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FTI Consulting, Inc. Reports 2011 Third Quarter Results

- Record Revenues up 20 percent to $413.8 million
- EPS up 63 percent to $0.70
- $500 million Share Repurchase Completed

WEST PALM BEACH, Fla., Nov. 2, 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 third quarter ended September 30, 2011.

For the quarter, revenues increased 20 percent to $413.8 million, the highest quarterly revenues in the Company's history. Earnings per diluted share for the quarter were $0.70, representing an increase of $0.27 or 63 percent over the same period in 2010, which included a $5.2 million charge for debt extinguishment. Adjusted EBITDA increased 18 percent for the quarter to $73.6 million, or 17.8 percent of revenues, from $62.2 million, or 18.0 percent of revenues, in the prior year period.

As previously announced on September 9, 2011, the Company received 671,647 shares of its common stock during the quarter as a result of the completion of the accelerated share buyback transaction entered into in March 2011. The total number of shares of FTI Consulting common stock retired under this transaction was 5,733,205 for an aggregate cost of $209.4 million or an average price per share of $36.52. As a result, the $500 million stock repurchase authorized by the Board of Directors in November 2009 has now been completed.

Commenting on these results, Jack Dunn, President and Chief Executive Officer of the Company said: "The third quarter continued to validate our business strategy and market execution. Record results, including 11 percent organic growth, were driven by strong performance in our pro-cyclical businesses and the diversity of our geographic footprint. Operations in Asia Pacific and Latin America, particularly Brazil, continued to outperform. Growth was led by our Economic Consulting, Technology and Forensic and Litigation Consulting practices at 61 percent, 33 percent, and 18 percent, respectively. In Economic Consulting, this represented outstanding organic growth of 30 percent and the addition of the former LECG professionals, who are now fully integrated, with their contributions continuing to exceed our expectations. In Technology, the growth was entirely organic, as was half of the growth in Forensic and Litigation Consulting."

"As we look forward, we remain very confident in our performance and outlook for both the fourth quarter and next year. We expect to end the year with solid growth and a strong position globally to take advantage of opportunities in both emerging and developed markets."

Third Quarter Segment Results

Corporate Finance/Restructuring

Revenues in the Corporate Finance/Restructuring segment were $110.3 million compared with $109.7 million in the third quarter of the prior year. Results were led by growth in the EMEA and Asia Pacific regions as well as in the segment's communications, media and entertainment and healthcare practices. Adjusted Segment EBITDA was $28.3 million in the quarter compared to $24.7 million for the same period in 2010, as the Adjusted EBITDA margin improved 3.2 percentage points to 25.7 percent. On a sequential basis, the Adjusted Segment EBITDA margin increased from 15.4 percent to 25.7 percent.

Forensic and Litigation Consulting

Revenues in the Forensic and Litigation Consulting segment increased by $15.0 million or 18 percent to record revenues of $99.0 million from $84.0 million in the third quarter of the prior year. Organic revenue growth of $7.7 million, or 9 percent, was driven by higher revenues in the data analytics practice and increased demand in the Asia Pacific region for construction solutions, forensic accounting and litigation support services. The remainder of the increase resulted from revenues generated by the acquired LECG practices. Adjusted Segment EBITDA was $19.2 million in the quarter, or 19.4 percent of segment revenues, compared to $19.5 million, or 23.2 percent of segment revenues, for the same period in 2010. This decrease in Adjusted Segment EBITDA margin was due primarily to the investment in new and acquired practices and senior practitioners.

Economic Consulting

Revenues in the Economic Consulting segment increased $36.2 million or 61 percent to record revenues of $95.7 million up from $59.4 million in the third quarter of the prior year. Organic revenue growth of $17.7 million, or 30 percent, is attributable to increased demand for our competition, financial disputes and European international arbitration practices. The acquired LECG practices contributed $18.3 million to revenues in the quarter. Adjusted Segment EBITDA was $18.7 million, or 19.5 percent of segment revenues, compared to Adjusted Segment EBITDA of $11.9 million, or 19.9 percent of segment revenues, for the same period in 2010.

Technology

Revenues in the Technology segment increased $14.3 million or 33 percent to $57.0 million from $42.7 million in the third quarter of the prior year. The segment continued to benefit from increased litigation, mergers, acquisition and investigation activity. Several large client assignments drove higher demand for its Acuity® review services and its on-demand hosting and processing services. Adjusted Segment EBITDA was $19.6 million or 34.4 percent of segment revenues, compared to Adjusted Segment EBITDA of $13.8 million, or 32.2 percent of segment revenues, for the same period in the prior year.

