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FTI Consulting, Inc. Reports 2011 Second Quarter Results

- Record Revenues of $400.4 million
- Record Revenues Outside of the United States
- EPS of $0.40 After Special Charge of $16.8 million
- Adjusted EPS up 23 percent to $0.64
- Guidance for 2011 Reaffirmed

WEST PALM BEACH, Fla., Aug. 4, 2011 /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 second quarter ended June 30, 2011.

For the quarter, revenues rose 15 percent to a record $400.4 million, the highest quarterly revenue in the history of the Company. Revenues generated outside the United States were $102.3 million, or 26 percent of total revenues; also a record. Earnings per diluted share for the quarter were $0.40, including a previously announced special charge of $16.8 million, or $0.24 per diluted share. Adjusted EPS for the quarter, excluding this special charge was $0.64, a 23 percent increase over Adjusted EPS of $0.52 in the second quarter of 2010 in which no special charges were incurred. Adjusted EBITDA was $66.5 million, or 16.6 percent of revenues, compared to Adjusted EBITDA of $65.5 million, or 18.8 percent of revenues, in the prior year period.

Commenting on these results, Jack Dunn, President and Chief Executive Officer of the Company said: "In the quarter, our strategy of delivering a portfolio of gold standard, diversified services from a global platform produced outstanding results. Revenues in our pro cyclical businesses grew 25 percent, more than offsetting continuing headwinds experienced in our restructuring business. Revenues outside the United States increased by 41 percent. Organic revenue growth for the pro cyclical businesses was 16 percent before contribution from the professionals who joined us from LECG, and these professionals are exceeding our expectations. The Economic Consulting and Technology segments both produced all time record revenue quarters, growing by 46 percent and 33 percent, respectively. Forensic and Litigation Consulting reported a strong quarter with 16 percent growth and Strategic Communications more than held its own."

"We remain confident in our performance and continue to expect a very solid year of growth in revenues and earnings per share. Based on the strong results in the first half across our pro-cyclical businesses, tempered by the anticipated normal seasonal slowdown in the third quarter, we are reaffirming the full year revenue and Adjusted EPS guidance we gave in May."

Operating cash flow in the quarter was $26.4 million compared to $49.2 million in the prior year's quarter. This decline was primarily a result of the decline in, and shifts in the mix of, the Corporate Finance/Restructuring segment and the increase in the Economic Consulting segment, including the LECG transaction. Overall, cash collections for the quarter were strong at approximately $347 million, and the current collection experience of our accounts receivable by practice has not changed materially.

During the quarter, the Company received and retired approximately 628,000 shares of its common stock pursuant to the accelerated stock buyback transaction entered into in March 2011 bringing the total number of shares received under this transaction to approximately 5,062,000. Under the terms of the transaction, the Company may receive additional shares later in 2011 depending on the average price of the Company's stock.

Second Quarter Segment Results

Corporate Finance/Restructuring

Revenues in the Corporate Finance/Restructuring segment were $101.9 million compared with $111.1 million in the second quarter of the prior year. The decline in demand for restructuring and bankruptcy services resulted from continued improvements in the credit markets and the macroeconomic environment. This decline was somewhat offset by growth from the segment's acquired business in Asia and improvements in the healthcare practice. Adjusted Segment EBITDA was $17.3 million, or 17.0 percent of segment revenues, compared with Adjusted Segment EBITDA of $26.0 million, or 23.4 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA margins declined primarily due to lower demand.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased 15.6 percent to $93.4 million from $80.8 million in the second quarter of the prior year. Organic revenue growth of $7.6 million, or 9.5 percent, was primarily driven by increased demand from construction, forensic investigations, insurance and compliance related engagements. The Adjusted Segment EBITDA margin declined to 20.6% of revenue from 24.0% in the prior year quarter primarily due to increasing headcount, including the addition of approximately 50 professionals from LECG, who are expected to continue ramping up their productivity in the last half of 2011.

