289	7,864
Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	15 years
Gross Carrying Amount	$ 9,077	9,251
Accumulated Amortization	(4,077)	(3,416)
Net Carrying Amount	$ 5,000	5,835
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	7 years
Gross Carrying Amount	$ 7,200	7,200
Accumulated Amortization	(3,857)	(3,086)
Net Carrying Amount	$ 3,343	4,114
Non-compete [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	5 years
Gross Carrying Amount	$ 570	586
Accumulated Amortization	(307)	(117)
Net Carrying Amount	$ 263	469
Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Life (in years)	3 years
Gross Carrying Amount	$ 389	442
Accumulated Amortization	(130)	(37)
Net Carrying Amount	$ 259	$ 405

XML

Goodwill and Other Intangible Assets - Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended			6 Months Ended	9 Months Ended
	Feb. 29, 2016	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization expense, excluding impairment charge		$ 1,600		$ 1,200		$ 4,700	$ 3,500
Estimated intangible asset amortization expense 2015		1,709				1,709
Estimated intangible asset amortization expense 2016		5,434				5,434
Estimated intangible asset amortization expense 2017		4,204				4,204
Estimated intangible asset amortization expense 2018		3,242				3,242
Estimated intangible asset amortization expense 2019		1,853				1,853
Finite-Lived Intangible Assets, Amortization Expense, after Year Five		3,712				3,712
Finite-Lived Intangible Assets, Net		20,154				20,154		$ 18,687
Executive Search and Leadership Consulting [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Net		8,198				8,198		3,521
Americas [Member] | Executive Search and Leadership Consulting [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 3,200
Goodwill, Acquired During Period						4,253
Finite-Lived Intangible Assets, Net		3,221				3,221		764
Europe [Member] | Executive Search and Leadership Consulting [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		3,500
Goodwill, Acquired During Period						15,500
Finite-Lived Intangible Assets, Net		$ 4,828				4,828		$ 2,548
Decision Strategies International [Member]
Finite-Lived Intangible Assets [Line Items]
Business Acquisition, Date of Acquisition					2/29/2016
Decision Strategies International [Member] | Americas [Member] | Executive Search and Leadership Consulting [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill, Acquired During Period	$ 5,673					$ 5,673

XML

Other Non-Current Liabilities - Components of Other Non-Current Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Other Liabilities Disclosure [Abstract]
Accrued salaries and employee benefits	$ 30,363	$ 32,690
Premise related costs	18,066	17,790
Accrued earnout payments	7,831	788
Other	1,370	1,269
Total other non-current liabilities	$ 27,267	$ 19,847

XML

Line of Credit - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Line of Credit Facility [Line Items]
Long-term debt, gross	$ 0	$ 0
Senior Unsecured Revolving Line of Credit [Member]
Line of Credit Facility [Line Items]
Senior unsecured revolving line of credit aggregate commitment			$ 100
Sublimit for letters of credit			25
Line of credit facility expansion feature			$ 50

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Stock-based Compensation - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	May 22, 2014	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost		$ 1,155	$ 1,094	$ 4,492	$ 3,234
Document Period End Date				Sep. 30, 2016
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense		437	259	$ 2,005	1,301
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax unrecognized compensation expense		4,400		$ 4,400
Expected time to be recognized				2 years
Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax unrecognized compensation expense		$ 2,600		$ 2,600
Expected time to be recognized				2 years 1 month 6 days
Performance Stock Units [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance stock units vesting period				3 years
Performance stock units, expiration period				3 years
Performance Stock Units [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance stock units vesting period				2 years
Performance Stock Units [Member] | Minimum [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance stock units, variation percentage				0.00%
Performance Stock Units [Member] | Maximum [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance stock units, variation percentage				200.00%
2012 Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized or reserved for issuance with respect to awards granted		1,300,000		1,300,000
Increase in number of shares of common stock reserved for issuance	700,000
Number of stock awards issued under 2012 Program				1,397,410
Shares available for future awards		1,003,228		1,003,228
Number of forfeited awards under 2012 Program				400,638
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense		$ 0	$ 0	$ 563	$ 450

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Stock-based Compensation - Summary of Information with Respect to Stock-Based Compensation (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	May 22, 2014	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Salaries and employee benefits		$ 1,155	$ 1,094	$ 4,492	$ 3,234
Income tax benefit related to stock-based compensation included in net income		437	259	2,005	1,301
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
General and administrative expenses		$ 0	$ 0	$ 563	$ 450
Two Thousand Twelve Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	700,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period				1,397,410
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		1,003,228		1,003,228
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares				400,638

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Stock-based Compensation - Restricted Stock Unit Activity (Detail) - Restricted Stock Units [Member] $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 4.4
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of stock units, beginning balance | shares	473,935
Number of stock units, granted | shares	207,405
Number of stock units, vested and converted to common stock | shares	(119,455)
Number of stock units, forfeited | shares	(24,612)
Number of stock units, ending balance | shares	537,273
Weighted-average grant-date fair value, beginning balance | $ / shares	$ 19.98
Weighted-average grant-date fair value, granted | $ / shares	22.92
Weighted-average grant-date fair value, vested and converted to common stock | $ / shares	20.02
Weighted-average grant-date fair value, forfeited | $ / shares	22.81
Weighted-average grant-date fair value, ending balance | $ / shares	$ 20.97
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years

