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FTI Consulting, Inc. Reports 2010 Third Quarter Results
- Third Quarter Revenues of $346 Million
- Adjusted EPS of $0.54
- Financing Activities Extend Maturities, Lower Interest Rate and Enhance Liquidity

WEST PALM BEACH, Fla., Nov. 5, 2010 /PRNewswire via COMTEX/ -- FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today reported its financial results for the third quarter ended September 30, 2010.

For the third quarter, revenues were $346.1 million compared to $348.6 million in the prior year period. Earnings per diluted share (EPS) were $0.47 compared to $0.70 in the prior year period. Excluding the $0.07 EPS impact of debt extinguishment costs related to the refinancing of a portion of the Company's long term debt, Adjusted EPS for the third quarter of 2010 was $0.54. Adjusted EBITDA was $65.0 million, or 18.8% of revenues, compared to $77.9 million, or 22.3% of revenues, in the prior year period. Adjusted EBITDA, Adjusted Segment EBITDA and Adjusted EPS (which appear in the accompanying tables) are non-GAAP measures and are described in further detail below.

For the quarter, the Company generated $73.9 million in cash from operations.

The Company strengthened its financial position through several related financing transactions consisting of:

 

  • A new $250 million, five-year revolving credit agreement that replaced the $175 million revolving credit agreement;
  • A private offering of $400 million aggregate principal amount of 6 3/4% senior notes due 2020; and
  • The retirement of $200 million aggregate principal amount of the Company's outstanding 7 5/8% Senior Notes due 2013, $185 million of which was purchased as of September 30, 2010 and the balance was redeemed November 1, 2010.

 

Including the net proceeds from the financing transactions, the Company had $331 million of cash and cash equivalents as of September 30, 2010. During the third quarter of 2010, the Company repurchased 762,359 shares of its common stock for a total purchase price of approximately $26.1 million.

Commenting on these results, Jack Dunn, President and Chief Executive Officer of the Company, said, "Results for the quarter saw three of our segments grow; one was flat and one experienced a significant decline. Forensic and Litigation Consulting grew 11.9% based on the continuation of major cases plus several new FCPA cases, strong investigatory due diligence activities in Asia and Latin America and disputes arising out of the financial crisis and mortgage backed securities. Technology grew 10.4% based on increased volumes in document hosting, revenues from our new Acuity(TM) offering and increased activity in the U.K. and Australia. Strategic Communications grew 5.8%, with both retained and project based work performing well. While the quarter for Economic Consulting was basically flat reflecting a continued dearth of antitrust and M&A work, the segment remains up 11.5% for the nine months compared to a year ago period. Corporate Finance continued to decline from cyclically high results last year and was down 14.1%.

"Our international strategy was advanced meaningfully in the quarter with the acquisition in Asia of a prominent provider of corporate finance, restructuring, turnaround, corporate advisory and recovery services. Hong Kong is now one of our largest offices."

Third Quarter Segment Results

Corporate Finance/Restructuring

Revenues in the Corporate Finance/Restructuring segment decreased 14.1% to $109.7 million from $127.8 million in the third quarter of the prior year. Adjusted Segment EBITDA was $26.7 million, or 24.3% of segment revenues, compared with $43.6 million, or 34.1% of segment revenues, in the prior year quarter. The year-over-year decline was due to lower demand for restructuring services resulting from the improvement in high yield markets and the economy. The segment's results benefited from the acquisition in August of its Asia practice, growth in commercial real estate consulting and new operations in Germany and Spain. Adjusted Segment EBITDA margins declined from the prior year due to lower revenues.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased 11.9% to a record $84.0 million from $75.1 million in the third quarter of the prior year. Adjusted Segment EBITDA was $20.2 million, or 24.0% of segment revenues, compared to $18.6 million, or 24.7% of segment revenues, in the prior year's third quarter. Segment growth came from increased activity in litigation and corporate investigations, continued growth in services to regulated industries, notably healthcare and pharmaceuticals, and growth in the Ibero-American and Asian investigations practices.

Economic Consulting

Revenues in the Economic Consulting segment were $59.4 million compared to $59.6 million in the third quarter of the prior year. Adjusted Segment EBITDA was $11.9 million, or 20.1% of segment revenues, compared to $14.0 million, or 23.4% of segment revenues, in the prior year quarter. Continued growth in the segment's European operations and the financial economics practice were offset by lower demand in antitrust and mergers and acquisition (M&A) activity. Adjusted Segment EBITDA declined compared to the margin levels in the same prior year quarter due to lower utilization.