Economic Consulting

Revenues in the Economic Consulting segment increased 46.4 percent to a record $94.5 million from $64.6 million in the second quarter of the prior year. Organic revenue growth was $11.9 million, or 18.5%, compared to the prior year quarter. Organic growth was primarily attributable to increased demand in merger and acquisition activity, financial disputes and the European international arbitration practice. Adjusted Segment EBITDA was $18.9 million, or 20.0 percent of segment revenues, compared to Adjusted Segment EBITDA of $11.5 million, or 17.7 percent of segment revenues, for the prior year quarter. Adjusted Segment EBITDA margins improved due to higher overall volume and utilization.

Technology

Revenues in the Technology segment increased 33.5 percent to $57.1 million from $42.8 million in the second quarter of the prior year, the segment's second consecutive record revenue quarter. The segment saw significant increases in litigation and investigation activity and the Acuity(TM) offering continued to gain momentum during the quarter. The segment also continued to benefit from several large client assignments. Both unit-based and product licensing revenue increased compared to the prior year quarter with unit-based revenue improving due to higher volumes while pricing was relatively stable on the combined mix of offerings. The segment continued to report excellent margins, with Adjusted Segment EBITDA of $20.7 million, or 36.2 percent of segment revenues, compared to Adjusted Segment EBITDA of $15.9 million, or 37.1 percent of segment revenues, in the prior year quarter.

Strategic Communications

Revenues in the Strategic Communications segment increased 7.5 percent to $53.6 million from $49.8 million in the second quarter of the prior year. Adjusted Segment EBITDA was $6.5 million, or 12.1 percent of segment revenues, compared to Adjusted Segment EBITDA of $8.6 million, or 17.3 percent of segment revenues, in the prior year quarter. Adjusted Segment EBITDA margins were impacted by the final payment of incentive compensation related to an acquisition.

Reaffirmed 2011 Guidance

Based on current market conditions, the Company continues to estimate that revenues for the year will be between $1.50 billion and $1.54 billion and Adjusted EPS will be between $2.30 and $2.45.

Second Quarter Conference Call

FTI will hold a conference call for analysts and investors to discuss second quarter financial results at 9:00 AM Eastern Time on August 4, 2011. 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 3,700 employees located in 22 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring. The company generated $1.4 billion in revenues during fiscal year 2010. 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, accretion of contingent consideration and special charges. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets, accretion of contingent consideration and special charges. We define Adjusted Net Income as the net income excluding the impact of the special charges and debt extinguishment costs that were incurred in that period. 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 period. Although Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted Net Income 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, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are common alternative measures of operating performance which may be 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, Adjusted Net Income 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 income to Adjusted EBITDA, segment operating income to Adjusted Segment EBITDA, net income to Adjusted Net Income 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 27A of the Securities Act of 1933, as amended, and 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 estimates will result or be achieved or that actual results will not differ from estimates or expectations. The Company's actual results may differ from our expectations. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flow in some prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, adverse financial, real estate or other market and general economic conditions, which could impact each of our segments differently, 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, including the risks set forth under "Risks Related to Our Business Segments" and "Risks Related to Our Operations". 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.

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(in thousands, except per share data)

 
         
         
 

Six Months Ended

 
 

June 30,

 
 

2011

 

2010

 
 

(unaudited)

 
         

Revenues

$ 762,253

 

$ 699,073

 
         

Operating expenses

       

Direct cost of revenues

466,176

 

406,491

 

Selling, general and administrative expense

183,548

 

166,603

 

Special charges

16,772

 

30,245

 

Amortization of other intangible assets

10,952

 

11,943

 
 

677,448

 

615,282

 
         

Operating income

84,805

 

83,791

 
         

Other income (expense)

       

Interest income and other

4,923

 

2,213

 

Interest expense

(29,810)

 

(22,696)

 
 

(24,887)

 

(20,483)

 
         

Income before income tax provision

59,918

 

63,308

 
         

Income tax provision

21,208

 

24,057

 
         

Net income

$ 38,710

 

$ 39,251

 
         
         

Earnings per common share - basic

$ 0.92

 

$ 0.86

 

