PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands)

		June 30,				December 31,
		2008				2007
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	10,320			$	11,656
Accounts receivable, net			219,868				189,616
Prepaid expenses and other current assets			17,071				11,827
Deferred income tax assets			19,026				15,460
Total current assets			266,285				228,559
Property and equipment, net			49,473				54,687
Intangible assets, net			52,903				57,755
Goodwill			483,343				430,768
Other assets			19,867				6,928
Total assets		$	871,871			$	778,697
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	9,297			$	7,547
Accrued liabilities			12,316				9,771
Accrued compensation-related costs			55,402				62,150
Income taxes payable			7,941				5,904
Notes payable			6,343				6,348
Bank debt			2,250				2,250
Other current liabilities			39,094				32,549
Total current liabilities			132,643				126,519
Non-current liabilities:
Deferred income tax liabilities			29,071				29,756
Notes payable			4,844				5,348
Other non-current liabilities			31,989				19,955
Term loan non-current			220,500				221,625
Bank borrowings non-current			86,287				32,741
Total non-current liabilities			372,691				309,425
Total liabilities			505,334				435,944
Stockholders’ equity:
Preferred stock			—				—
Common stock			58				58
Additional paid-in capital			549,549				546,870
Deferred stock issuance			1,853				2,847
Treasury stock			(239,687	)			(242,302	)
Retained earnings			50,074				29,182
Accumulated other comprehensive income			4,690				6,098
Total stockholders’ equity			366,537				342,753
Total liabilities and stockholders’ equity		$	871,871			$	778,697

See accompanying notes to the unaudited consolidated financial statements.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

     We are a specialized independent consulting firm providing dispute, investigative, financial, operational and business advisory, risk management and regulatory advisory, and transaction advisory solution services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change. We focus on industries undergoing substantial regulatory or structural change and on the issues driving these transformations.

     The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. The information furnished herein includes all adjustments, consisting of normal recurring adjustments except where indicated, which are, in the opinion of management, necessary for a fair presentation of the results of operations for these interim periods.

     The results of operations for the six months ended June 30, 2008 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2008.

     These financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2007 included in the Annual Report on Form 10-K, as filed by us with the Securities and Exchange Commission on February 28, 2008.

     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 amounts reported in the consolidated financial statements and the related notes. Actual results could differ from those estimates and may affect future results of operations and cash flows.

Note 2. Acquisitions

2008 Acquisitions

     On May 1, 2008, we acquired the assets of Chicago Partners, LLC (“Chicago Partners”) for $73.0 million which consisted of $50.0 million in cash paid at closing and $23.0 million in our common stock (which was recorded at fair value for $21.0 million at closing). The common stock will be paid in four equal installments of $5.8 million on the six month anniversary of the closing and each of the first, second and third year anniversaries of the closing. We acquired assets of $16.7 million, including $15.8 million in accounts receivable, net of allowance for doubtful accounts, and assumed liabilities of $7.1 million. Through June 30, 2008, we paid $0.4 million in acquisition-related costs. We recorded $2.0 million to goodwill and liabilities for obligations related to lease exit costs for two offices acquired as part of the acquisition. As part of the purchase price allocation, we recorded $4.3 million in identifiable intangible assets and $60.9 million in goodwill. The purchase agreement provides for an adjustment of purchase price for the difference in net assets acquired compared to the target net assets. Additionally, we may pay up to $27.0 million of additional purchase consideration based on the Chicago Partners’ segment achieving certain post-closing performance targets during the periods from closing to December 31, 2008 and calendar years 2009, 2010 and 2011. If earned, the additional purchase consideration would be payable 75 percent in cash and 25 percent in our common stock. The additional purchase price payments, if any, will be payable in April of the year following such performance targets are attained. Any additional purchase price consideration payments will be recorded as goodwill when the contingencies regarding attainment of performance targets are resolved. The purchase price paid in cash at closing was funded under our credit facility. The allocation of purchase price for Chicago Partners is preliminary, as the valuation of certain identifiable intangible assets and obligations for certain real estate has not been finalized. We expect to complete the allocation of purchase price by the end of the third quarter of 2008.

     We acquired Chicago Partners to expand our product offerings to our clients. Chicago Partners provides economic and financial analyses of legal and business issues for law firms, corporations and government agencies. Chicago Partners has approximately 90 consultants. Chicago Partners will be managed and resources will be allocated based on its results and as such, in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”), will operate under a fourth operating segment referred to as “Economic Consulting Services.”

Item 2.