Strategic Communications

Revenues in the Strategic Communications segment increased 3 percent to $51.8 million from $50.2 million in the third quarter of the prior year, primarily due to a positive impact of foreign currency translation. The segment benefitted from several key financial communications and restructuring projects, but it continued to be impacted by ongoing sluggish capital markets activity. Adjusted Segment EBITDA was $7.4 million, or 14.3 percent of segment revenues, compared to Adjusted Segment EBITDA of $7.2 million, or 14.4 percent of segment revenues, for the same period of 2010. On a sequential basis, the Adjusted Segment EBITDA margin increased from 12.0 percent to 14.3 percent.

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 November 2, 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 3,800 employees located in 23 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 EBITDA and 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, which 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 be achieved, and the Company's actual results may differ from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flow in 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, the mix of the geographic locations where our clients are located or where services are performed, 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.

FINANCIAL TABLES FOLLOW

 
 

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

 

(in thousands, except per share data)

 
         
 

Nine Months Ended

 
 

September 30, (1)

 
 

2011

 

2010

 
 

(unaudited)

 
         

Revenues

$ 1,176,055

 

$ 1,045,213

 
         

Operating expenses

       

Direct cost of revenues

723,746

 

617,061

 

Selling, general and administrative expense

282,189

 

252,886

 

Special charges

16,772

 

30,245

 

Amortization of other intangible assets

16,795

 

18,229

 
 

1,039,502

 

918,421

 
         

Operating income

136,553

 

126,792

 
         

Other income (expense)

       

Interest income and other

5,409

 

4,740

 

Interest expense

(44,129)

 

(34,600)

 

Loss on early extinguishment of debt

-

 

(5,161)

 
 

(38,720)

 

(35,021)

 
         

Income before income tax provision

97,833

 

91,771

 
         

Income tax provision

34,291

 

34,743

 
         

Net income

$ 63,542

 

$ 57,028

 
         
         

Earnings per common share - basic

$ 1.53

 

$ 1.25

 

Weighted average common shares outstanding - basic

41,535

 

45,708

 
         

Earnings per common share - diluted

$ 1.47

 

$ 1.19

 

Weighted average common shares outstanding - diluted

43,346

 

47,726

 
         

(1) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K. The impact of the correction of these errors resulted in a decrease in net income of $4.6 and $4.2 million and a decrease in basic and diluted earnings per share of $0.11 and $0.09 for the nine months ended September 30, 2011 and 2010, respectively.

 
       

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

 

(in thousands, except per share data)

 
         
 

Three Months Ended

 
 

September 30,

 
 

2011

 

2010 (1)

 
 

(unaudited)

 
         

Revenues

$ 413,802

 

$ 346,140

 
         

Operating expenses

       

Direct cost of revenues

249,983

 

206,831

 

Selling, general and administrative expense

98,591

 

86,115

 

Amortization of other intangible assets

5,843

 

6,286

 
 

354,417

 

299,232

 
         

Operating income

59,385

 

46,908

 
         

Other income (expense)

       

Interest income and other

486

 

2,527

 

Interest expense

(14,319)

 

(11,904)

 

Loss on early extinguishment of debt

-

 

(5,161)

 
 

(13,833)

 

(14,538)

 
         

Income before income tax provision

45,552

 

32,370

 
         

Income tax provision

16,121

 

12,246

 
         

Net income

$ 29,431

 

$ 20,124

 
         
         

Earnings per common share - basic

$ 0.73

 

$ 0.44

 

Weighted average common shares outstanding - basic

40,182

 

45,471

 
         

Earnings per common share - diluted

$ 0.70

 

$ 0.43

 

Weighted average common shares outstanding - diluted

41,919

 

46,808

 
         

(1) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K. The impact of the correction of these errors resulted in a decrease in net income of $1.8 million and a decrease in basic and diluted earnings per share of $0.04 for the three months ended September 30, 2010.