Technology

Revenues in the Technology segment increased 10.4% to $42.7 million from $38.7 million in the third quarter of the prior year. Adjusted Segment EBITDA increased 20.5% to $13.9 million, or 32.6% of segment revenues, compared to $11.5 million, or 29.8% of segment revenues, in the prior year quarter. Revenue performance in the quarter reflected the contribution from two large cases, increased litigation activity, growth in investigation matters, and the continued success of the segment's Acuity(TM) offering, and continued low levels of contribution from M&A 'Second Request' projects. Adjusted Segment EBITDA margins improved from the prior year quarter due to the higher revenues.

Strategic Communications

Revenues in the Strategic Communications segment increased 5.8% to $50.2 million from $47.5 million in the third quarter of the prior year. Adjusted Segment EBITDA was $7.2 million, or 14.4% of segment revenues, compared to $6.6 million, or 13.8% of segment revenues, in the prior year quarter. The segment experienced growth in project-based work despite the continued slow environment for discretionary corporate spending and capital markets-related activity. The segment also experienced the fourth consecutive quarter of net annualized retainer wins. Adjusted Segment EBITDA margins improved compared to the prior year quarter due to higher revenues.

Third Quarter Conference Call

FTI will hold a conference call for analysts and investors to discuss third quarter financial results at 9:00 AM Eastern Time on Friday, November 5, 2010. The call can be accessed live and will be available for replay over the Internet for 90 days by logging onto the Company's website, http://www.fticonsulting.com/.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 3,500 employees located in most major business centers in the world, we work closely with clients every day to anticipate, illuminate, and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring. More information can be found at http://www.fticonsulting.com/.

Use of Non-GAAP Measure

Note: We define Adjusted EBITDA as consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. We define Adjusted Segment EBITDA as the segment's share of consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. We define Adjusted earnings per diluted share (Adjusted EPS) as earnings per diluted share excluding the per share impact of the special charges and debt extinguishment costs that were incurred in that year. Although Adjusted EBITDA, Adjusted Segment EBITDA and Adjusted EPS are not measures of financial condition or performance determined in accordance with generally accepted accounting principles ("GAAP"), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments.

Adjusted EBITDA, Adjusted Segment EBITDA and Adjusted EPS are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our statements of income. Reconciliations of operating profit to Adjusted EBITDA, segment operating profit to Adjusted Segment EBITDA and EPS to Adjusted EPS are included in the accompanying tables to today's press release.

Safe Harbor Statement

This press release includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions and other matters, business trends and other information that is not historical, including statements regarding estimates of our future financial results. When used in this press release, words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts" and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, estimates of our future financial results, are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved or that actual results will not differ from expectations. The Company has experienced fluctuating revenues, operating income and cash flow in some prior periods and expects this will occur from time to time in the future. The Company's actual results may differ from our expectations. Further, preliminary results are subject to normal year-end adjustments. Other factors that could cause such differences include adverse financial and real estate market and general economic conditions, the pace and timing of the consummation and integration of past and future acquisitions, the Company's ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients and other risks described under the heading "Item 1A. Risk Factors" in the Company's most recent Form 10-K and in the Company's other filings with the Securities and Exchange Commission. We are under no duty to update any of the forward-looking statements to conform such statements to actual results or events and do not intend to do so.

FINANCIAL TABLES FOLLOW

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

 

(in thousands, except per share data)

 
         
 

Nine Months Ended

 
 

September 30,

 
 

2010

 

2009

 
 

(unaudited)

 
         

Revenues

$ 1,045,213

 

$ 1,057,008

 
         

Operating expenses

       

Direct cost of revenues

610,586

 

579,797

 

Selling, general and administrative expense

252,399

 

262,571

 

Special charges

30,245

 

-

 

Amortization of other intangible assets

18,229

 

18,370

 
 

911,459

 

860,738

 
         

Operating income

133,754

 

196,270

 
         

Other income (expense)

       

Interest income and other

4,740

 

6,335

 

Interest expense

(34,600)

 

(33,477)

 

Loss on early extinguishment of debt

(5,161)

 

-

 
 

(35,021)

 

(27,142)

 
         

Income before income tax provision

98,733

 

169,128

 
         

Income tax provision

37,519

 

62,675

 
         

Net income

$ 61,214

 

$ 106,453

 
         
         

Earnings per common share - basic

$ 1.34

 

$ 2.11

 

Weighted average common shares outstanding - basic

45,708

 

50,419

 
         