NAVIGANT CONSULTING, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are not historical in nature, are intended to be, and are hereby identified as “forward-looking statements” for purposes of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this report, including, without limitation, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When used in this report, the words “anticipate,” “believe,” “intend,” “estimate,” “expect,” and similar expressions are intended to identify such forward-looking statements. We caution readers that there may be events in the future that we are not able to accurately predict or control and the information contained in the forward-looking statements is inherently uncertain and subject to a number of risks that could cause actual results to differ materially from those indicated in the forward-looking statements including, without limitation: the success of our organizational changes; risks inherent in international operations, including foreign currency fluctuations; pace, timing and integration of acquisitions; management of professional staff, including dependence on key personnel, recruiting, attrition and the ability to successfully integrate new consultants into our practices; utilization rates; dependence on the expansion of and the increase in our service offerings and staff; conflicts of interest; potential loss of clients; risks inherent with litigation; significant client assignments; professional liability; potential legislative and regulatory changes; and general economic conditions. Further information on these and other potential factors that could affect our financial results is included in our Annual Report on Form 10-K and prior filings with the SEC under the “Risk Factors” sections and elsewhere in those filings. We cannot guarantee any future results, levels of activity, performance or achievement and we undertake no obligation to update any of our forward-looking statements.

Overview

     We are a specialized independent consulting firm providing dispute, investigative, financial, operational and business advisory, risk management and regulatory advisory, and transaction advisory solution services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change. We focus on industries undergoing substantial regulatory or structural change and on the issues driving these transformations.

     Our revenues, margins and profits are generally not materially impacted by macro economic business trends, although a long term decline in the U.S. economy would likely impact our business. Examples of impacting events that may affect us are natural disasters, legislative and regulatory changes, capital market disruptions, crises in the energy, healthcare, financial services, insurance and other industries, and significant client specific events.

     We derive our revenues from fees and reimbursable expenses for professional services. A majority of our revenues are generated under hourly or daily rates billed on a time and expense basis. Clients are typically invoiced on a monthly basis, with revenue recognized as the services are provided. There are also client engagements where we are paid a fixed amount for our services, often referred to as fixed fee billings. This may be one single amount covering the whole engagement or several amounts for various phases or functions. From time to time, we earn incremental revenues, in addition to hourly or fixed fee billings, which are contingent on the attainment of certain contractual milestones or objectives. Such incremental revenues may cause variations in quarterly revenues and operating results if all other revenues and expenses during the quarters remain the same.

     Our most significant expense is cost of services before reimbursable expenses, which generally relates to costs associated with generating revenues, and includes consultant compensation and benefits, sales and marketing expenses, and the direct costs of recruiting and training the consulting staff. Consultant compensation consists of salaries, incentive compensation, stock compensation and benefits. Our most significant overhead expenses are administrative compensation and benefits and office related expenses. Administrative compensation includes payroll costs, incentive compensation, stock compensation and benefits for corporate management and administrative personnel, which are used to indirectly support client projects. Office related expenses primarily consist of rent for our primary offices.

Critical Accounting Policies

     The preparation of the financial statements requires management to make estimates and assumptions that affect amounts reported therein. We base our estimates on historical experience and on various 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

     The Credit Agreement also includes certain financial covenants, including covenants that require that we maintain a consolidated leverage ratio of not greater than 3.25:1 and a consolidated fixed charge coverage ratio (the ratio of the sum of adjusted EBITDA and rental expense to the sum of cash interest expense and rental expense) of not less than 2.0:1. At June 30, 2008, under the definitions in the Credit Agreement, our consolidated leverage ratio was 2.4 and our consolidated fixed charge coverage ratio was 3.2. In addition to the financial covenants, the Credit Agreement contains customary affirmative and negative covenants and is subject to customary exceptions. These covenants will limit our ability to incur liens or other encumbrances or make investments, incur indebtedness, enter into mergers, consolidations and asset sales, pay dividends or other distributions, change the nature of our business and engage in transactions with affiliates. We were in compliance with the terms of the Credit Agreement as of June 30, 2008 and December 31, 2007.

     As of June 30, 2008, we had total commitments of $475.7 million, which included $24.7 million in deferred business acquisition obligations, payable in cash and common stock, notes payable of $11.2 million, debt of $309.0 million, and $130.8 million in lease commitments. As of June 30, 2008, we had no significant commitments for capital expenditures.

     The following table shows the components of significant commitments as of June 30, 2008 and the scheduled years of payments (shown in thousands):

						From July 1,
						2008 to
						December 31,
Contractual Obligations		Total				2008				2009 to 2010				2011 to 2012				Thereafter
Deferred purchase price obligations		$	24,683			$	8,398			$	11,406			$	4,879			$	—
Notes payable			11,187				5,844				5,343				—				—
Line of credit			86,287				—				—				86,287				—
Bank debt			222,750				1,125				14,625				207,000				—
Lease commitments			130,775				13,011				46,172				36,037				35,555
Total		$	475,682			$	28,378			$	77,546			$	334,203			$	35,555

     We may pay up to $27.0 million of additional purchase consideration based on the Chicago Partners’ business achieving certain post-closing performance targets during the periods from closing to December 31, 2008 and calendar years 2009, 2010 and 2011. If earned, the additional purchase consideration would be payable 75 percent in cash and 25 percent in our common stock. The additional purchase price payments, if any, will be payable in April of the year following the year such performance targets are attained.

     We do not expect to significantly increase or reduce our reserve for uncertain tax positions during the next twelve months.