 
       

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 September 30, 2011

                       

Corporate Finance/Restructuring

$ 110,311

 

$ 28,313

 

25.7%

 

75%

 

$ 406

 

711

 

Forensic and Litigation Consulting

99,064

 

19,202

 

19.4%

 

69%

 

$ 331

 

872

 

Economic Consulting

95,662

 

18,650

 

19.5%

 

85%

 

$ 487

 

424

 

Technology (2)

56,972

 

19,619

 

34.4%

 

N/M

 

N/M

 

284

 

Strategic Communications (2)

51,793

 

7,429

 

14.3%

 

N/M

 

N/M

 

590

 
 

$ 413,802

 

93,213

 

22.5%

 

N/M

 

N/M

 

2,881

 

Corporate

   

(19,622)

                 

Adjusted EBITDA (1)

   

$ 73,591

 

17.8%

             
                         

Nine Months Ended September 30, 2011

                       

Corporate Finance/Restructuring

$ 319,461

 

$ 62,312

 

19.5%

 

70%

 

$ 422

 

711

 

Forensic and Litigation Consulting

275,345

 

53,285

 

19.4%

 

69%

 

$ 331

 

872

 

Economic Consulting

264,401

 

50,635

 

19.2%

 

86%

 

$ 486

 

424

 

Technology (2)

165,137

 

58,362

 

35.3%

 

N/M

 

N/M

 

284

 

Strategic Communications (2)

151,711

 

19,268

 

12.7%

 

N/M

 

N/M

 

590

 
 

$ 1,176,055

 

243,862

 

20.7%

 

N/M

 

N/M

 

2,881

 

Corporate

   

(49,696)

                 

Adjusted EBITDA (1) (3)

   

$ 194,166

 

16.5%

             
                         

Three Months Ended September 30, 2010

                       

Corporate Finance/Restructuring

$ 109,736

 

$ 24,739

 

22.5%

 

71%

 

$ 421

 

740

 

Forensic and Litigation Consulting

84,023

 

19,528

 

23.2%

 

69%

 

$ 338

 

799

 

Economic Consulting

59,417

 

11,853

 

19.9%

 

70%

 

$ 481

 

292

 

Technology (2)

42,721

 

13,754

 

32.2%

 

N/M

 

N/M

 

248

 

Strategic Communications (2)

50,243

 

7,210

 

14.4%

 

N/M

 

N/M

 

579

 
 

$ 346,140

 

77,084

 

22.3%

 

N/M

 

N/M

 

2,658

 

Corporate

   

(14,934)

                 

Adjusted EBITDA (1) (3)

   

$ 62,150

 

18.0%

             
                         

Nine Months Ended September 30, 2010

                       

Corporate Finance/Restructuring

$ 338,298

 

$ 82,560

 

24.4%

 

70%

 

$ 440

 

740

 

Forensic and Litigation Consulting

243,455

 

57,868

 

23.8%

 

72%

 

$ 327

 

799

 

Economic Consulting

191,276

 

36,682

 

19.2%

 

78%

 

$ 472

 

292

 

Technology (2)

128,885

 

46,798

 

36.3%

 

N/M

 

N/M

 

248

 

Strategic Communications (2)

143,299

 

21,563

 

15.0%

 

N/M

 

N/M

 

579

 
 

$ 1,045,213

 

245,471

 

23.5%

 

N/M

 

N/M

 

2,658

 

Corporate

   

(45,888)

                 

Adjusted EBITDA (1) (3)

   

$ 199,583

 

19.1%

             
                         
                         

(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. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments. Adjusted EBITDA and Adjusted Segment EBITDA for 2010 have been presented in a consistent manner.

 
   

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) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K.

 
                       

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,

 
 

2011

 

2010

 

2011

 

2010

 
                 

Net income

$ 29,431

 

$ 20,124

 

$ 63,542

 

$ 57,028

 
                 

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

-

 

-

 

10,198

 

18,069

 

Add back: Loss on early extinguishment of debt, net of taxes of $1,961

-

 

3,200

 

-

 

3,200

 

Adjusted net income (1)

$ 29,431

 

$ 23,324

 

$ 73,740

 

$ 78,297

 
                 

Earnings per common share - diluted

$ 0.70

 

$ 0.43

 

$ 1.47

 

$ 1.19

 
                 

Adjusted earnings per common share - diluted (1) (2)

$ 0.70

 

$ 0.50

 

$ 1.70

 

$ 1.64

 
                 

Weighted average common shares outstanding - diluted

41,919

 

46,808

 

43,346

 

47,726

 
                 

(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.

 
                 

(2) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K.