Weighted average common shares outstanding - basic

42,223

 

45,828

 
         

Earnings per common share - diluted

$ 0.88

 

$ 0.82

 

Weighted average common shares outstanding - diluted

44,070

 

48,153

 
       

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2011 AND 2010

(in thousands, except per share data)

 
         
 

Three Months Ended

 
 

June 30,

 
 

2011

 

2010

 
 

(unaudited)

 
         

Revenues

$ 400,437

 

$ 349,033

 
         

Operating expenses

       

Direct cost of revenues

247,036

 

209,031

 

Selling, general and administrative expense

94,819

 

82,202

 

Special charges

16,772

 

-

 

Amortization of other intangible assets

5,498

 

5,852

 
 

364,125

 

297,085

 
         

Operating income

36,312

 

51,948

 
         

Other income (expense)

       

Interest income and other

2,923

 

(141)

 

Interest expense

(14,500)

 

(11,378)

 
 

(11,577)

 

(11,519)

 
         

Income before income tax provision

24,735

 

40,429

 
         

Income tax provision

7,823

 

15,363

 
         

Net income

$ 16,912

 

$ 25,066

 
         
         

Earnings per common share - basic

$ 0.42

 

$ 0.55

 

Weighted average common shares outstanding - basic

40,587

 

45,857

 
         

Earnings per common share - diluted

$ 0.40

 

$ 0.52

 

Weighted average common shares outstanding - diluted

42,518

 

48,176

 
       

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

(unaudited)

 
                   

Average

 

Revenue-

 
       

Adjusted

         

Billable

 

Generating

 
   

Revenues

 

EBITDA (1)

 

Margin

 

Utilization

 

Rate

 

Headcount

 
   

(in thousands)

                 

Three Months Ended June 30, 2011

                         

Corporate Finance/Restructuring

 

$ 101,896

 

$ 17,311

 

17.0%

 

65%

 

$ 420

 

730

 

Forensic and Litigation Consulting

 

93,368

 

19,232

 

20.6%

 

71%

 

$ 330

 

863

 

Economic Consulting

 

94,480

 

18,914

 

20.0%

 

86%

 

$ 496

 

409

 

Technology (2)

 

57,130

 

20,692

 

36.2%

 

N/M

 

N/M

 

261

 

Strategic Communications (2)

 

53,563

 

6,457

 

12.1%

 

N/M

 

N/M

 

562

 
   

$ 400,437

 

82,606

 

20.6%

 

N/M

 

N/M

 

2,825

 

Corporate

     

(16,082)

                 

Adjusted EBITDA (1)

     

$ 66,524

 

16.6%

             
                           

Six Months Ended June 30, 2011

                         

Corporate Finance/Restructuring

 

$ 209,150

 

$ 38,832

 

18.6%

 

68%

 

$ 426

 

730

 

Forensic and Litigation Consulting

 

176,281

 

36,110

 

20.5%

 

70%

 

$ 330

 

863

 

Economic Consulting

 

168,739

 

32,156

 

19.1%

 

87%

 

$ 487

 

409

 

Technology (2)

 

108,165

 

39,323

 

36.4%

 

N/M

 

N/M

 

261

 

Strategic Communications (2)

 

99,918

 

11,865

 

11.9%

 

N/M

 

N/M

 

562

 
   

$ 762,253

 

158,286

 

20.8%

 

N/M

 

N/M

 

2,825

 

Corporate

     

(30,074)

                 

Adjusted EBITDA (1)

     

$ 128,212

 

16.8%

             
                           

Three Months Ended June 30, 2010

                         

Corporate Finance/Restructuring

 

$ 111,095

 

$ 25,977

 

23.4%

 

65%

 

$ 438

 

683

 

Forensic and Litigation Consulting (3)

 

80,754

 

19,346

 

24.0%

 

72%

 

$ 327

 

784

 

Economic Consulting

 

64,552

 

11,453

 

17.7%

 

77%

 

$ 472

 

286

 

Technology (2)

 

42,791

 

15,857

 

37.1%

 