Earnings per common share - diluted

$ 1.28

 

$ 1.99

 

Weighted average common shares outstanding - diluted

47,726

 

53,584

 
       

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

FOR THE THREE MONTHS ENDED September 30, 2010 AND 2009

 

(in thousands, except per share data)

 
         
 

Three Months Ended

 
 

September 30,

 
 

2010

 

2009

 
 

(unaudited)

 
         

Revenues

$ 346,140

 

$ 348,637

 
         

Operating expenses

       

Direct cost of revenues

204,095

 

193,204

 

Selling, general and administrative expense

85,796

 

84,976

 

Amortization of other intangible assets

6,286

 

6,171

 
 

296,177

 

284,351

 
         

Operating income

49,963

 

64,286

 
         

Other income (expense)

       

Interest income and other

2,527

 

3,330

 

Interest expense

(11,904)

 

(11,434)

 

Loss on early extinguishment of debt

(5,161)

 

-

 
 

(14,538)

 

(8,104)

 
         

Income before income tax provision

35,425

 

56,182

 
         

Income tax provision

13,462

 

18,626

 
         

Net income

$ 21,963

 

$ 37,556

 
         
         

Earnings per common share - basic

$ 0.48

 

$ 0.74

 

Weighted average common shares outstanding - basic

45,471

 

50,696

 
         

Earnings per common share - diluted

$ 0.47

 

$ 0.70

 

Weighted average common shares outstanding - diluted

46,808

 

53,896

 
       

FTI CONSULTING, INC.

 

OPERATING RESULTS BY BUSINESS SEGMENT

 

(unaudited)

 
                   

Average

 

Revenue-

 
       

Adjusted

         

Billable

 

Generating

 
   

Revenues

 

EBITDA (1)

 

Margin

 

Utilization(2)

 

Rate (2)

 

Headcount

 
   

(in thousands)

                 

Three Months Ended September 30, 2010

                         

Corporate Finance/Restructuring

 

$ 109,736

 

$ 26,708

 

24.3%

 

71%

 

$ 421

 

740

 

Forensic and Litigation Consulting (3) (4)

 

84,023

 

20,189

 

24.0%

 

69%

 

$ 338

 

799

 

Economic Consulting

 

59,417

 

11,932

 

20.1%

 

70%

 

$ 481

 

292

 

Technology (3)

 

42,721

 

13,908

 

32.6%

 

N/M

 

N/M

 

248

 

Strategic Communications

 

50,243

 

7,223

 

14.4%

 

N/M

 

N/M

 

579

 
   

$ 346,140

 

79,960

 

23.1%

 

N/M

 

N/M

 

2,658

 

Corporate

     

(14,934)

                 

Adjusted EBITDA (1)

     

$ 65,026

 

18.8%

             
                           

Nine Months Ended September 30, 2010

                         

Corporate Finance/Restructuring

 

$ 338,298

 

$ 87,404

 

25.8%

 

70%

 

$ 440

 

740

 

Forensic and Litigation Consulting (3) (4)

 

243,455

 

59,319

 

24.4%

 

72%

 

$ 327

 

799

 

Economic Consulting

 

191,276

 

36,905

 

19.3%

 

78%

 

$ 472

 

292

 

Technology (3)

 

128,885

 

47,026

 

36.5%

 

N/M

 

N/M

 

248

 

Strategic Communications

 

143,299

 

21,600

 

15.1%

 

N/M

 

N/M

 

579

 
   

$ 1,045,213

 

252,254

 

24.1%

 

N/M

 

N/M

 

2,658

 

Corporate

     

(45,888)

                 

Adjusted EBITDA (1)

     

$ 206,366

 

19.7%

             
                           

Three Months Ended September 30, 2009

                         

Corporate Finance/Restructuring

 

$ 127,808

 

$ 43,584

 

34.1%

 

68%

 

$ 455

 

776

 

Forensic and Litigation Consulting (3) (4)

 

75,055

 

18,550

 

24.7%

 

76%

 

$ 310

 

745

 

Economic Consulting

 

59,588

 

13,957

 

23.4%

 

73%

 

$ 460

 

302

 

Technology (3)

 

38,693

 

11,547

 

29.8%

 

N/M

 

N/M

 

261

 

Strategic Communications

 

47,493

 

6,557

 

13.8%

 

N/M

 

N/M

 

547

 
   

$ 348,637

 

94,195

 

27.0%

 

N/M

 

N/M

 

2,631

 

Corporate

     

(16,324)

                 

Adjusted EBITDA (1)