     We believe that our current cash and cash equivalents, the future cash flows from operations and our Credit Agreement will provide adequate cash to fund anticipated short-term and long-term cash needs from normal operations. In the event we make significant cash expenditures in the future for major acquisitions or other non-operating activities, we might need additional debt or equity financing, as appropriate.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Our primary exposure to market risks relates to changes in interest rates associated with our borrowings under the line of credit, and our investment portfolio, classified as cash equivalents. Our general investment policy is to limit the risk of principal loss by limiting market and credit risks.

     At June 30, 2008, our investments were primarily limited to ‘A’ rated securities, with maturity dates of 90 days or less. These financial instruments are subject to interest rate risk and will decline in value if interest rates rise. Because of the short periods to maturity of these instruments, an increase in interest rates would not have a material effect on our financial position or operating results.

     On July 2, 2007, we entered into an interest rate swap agreement with a bank for a notional value of $165.0 million through June 30, 2010. This agreement effectively fixed our LIBOR base rate for $165.0 million of our indebtedness at a rate

of 5.30 percent during this period. We expect the interest rate derivative to be highly effective against changes in cash flows related to changes in interest rates and have recorded the derivative as a hedge. As a result, gains or losses related to fluctuations in fair value of the interest rate derivative are recorded as a component of accumulated other comprehensive income and reclassified into interest expense as the variable interest expense on our indebtedness is recorded. There was no ineffectiveness related to this hedge for the six months ended June 30, 2008. As of June 30, 2008, we had a $5.8 million liability related to this interest rate derivative and we recorded a $0.1 million unrealized gain, net of tax of $0.1 million, to accumulated other comprehensive income for the six months ended June 30, 2008.

     Other than the deferred purchase price obligations, notes payable, borrowings under the Credit Agreement, and the $165.0 million interest rate swap agreement, we did not have, at June 30, 2008, any other short-term debt, long-term debt, interest rate derivatives, forward exchange agreements, firmly committed foreign currency sales transactions or derivative commodity instruments.

     Our market risk associated with the Credit Agreement relates to changes in interest rates. As of June 30, 2008, borrowings under the Credit Agreement bore interest, in general, based on a variable rate equal to an applicable base rate (equal to the higher of a reference prime rate or one half of one percent above the federal funds rate) or LIBOR, in each case plus an applicable margin. Based on borrowings under the Credit Agreement at June 30, 2008, each quarter point change in market interest rates would result in approximately a $0.4 million change in annual interest expense, after considering the impact of our interest rate swap agreement entered into on July 2, 2007.

     We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. At June 30, 2008, we had net assets of approximately $86.3 million with a functional currency of the United Kingdom Pounds Sterling and $33.2 million with a functional currency of the Canadian Dollar related to our operations in the United Kingdom and Canada, respectively.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

     From time to time we are party to various lawsuits and claims in the ordinary course of business. While the outcome of those lawsuits or claims cannot be predicted with certainty, we do not believe that any of those lawsuits or claims will have a material adverse effect on us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     During the six months ended June 30, 2008, we issued the following unregistered securities:

Number of

Type of

Shares in

Exemption

Purchaser or

Assets

Date

Securities

Consideration (a)

Claimed (b)

“Recipient”

Purchased

January 24, 2008

Common Stock

14,866

Section 4(2)

Tedd Avey & Associates Ltd.

(c)

January 31, 2008

Common Stock

8,159

Section 4(2)

Devito Consulting, Inc

(d)

February 8, 2008

Common Stock

100,539

Section 4(2)

Casas, Benjamin & White, LLC

(d)

Item 4. Submission of Matters to a Vote of Security Holders

     Our 2008 Annual Meeting of Shareholders was held on April 29, 2008.

     Two nominees, Mr. William M. Goodyear and Ms. Valerie B. Jarrett, were elected as Directors to the board of directors for a term expiring at the Annual Meeting of Stockholders in 2011. The vote for Mr. Goodyear was 40,828,439 shares for and 2,410,505 shares to withhold authority. The vote for Ms. Jarrett was 39,331,659 shares for and 2,907,285 shares to withhold authority. Messrs. Thompson, Skinner, Gildehaus and Pond’s terms as Director continued.

     KPMG LLP was ratified as our independent accountants for the year 2008. The vote for such ratification was 42,879,377 shares for, 405,728 shares to withhold authority and 7,400 shares abstained.

Item 6. Exhibits-

     The following exhibits are filed with the Form 10-Q:

Exhibit 2.1		-		Purchase and Sale Agreement dated as of April 18, 2008 (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to this agreement are omitted but will be provided supplementally to the Commission upon request) (incorporated by reference from our Current Report on Form 8-K dated April 18, 2008).
Exhibit 10.1		-		First Amendment of the Navigant Consulting, Inc. 2005 Long Term Incentive Plan, as amended, effective as of April 22, 2008 (incorporated by reference from our Current Report on Form 8-K dated April 18, 2008).
Exhibit 31.1		-		Rule 13a—14(a) Certification of the Chairman and Chief Executive Officer.
Exhibit 31.2		-		Rule 13a—14(a) Certification of the Executive Vice President and Chief Financial Officer.
Exhibit 32.1		-		Section 1350 Certification

SIGNATURES

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

Date: August 1, 2008