N/M

 

N/M

 

234

 

Strategic Communications (2)

 

49,841

 

8,635

 

17.3%

 

N/M

 

N/M

 

561

 
   

$ 349,033

 

81,268

 

23.3%

 

N/M

 

N/M

 

2,548

 

Corporate

     

(15,810)

                 

Adjusted EBITDA (1)

     

$ 65,458

 

18.8%

             
                           

Six Months Ended June 30, 2010

                         

Corporate Finance/Restructuring

 

$ 228,562

 

$ 60,696

 

26.6%

 

67%

 

$ 448

 

683

 

Forensic and Litigation Consulting (3)

 

159,432

 

39,130

 

24.5%

 

74%

 

$ 319

 

784

 

Economic Consulting

 

131,859

 

24,973

 

18.9%

 

80%

 

$ 470

 

286

 

Technology (2)

 

86,164

 

33,118

 

38.4%

 

N/M

 

N/M

 

234

 

Strategic Communications (2)

 

93,056

 

14,377

 

15.4%

 

N/M

 

N/M

 

561

 
   

$ 699,073

 

172,294

 

24.6%

 

N/M

 

N/M

 

2,548

 

Corporate

     

(30,954)

                 

Adjusted EBITDA (1)

     

$ 141,340

 

20.2%

             
                           
 

(1) We define Adjusted EBITDA as consolidated operating income before depreciation, amortization of intangible assets, accretion of contingent consideration and special charges. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments' respective Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as the segments' share of consolidated operating income before depreciation, amortization of intangible assets, accretion of contingent consideration and special charges. 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 based on billable hours. Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.

 

(3) 2010 utilization and average billable rate calculations were updated to include information related to non-domestic operations that was not available in 2010.

 
                         

FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

 
                         
         

Three Months Ended

 

Six Months Ended

 
         

June 30,

 

June 30,

 
         

2011

 

2010

 

2011

 

2010

 
                         

Net income

 

$ 16,912

 

$ 25,066

 

$ 38,710

 

$ 39,251

 
                   

Add back: Special charges, net of taxes of $6,574 (2011) and $12,176 (2010)

 

$ 10,198

 

$ -

 

$ 10,198

 

$ 18,069

 

Adjusted net income (1)

 

$ 27,110

 

$ 25,066

 

$ 48,908

 

$ 57,320

 
                   

Earnings per common share - diluted

 

$ 0.40

 

$ 0.52

 

$ 0.88

 

$ 0.82

 
                   

Adjusted earnings per common share - diluted (1)

 

$ 0.64

 

$ 0.52

 

$ 1.11

 

$ 1.19

 
                   

Weighted average common shares outstanding - diluted

 

42,518

 

48,176

 

44,070

 

48,153

 
                   

(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 ADJUSTED EBITDA

(in thousands)

(unaudited)

 
                                       

Three Months Ended June 30, 2011

 

Corporate Finance / Restructuring

 

Forensic and Litigation Consulting

 

Economic Consulting

 

Technology

 

Strategic Communi- cations

 

Corp HQ

 

Total

   
                                 

Net income

                         

$ 16,912

   

Interest income and other

                         

(2,923)

   

Interest expense

                         

14,500

   

Income tax provision

                         

7,823

   

Operating income

 

$ 3,289

 

$ 16,849

 

$ 15,889

 

$ 15,973

 

$ 4,511

 

$ (20,199)

 

36,312

   

Depreciation and amortization

 

894

 

857

 

635

 

2,741

 

739

 

1,277

 

7,143

   

Amortization of other intangible assets

 

1,420

 

596

 

297

 

1,978

 

1,207

 

-

 

5,498

   

Special charges

 

11,000

 

839

 

2,093

 

-

 

-

 

2,840

 

16,772

   

Accretion of contingent consideration

 

708

 

91

 

-

 

-

 

-

 

-

 

799

   

Adjusted EBITDA (1)

 

17,311

 

19,232

 

18,914

 

20,692

 

6,457

 

(16,082)

 

66,524

   
                                 
                                 