 
               

RECONCILIATION OF OPERATING INCOME AND NET INCOME TO ADJUSTED EBITDA

 

(in thousands)

 

(unaudited)

 
                             

Three Months Ended September 30, 2011

Corporate

Finance /

Restructuring

 

Forensic and

Litigation

Consulting

 

Economic

Consulting

 

Technology

 

Strategic

Communi-

cations

 

Corp HQ

 

Total

 
                             

Net income

                       

$ 29,431

 
 

Interest income and other

                       

(486)

 
 

Interest expense

                       

14,319

 
 

Income tax provision

                       

16,121

 

Operating income

$ 25,104

 

$ 17,581

 

$ 17,469

 

$ 14,662

 

$ 5,495

 

$ (20,926)

 

59,385

 
 

Depreciation

847

 

867

 

680

 

2,982

 

739

 

1,304

 

7,419

 
 

Amortization of other intangible assets

1,507

 

665

 

501

 

1,975

 

1,195

 

-

 

5,843

 
 

Accretion of contingent consideration

855

 

89

 

-

 

-

 

-

 

-

 

944

 

Adjusted EBITDA (1)

28,313

 

19,202

 

18,650

 

19,619

 

7,429

 

(19,622)

 

73,591

 
                               
                               

Nine Months Ended September 30, 2011

                           
                               

Net income

                       

$ 63,542

 
 

Interest income and other

                       

(5,409)

 
 

Interest expense

                       

44,129

 
 

Income tax provision

                       

34,291

 

Operating income

$ 42,080

 

$ 47,746

 

$ 45,565

 

$ 44,026

 

$ 13,450

 

$ (56,314)

 

136,553

 
 

Depreciation

2,617

 

2,579

 

1,883

 

8,407

 

2,243

 

3,778

 

21,507

 
 

Amortization of other intangible assets

4,345

 

1,852

 

1,094

 

5,929

 

3,575

 

-

 

16,795

 
 

Special charges

11,000

 

839

 

2,093

 

-

 

-

 

2,840

 

16,772

 
 

Accretion of contingent consideration

2,270

 

269

 

-

 

-

 

-

 

-

 

2,539

 

Adjusted EBITDA (1) (2)

62,312

 

53,285

 

50,635

 

58,362

 

19,268

 

(49,696)

 

194,166

 
                               
                               

Three Months Ended September 30, 2010

                           
                               

Net income

                       

$ 20,124

 
 

Interest income and other

                       

(2,527)

 
 

Interest expense

                       

11,904

 
 

Loss on early extinguishment of debt

                       

5,161

 
 

Income tax provision

                       

12,246

 

Operating income

$ 21,798

 

$ 17,751

 

$ 10,998

 

$ 7,480

 

$ 5,116

 

$ (16,235)

 

$ 46,908

 
 

Depreciation

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

 
 

Accretion of contingent consideration

171

 

8

 

-

 

-

 

-

 

-

 

179

 

Adjusted EBITDA (1) (2)

$ 24,739

 

$ 19,528

 

$ 11,853

 

$ 13,754

 

$ 7,210

 

$ (14,934)

 

$ 62,150

 
                               
                               

Nine Months Ended September 30, 2010

                           
                               

Net income

                       

$ 57,028

 
 

Interest income and other

                       

(4,740)

 
 

Interest expense

                       

34,600

 
 

Loss on early extinguishment of debt

                       

5,161

 
 

Income tax provision

                       

34,743

 

Operating income

$ 68,134

 

$ 46,898

 

$ 27,079

 

$ 25,699

 

$ 13,989

 

$ (55,007)

 

$ 126,792

 
 

Depreciation

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

 
 

Accretion of contingent consideration

171

 

8

 

-

 

-

 

-

 

-

 

179

 

Adjusted EBITDA (1) (2)

$ 82,560

 

$ 57,868

 

$ 36,682

 

$ 46,798

 

$ 21,563

 

$ (45,888)

 

$ 199,583

 
                               
                               
                               

(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. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments. Adjusted EBITDA and Adjusted Segment EBITDA for 2010 have been presented in a consistent manner.

 
   

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) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K.

 
                             

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

 

(in thousands)

 
         
 

Nine Months Ended

 
 

September 30, (1)

 
 

2011

 

2010

 
 

(unaudited)

 

Operating activities

       

Net income

$ 63,542

 

$ 57,028

 

Adjustments to reconcile net income to net cash

       

provided by operating activities:

       

Depreciation, amortization and accretion

24,053

 

24,138

 

Amortization of other intangible assets

16,795

 

18,229

 

Provision for doubtful accounts

9,483

 

7,179

 

Non-cash share-based compensation

29,043

 

25,205

 

Excess tax benefits from share-based compensation

(198)

 

(761)

 

Non-cash interest expense

6,322

 

10,132

 

Other

(566)