     

$ 77,871

 

22.3%

             
                           

Nine Months Ended September 30, 2009

                         

Corporate Finance/Restructuring

 

$ 389,320

 

$ 131,750

 

33.8%

 

76%

 

$ 436

 

776

 

Forensic and Litigation Consulting (3) (4)

 

229,775

 

61,347

 

26.7%

 

78%

 

$ 317

 

745

 

Economic Consulting

 

171,547

 

34,621

 

20.2%

 

75%

 

$ 457

 

302

 

Technology (3)

 

131,552

 

43,831

 

33.3%

 

N/M

 

N/M

 

261

 

Strategic Communications

 

134,814

 

18,232

 

13.5%

 

N/M

 

N/M

 

547

 
   

$ 1,057,008

 

289,781

 

27.4%

 

N/M

 

N/M

 

2,631

 

Corporate

     

(53,368)

                 

Adjusted EBITDA (1)

     

$ 236,413

 

22.4%

             
                           
                           

(1) We define Adjusted EBITDA as consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. Although Adjusted EBITDA, and Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles ("GAAP"), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments.

Adjusted EBITDA and Adjusted Segment EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our statements of income. See also our reconciliation of non-GAAP financial measures.

 

(2) The majority of the Technology and Strategic Communications segments' revenues are not generated on an hourly basis. Accordingly,

utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.

 

(3) Effective January 1, 2010, we implemented a change in our organizational structure that resulted in the movement of our Financial and Enterprise Data Analytics subpractice from our Technology segment to our Forensic and Litigation Consulting segment. This change has been reflected in our segment reporting for all periods presented.

 

(4) 2010 utilization and average billable rate calculations for our Forensic and Litigation Consulting segment include information related to non-domestic operations that was not available in 2009.

 
                         

FTI CONSULTING, INC.

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 

(in thousands, except per share data)

 

(unaudited)

 
                         
         

Three Months Ended

 

Nine Months Ended

 
         

September 30,

 

September 30,

 
         

2010

 

2009

 

2010

 

2009

 
                         

Net income

       

$ 21,963

 

$ 37,556

 

$ 61,214

 

$ 106,453

 
                         

Add back: Special charges, net of tax

 

-

 

-

 

18,069

 

-

 

Add back: Loss on early extinguishment of debt, net of tax

 

3,200

 

-

 

3,200

 

-

 

Adjusted net income (1)

     

$ 25,163

 

$ 37,556

 

$ 82,483

 

$ 106,453

 
                         

Earnings per common share - diluted

 

$ 0.47

 

$ 0.70

 

$ 1.28

 

$ 1.99

 
                         

Adjusted earnings per common share - diluted (1)

 

$ 0.54

 

$ 0.70

 

$ 1.73

 

$ 1.99

 
                         

Weighted average number of common shares outstanding - diluted

 

46,808

 

53,896

 

47,726

 

53,584

 
   

(1) We define adjusted net income and adjusted earnings per diluted share as net income and earnings per diluted share, respectively, excluding the impact of the special charges and loss on early extinguishment of debt that were incurred in that period, and their related income tax effects.

 
                       

RECONCILIATION OF OPERATING INCOME AND NET INCOME TO EARNINGS BEFORE

 

INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

 

(in thousands)

 

(unaudited)

 
   

Three Months Ended September 30, 2010

Corporate
Finance /
Restructuring

 

Forensic and
Litigation
Consulting (2)

 

Economic
Consulting

 

Technology (2)

 

Strategic
Communi-
cations

 

Corp HQ

 

Total

 
                             

Net income

                       

$ 21,963

 
 

Interest income and other

                       

(2,527)

 
 

Interest expense

                       

11,904

 
 

Loss on early extinguishment of debt

                       

5,161

 
 

Income tax provision

                       

13,462

 

Operating income

$ 23,938

 

$ 18,420

 

$ 11,077

 

$ 7,634

 

$ 5,129

 

$ (16,235)

 

$ 49,963

 
 

Depreciation and amortization

875

 

800

 

555

 

4,442

 

804

 

1,301

 

8,777

 
 

Amortization of other intangible assets

1,895

 

969

 

300

 

1,832

 

1,290

 

-

 

6,286

 

Adjusted EBITDA (1)

$ 26,708

 

$ 20,189

 

$ 11,932

 

$ 13,908

 

$ 7,223

 

$ (14,934)

 

$ 65,026

 
                             
                             

Nine Months Ended September 30, 2010

                           
                             

Net income

                       