Six Months Ended June 30, 2011

                               
                                 

Net income

                         

$ 38,710

   

Interest income and other

                         

(4,923)

   

Interest expense

                         

29,810

   

Income tax provision

                         

21,208

   

Operating income

 

$ 21,809

 

$ 32,192

 

$ 28,267

 

$ 29,944

 

$ 7,981

 

$ (35,388)

 

84,805

   

Depreciation and amortization

 

1,770

 

1,712

 

1,203

 

5,425

 

1,504

 

2,474

 

14,088

   

Amortization of other intangible assets

 

2,838

 

1,187

 

593

 

3,954

 

2,380

 

-

 

10,952

   

Special charges

 

11,000

 

839

 

2,093

 

-

 

-

 

2,840

 

16,772

   

Accretion of contingent consideration

 

1,415

 

180

 

-

 

-

 

-

 

-

 

1,595

   

Adjusted EBITDA (1)

 

38,832

 

36,110

 

32,156

 

39,323

 

11,865

 

(30,074)

 

128,212

   
                                 
                                 

Three Months Ended June 30, 2010

                               
                                 

Net income

                         

$ 25,066

   

Interest income and other

                         

141

   

Interest expense

                         

11,378

   

Income tax provision

                         

15,363

   

Operating income

 

$ 23,567

 

$ 17,537

 

$ 10,459

 

$ 10,991

 

$ 6,550

 

$ (17,156)

 

51,948

   

Depreciation and amortization

 

927

 

843

 

684

 

3,033

 

825

 

1,346

 

7,658

   

Amortization of other intangible assets

 

1,483

 

966

 

310

 

1,833

 

1,260

 

-

 

5,852

   

Adjusted EBITDA (1)

 

25,977

 

19,346

 

11,453

 

15,857

 

8,635

 

(15,810)

 

65,458

   
                                 
                                 

Six Months Ended June 30, 2010

                               
                                 

Net income

                         

$ 39,251

   

Interest income and other

                         

(2,213)

   

Interest expense

                         

22,696

   

Income tax provision

                         

24,057

   

Operating income

 

$ 49,211

 

$ 29,937

 

$ 16,225

 

$ 18,293

 

$ 8,897

 

$ (38,772)

 

83,791

   

Depreciation and amortization

 

1,921

 

1,672

 

1,314

 

6,083

 

1,648

 

2,723

 

15,361

   

Amortization of other intangible assets

 

2,975

 

1,961

 

620

 

3,815

 

2,572

 

-

 

11,943

   

Special charges

 

6,589

 

5,560

 

6,814

 

4,927

 

1,260

 

5,095

 

30,245

   

Adjusted EBITDA (1)

 

60,696

 

39,130

 

24,973

 

33,118

 

14,377

 

(30,954)

 

141,340

   
     
 

(1) We define Adjusted EBITDA as consolidated operating income before depreciation, amortization of intangible assets, accretion of contingent consideration and special charges. Amounts presented in the Adjusted EBITDA column for each segment reflect the segments' respective Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segments' share of consolidated operating income before depreciation, amortization of intangible assets, accretion of contingent consideration and special charges. 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.

   
   
                                     

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 and 2010

(in thousands)

 
         
 

Six Months Ended

 
 

June 30,

 
 

2011

 

2010

 
 

(unaudited)

 

Operating activities

       

Net income

$ 38,710

 

$ 39,251

 

Adjustments to reconcile net income to net cash (used in)

       

provided by operating activities:

       

Depreciation, amortization and accretion

15,683

 

15,361

 

Amortization of other intangible assets

10,952

 

11,943

 

Provision for doubtful accounts

5,768

 

4,618

 

Non-cash share-based compensation

15,942

 

14,651

 

Excess tax benefits from share-based compensation

(124)

 

(625)

 

Non-cash interest expense

4,190

 

3,599

 

Other

136

 

(315)

 

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

       

Accounts receivable, billed and unbilled

(99,137)

 

(34,895)

 

Notes receivable

(5,281)

 

(17,789)

 