 

633

 

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

       

Accounts receivable, billed and unbilled

(130,132)

 

(34,845)

 

Notes receivable

(4,223)

 

(20,091)

 

Prepaid expenses and other assets

(3,670)

 

1,994

 

Accounts payable, accrued expenses and other

14,489

 

9,120

 

Income taxes

850

 

6,265

 

Accrued compensation

21,098

 

(4,188)

 

Billings in excess of services provided

(38)

 

(4,172)

 

Net cash provided by operating activities

46,848

 

95,866

 
         

Investing activities

       

Payments for acquisition of businesses, including contingent payments, net of cash received

(62,346)

 

(60,273)

 

Purchases of property and equipment

(24,595)

 

(14,833)

 

Proceeds from sale or maturity of short-term investments

-

 

15,000

 

Other

(127)

 

(467)

 

Net cash used in investing activities

(87,068)

 

(60,573)

 
         

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

(6,967)

 

(190,452)

 

Issuance of debt securities

-

 

391,647

 

Payments of debt financing fees

-

 

(2,843)

 

Purchase and retirement of common stock

(209,400)

 

(26,138)

 

Net issuance of common stock under equity compensation plans

797

 

4,604

 

Excess of tax benefits from share-based compensation

198

 

761

 

Other

(1)

 

442

 

Net cash (used in) provided by financing activities

(215,373)

 

178,021

 
         

Effect of exchange rate changes on cash and cash equivalents

(747)

 

(1,004)

 
         

Net (decrease) increase in cash and cash equivalents

(256,340)

 

212,310

 

Cash and cash equivalents, beginning of period

384,570

 

118,872

 

Cash and cash equivalents, end of period

$ 128,230

 

$ 331,182

 
   

(1) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K.

 
       

FTI CONSULTING, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

 

(in thousands, except per share amounts)

 
         
 

September 30,

 

December 31,

 
 

2011

 

2010 (1)

 

Assets

(unaudited)

     

Current assets

       

Cash and cash equivalents

$ 128,230

 

$ 384,570

 

Restricted cash

10,231

 

10,518

 

Accounts receivable:

       

Billed receivables

348,480

 

268,386

 

Unbilled receivables

200,999

 

120,896

 

Allowance for doubtful accounts and unbilled services

(80,443)

 

(63,205)

 

Accounts receivable, net

469,036

 

326,077

 

Current portion of notes receivable

26,559

 

28,398

 

Prepaid expenses and other current assets

30,784

 

28,174

 

Income taxes receivable

11,997

 

13,246

 

Deferred income taxes

7,973

 

4,839

 

Total current assets

684,810

 

795,822

 
         

Property and equipment, net of accumulated depreciation

75,027

 

73,238

 

Goodwill

1,295,679

 

1,269,447

 

Other intangible assets, net of amortization

124,623

 

134,970

 

Notes receivable, net of current portion

82,678

 

76,538

 

Other assets

70,317

 

60,312

 
         

Total assets

$ 2,333,134

 

$ 2,410,327

 
         

Liabilities and Stockholders' Equity

       

Current liabilities

       

Accounts payable, accrued expenses and other

$ 108,050

 

$ 105,864

 

Accrued compensation

158,263

 

143,971

 

Current portion of long-term debt and capital lease obligations

152,047

 

7,559

 

Billings in excess of services provided

27,726

 

27,836

 

Total current liabilities

446,086

 

285,230

 
         

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

645,488

 

785,563

 

Deferred income taxes

104,163

 

92,134

 

Other liabilities

86,375

 

80,061

 

Total liabilities

1,282,112

 

1,242,988

 
         

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 -- 40,954 (2011) and 46,144 (2010)

410

 

461

 

Additional paid-in capital

365,746

 

546,336

 

Retained earnings

737,574

 

674,032

 

Accumulated other comprehensive loss

(52,708)

 

(53,490)

 

Total stockholders' equity

1,051,022

 

1,167,339

 
         

Total liabilities and stockholders' equity

$ 2,333,134

 

$ 2,410,327

 
         

(1) These amounts are revised based upon our completion of a re-examination of our historical practices regarding our accounting for compensation expense related to our Senior Managing Director Incentive Compensation Program and related agreements. In connection with this evaluation, we concluded that we had reported immaterial errors in prior period financial statements. Further information related to these immaterial errors can be found in the Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commission on November 2, 2011. This press release should be read in conjunction with such previously filed Form 8-K.

 
       

SOURCE FTI Consulting, Inc.

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