$ 61,214

 
 

Interest income and other

                       

(4,740)

 
 

Interest expense

                       

34,600

 
 

Loss on early extinguishment of debt

                       

5,161

 
 

Income tax provision

                       

37,519

 

Operating income

$ 73,149

 

$ 48,357

 

$ 27,302

 

$ 25,927

 

$ 14,026

 

$ (55,007)

 

$ 133,754

 
 

Depreciation and amortization

2,796

 

2,472

 

1,869

 

10,525

 

2,452

 

4,024

 

24,138

 
 

Amortization of other intangible assets

4,870

 

2,930

 

920

 

5,647

 

3,862

 

-

 

18,229

 
 

Special charges

6,589

 

5,560

 

6,814

 

4,927

 

1,260

 

5,095

 

30,245

 

Adjusted EBITDA (1)

$ 87,404

 

$ 59,319

 

$ 36,905

 

$ 47,026

 

$ 21,600

 

$ (45,888)

 

$ 206,366

 
                             
                             

Three Months Ended September 30, 2009

                           
                             

Net income

                       

$ 37,556

 
 

Interest income and other

                       

(3,330)

 
 

Interest expense

                       

11,434

 
 

Income tax provision

                       

18,626

 

Operating income

$ 41,058

 

$ 17,230

 

$ 12,925

 

$ 6,605

 

$ 4,267

 

$ (17,799)

 

$ 64,286

 
 

Depreciation and amortization

934

 

691

 

481

 

2,884

 

949

 

1,475

 

7,414

 
 

Amortization of other intangible assets

1,592

 

629

 

551

 

2,058

 

1,341

 

-

 

6,171

 

Adjusted EBITDA (1)

$ 43,584

 

$ 18,550

 

$ 13,957

 

$ 11,547

 

$ 6,557

 

$ (16,324)

 

$ 77,871

 
                             
                             

Nine Months Ended September 30, 2009

                           
                             

Net income

                       

$ 106,453

 
 

Interest income and other

                       

(6,335)

 
 

Interest expense

                       

33,477

 
 

Income tax provision

                       

62,675

 

Operating income

$ 124,475

 

$ 57,399

 

$ 31,665

 

$ 29,055

 

$ 11,885

 

$ (58,209)

 

$ 196,270

 
 

Depreciation and amortization

2,513

 

2,022

 

1,308

 

8,590

 

2,499

 

4,591

 

21,523

 
 

Amortization of other intangible assets

4,762

 

1,926

 

1,648

 

6,186

 

3,848

 

-

 

18,370

 
 

Non-operating litigation settlements

-

 

-

 

-

 

-

 

-

 

250

 

250

 

Adjusted EBITDA (1)

$ 131,750

 

$ 61,347

 

$ 34,621

 

$ 43,831

 

$ 18,232

 

$ (53,368)

 

$ 236,413

 
                             
                             

(1) We define Adjusted EBITDA as consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets and special charges plus non-operating litigation settlements. Although Adjusted EBITDA, and Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles ("GAAP"), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments.

 

Adjusted EBITDA and Adjusted Segment EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our statements of income. See also our reconciliation of non-GAAP financial measures.

 

(2) Effective January 1, 2010, we implemented a change in our organizational structure that resulted in the movement of our Financial and Enterprise Data Analytics subpractice from our Technology segment to our Forensic and Litigation Consulting segment. This change has been reflected in our segment reporting for all periods.

 
                             

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE NINE MONTHS ENDED September 30, 2010 and 2009

 

(in thousands)

 
   
 

Nine Months Ended

 
 

September 30,

 
 

2010

 

2009

 
 

(unaudited)

 

Operating activities

       

Net income

$ 61,214

 

$ 106,453

 

Adjustments to reconcile net income to net cash provided by operating
activities:

       

Depreciation and amortization

24,138

 

21,523

 

Amortization of other intangible assets

18,229

 

18,370

 

Provision for doubtful accounts

7,179

 

15,040

 

Non-cash share-based compensation

19,837

 

18,439

 

Excess tax benefits from share-based compensation

(761)

 

(3,647)

 

Non-cash interest expense

10,132

 

5,449

 

Other

633

 

(1,801)

 

Changes in operating assets and liabilities, net of effects from
acquisitions:

       

Accounts receivable, billed and unbilled

(34,845)

 

(30,120)

 

Notes receivable

(21,685)

 

(19,638)

 

Prepaid expenses and other assets

1,994

 

3,451

 

Accounts payable, accrued expenses and other

9,120

 