Prepaid expenses and other assets

(5,893)

 

(2,240)

 

Accounts payable, accrued expenses and other

227

 

11,262

 

Income taxes

(5,742)

 

(4,339)

 

Accrued compensation

4,093

 

(18,671)

 

Billings in excess of services provided

7,652

 

144

 

Net cash (used in) provided by operating activities

(12,824)

 

21,955

 
         

Investing activities

       

Payments for acquisition of businesses, net of cash received

(50,888)

 

(22,834)

 

Purchases of property and equipment

(12,705)

 

(11,632)

 

Proceeds from sale or maturity of short-term investments

-

 

15,000

 

Other

(405)

 

(475)

 

Net cash used in investing activities

(63,998)

 

(19,941)

 
         

Financing activities

       

Borrowings under revolving line of credit

25,000

 

20,000

 

Payments of revolving line of credit

(25,000)

 

(20,000)

 

Payments of long-term debt and capital lease obligations

(937)

 

(465)

 

Purchase and retirement of common stock

(209,400)

 

-

 

Net issuance of common stock under equity compensation plans

685

 

4,235

 

Excess of tax benefits from share-based compensation

124

 

625

 

Other

51

 

442

 

Net cash (used in) provided by financing activities

(209,477)

 

4,837

 
         

Effect of exchange rate changes on cash and cash equivalents

474

 

(2,469)

 
         

Net (decrease) increase in cash and cash equivalents

(285,825)

 

4,382

 

Cash and cash equivalents, beginning of period

384,570

 

118,872

 

Cash and cash equivalents, end of period

$ 98,745

 

$ 123,254

 
       

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2011 AND DECEMBER 31, 2010

(in thousands, except per share amounts)

 
         
 

June 30,

 

December 31,

 
 

2011

 

2010

 

Assets

(unaudited)

     

Current assets

       

Cash and cash equivalents

$ 98,745

 

$ 384,570

 

Restricted cash

11,383

 

10,518

 

Accounts receivable:

       

Billed receivables

318,554

 

268,386

 

Unbilled receivables

199,825

 

120,896

 

Allowance for doubtful accounts and unbilled services

(72,204)

 

(63,205)

 

Accounts receivable, net

446,175

 

326,077

 

Current portion of notes receivable

25,771

 

26,130

 

Prepaid expenses and other current assets

32,137

 

28,174

 

Income taxes receivable

17,885

 

13,246

 

Total current assets

632,096

 

788,715

 
         

Property and equipment, net of accumulated depreciation

71,983

 

73,238

 

Goodwill

1,305,170

 

1,269,447

 

Other intangible assets, net of amortization

132,035

 

134,970

 

Notes receivable, net of current portion

94,106

 

87,677

 

Other assets

64,305

 

60,312

 
         

Total assets

$ 2,299,695

 

$ 2,414,359

 
         

Liabilities and Stockholders' Equity

       

Current liabilities

       

Accounts payable, accrued expenses and other

$ 105,589

 

$ 105,864

 

Accrued compensation

141,972

 

143,971

 

Current portion of long-term debt and capital lease obligations

6,616

 

7,559

 

Billings in excess of services provided

35,674

 

27,836

 

Deferred income taxes

4,052

 

4,052

 

Total current liabilities

293,903

 

289,282

 
         

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

790,321

 

785,563

 

Deferred income taxes

99,520

 

92,134

 

Other liabilities

87,452

 

80,061

 

Total liabilities

1,271,196

 

1,247,040

 
         

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 -- 41,555 (2011) and 47,150 (2010)

416

 

461

 

Additional paid-in capital

338,789

 

532,929

 

Retained earnings

726,129

 

687,419

 

Accumulated other comprehensive loss

(36,835)

 

(53,490)

 

Total stockholders' equity

1,028,499

 

1,167,319

 
         

Total liabilities and stockholders' equity

$ 2,299,695

 

$ 2,414,359

 
       

SOURCE FTI Consulting, Inc.

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+1 617.747.1791

Megan McLaughlin Hawkins

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+1 617.747.1740