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Stock-based Compensation - Performance Stock Unit Activity (Detail) - Performance Stock Units [Member] $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 2.6
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of stock units, beginning balance	272,024
Number of stock units, granted	125,388
Number of stock units, vested and converted to common stock	(160,600)
Number of stock units, ending balance	236,812
Weighted-average grant-date fair value, beginning balance | $ / shares	$ 18.28
Weighted-average grant-date fair value, granted | $ / shares	22.98
Weighted-average grant-date fair value, vested and converted to common stock | $ / shares	15.51
Weighted-average grant-date fair value, ending balance | $ / shares	$ 22.64
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 1 month 6 days
Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of stock units, vested and converted to common stock	(125,000)

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Line Items]
Income before income taxes	$ 12,388	$ 11,137	$ 28,158	$ 26,781
Provision for income taxes	5,448	$ 3,647	13,238	$ 10,909
Increase In Income From Continuing Operations Before Income Taxes	$ 1,300		$ 1,400

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Changes in Accumulated Other Comprehensive Income - Changes in Accumulated Other Comprehensive Income ("AOCI") by Component (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at December 31, 2015			$ 9,259
Other comprehensive income before classification, net of tax			(464)
Amount reclassified from AOCI			321
Net current period other comprehensive income	$ (198)	$ (1,288)	(143)	$ (2,525)
Balance at June 30, 2016	9,116		9,116
Stockholders' equity attributable to parent	265,765		265,765		$ 254,802
Available-for-Sale Securities Adjustment [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at December 31, 2015			2,394
Other comprehensive income before classification, net of tax			709
Amount reclassified from AOCI			321
Net current period other comprehensive income			1,030
Balance at June 30, 2016	3,424		3,424
Foreign Currency Translation Adjustment [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at December 31, 2015			8,561
Other comprehensive income before classification, net of tax			(1,173)
Amount reclassified from AOCI			0
Net current period other comprehensive income			(1,173)
Balance at June 30, 2016	7,388		7,388
Pension Adjustment [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at December 31, 2015			(1,696)
Other comprehensive income before classification, net of tax			0
Amount reclassified from AOCI			0
Net current period other comprehensive income			0
Balance at June 30, 2016	(1,696)		(1,696)
Accumulated Other Comprehensive Income [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net current period other comprehensive income			(143)
Stockholders' equity attributable to parent	$ 9,116		$ 9,116		$ 9,259

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Segment Information - Revenue and Operating Income (Loss), by Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Revenue before reimbursements (net revenue)	$ 143,519	$ 138,421	$ 422,569	$ 386,619
Reimbursements	4,720	4,429	13,773	12,396
Total revenue	148,239	142,850	436,342	399,015
Operating income (loss):
Operating (loss) income	12,006	12,933	27,568	28,777
Operating Segments [Member]
Operating income (loss):
Operating (loss) income	22,993	23,832	62,497	62,617
Global Operations Support [Member]
Operating income (loss):
Global Operations Support	10,987	10,899	34,929	33,840
Executive Search and Leadership Consulting [Member] | Operating Segments [Member]
Revenue:
Revenue before reimbursements (net revenue)	134,894	129,242	395,899	360,951
Operating income (loss):
Operating (loss) income	22,952	22,293	64,425	59,669
Culture Shaping [Member] | Operating Segments [Member]
Revenue:
Revenue before reimbursements (net revenue)	8,625	9,179	26,670	25,668
Operating income (loss):
Operating (loss) income	41	1,539	(1,928)	2,948
Executive Search and Leadership Consulting Americas Segment [Member] | Executive Search and Leadership Consulting [Member] | Operating Segments [Member]
Revenue:
Revenue before reimbursements (net revenue)	78,198	78,265	237,557	218,560
Operating income (loss):
Operating (loss) income	18,552	18,193	56,817	50,563
Executive Search and Leadership Consulting Europe Segment [Member] | Executive Search and Leadership Consulting [Member] | Operating Segments [Member]
Revenue:
Revenue before reimbursements (net revenue)	32,895	25,946	91,017	69,679
Operating income (loss):
Operating (loss) income	2,371	1,470	2,429	1,018
Executive Search and Leadership Consulting Asia Pacific Segment [Member] | Executive Search and Leadership Consulting [Member] | Operating Segments [Member]
Revenue:
Revenue before reimbursements (net revenue)	23,801	25,031	67,325	72,712
Operating income (loss):
Operating (loss) income	$ 2,029	$ 2,630	$ 5,179	$ 8,088

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Guarantees - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Sep. 30, 2016
Guarantees [Abstract]
Maximum undiscounted payments under outstanding guarantees		$ 2.5
Extend termination dates of the leases	Extend through 2018

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Commitments and Contingencies - Additional Information (Detail) - Sep. 30, 2016 £ in Millions, $ in Millions	GBP (£)	USD ($)
Commitments and Contingencies Disclosure [Abstract]
Proposed adjustment to payroll tax liability	£ 3.9	$ 5.1