(16,218)

 

Income taxes

9,041

 

30,761

 

Accrued compensation

(4,188)

 

18,017

 

Billings in excess of services provided

(4,172)

 

(2,535)

 

Net cash provided by operating activities

95,866

 

163,544

 
         

Investing activities

       

Payments for acquisition of businesses, including contingent
payments,

       

net of cash received

(60,273)

 

(38,152)

 

Purchases of property and equipment

(14,833)

 

(17,975)

 

Purchases of short-term investments

-

 

(35,717)

 

Proceeds from maturity of short-term investment

15,000

 

-

 

Other

(467)

 

303

 

Net cash used in investing activities

(60,573)

 

(91,541)

 
         

Financing activities

       

Borrowings under revolving line of credit

20,000

 

-

 

Payments of revolving line of credit

(20,000)

 

-

 

Payments of long-term debt and capital lease obligations

(190,452)

 

(13,459)

 

Issuance of debt securities

391,647

 

-

 

Payments of debt financing fees

(2,843)

 

-

 

Cash received for settlement of interest rate swaps

-

 

2,288

 

Purchase and retirement of common stock

(26,138)

 

-

 

Net issuance of common stock under equity compensation plans

4,604

 

15,671

 

Excess of tax benefits from share-based compensation

761

 

3,647

 

Other

442

 

(4)

 

Net cash provided by financing activities

178,021

 

8,143

 
         

Effect of exchange rate changes on cash and cash equivalents

(1,004)

 

5,981

 
         

Net increase in cash and cash equivalents

212,310

 

86,127

 

Cash and cash equivalents, beginning of period

118,872

 

191,842

 

Cash and cash equivalents, end of period

$ 331,182

 

$ 277,969

 
       

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

AS OF September 30, 2010 AND DECEMBER 31, 2009

 

(in thousands, except per share amounts)

 
         
 

September 30,

 

December 31,

 
 

2010

 

2009

 

Assets

(unaudited)

     

Current assets

       

Cash and cash equivalents

$ 331,182

 

$ 118,872

 

Restricted cash

8,632

 

-

 

Accounts receivable:

       

Billed receivables

263,374

 

241,911

 

Unbilled receivables

148,248

 

104,959

 

Allowance for doubtful accounts and unbilled services

(65,306)

 

(59,328)

 

Accounts receivable, net

346,316

 

287,542

 

Current portion of notes receivable

27,267

 

20,853

 

Prepaid expenses and other current assets

27,979

 

45,157

 

Income taxes receivable

21,138

 

7,015

 

Deferred income taxes

4,657

 

20,476

 

Total current assets

767,171

 

499,915

 
         

Property and equipment, net of accumulated depreciation

74,020

 

80,678

 

Goodwill

1,253,798

 

1,195,949

 

Other intangible assets, net of amortization

164,896

 

175,962

 

Notes receivable, net of current portion

84,826

 

69,213

 

Other assets

58,832

 

55,621

 
         

Total assets

$ 2,403,543

 

$ 2,077,338

 
         

Liabilities and Stockholders' Equity

       

Current liabilities

       

Accounts payable, accrued expenses and other

$ 69,423

 

$ 81,193

 

Accrued compensation

128,580

 

152,807

 

Current portion of long-term debt and capital lease obligations

166,309

 

138,101

 

Billings in excess of services provided

29,907

 

34,101

 

Total current liabilities

394,219

 

406,202

 
         

Long-term debt and capital lease obligations, net of current portion

644,376

 

417,397

 

Deferred income taxes

117,328

 

95,704

 

Other liabilities

79,331

 

53,821

 

Total liabilities

1,235,254

 

973,124

 
         

Stockholders' equity

       

Preferred stock, $0.01 par value; shares authorized -- 5,000; none outstanding

-

 

-

 

Common stock, $0.01 par value; shares authorized -- 75,000; shares issued and
outstanding -- 46,427 (2010) and 46,985 (2009)

464

 

470

 

Additional paid-in capital

539,631

 

535,754

 

Retained earnings

676,743

 

615,529

 

Accumulated other comprehensive loss

(48,549)

 

(47,539)

 

Total stockholders' equity

1,168,289

 

1,104,214

 
         

Total liabilities and stockholders' equity

$ 2,403,543

 

$ 2,077,338

 
       

SOURCE FTI Consulting, Inc.

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Mollie Hawkes

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+1 617.747.1791

Megan McLaughlin Hawkins

Manager of Investor Relations & Corporate Citizenship

+1 617.747.1740