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FTI Consulting, Inc. Reports 2012 Second Quarter Results
-- Revenues of $396.2 million
-- Adjusted EPS of $0.60
-- Updated Guidance for 2012 Adjusted EPS of $2.15 to $2.35

WEST PALM BEACH, Fla., Aug. 1, 2012 /PRNewswire/ -- 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 quarter ended June 30, 2012.

For the quarter, revenues were $396.2 million compared to $400.4 million in the prior year quarter. Foreign currency translation reduced our consolidated revenues by approximately 1.1 percent or $4.6 million. Adjusted EBITDA was $66.6 million, or 16.8 percent of revenues, compared to Adjusted EBITDA of $61.5 million, or 15.4 percent of revenues, in the prior year quarter.  Fully diluted earnings per share ("EPS") for the quarter were $0.18, including a previously announced special charge of $26.8 million, which reduced EPS by $0.42. For the quarter, Adjusted EPS were $0.60 compared to $0.57 in the prior year quarter. Both EPS and Adjusted EPS included a $4.1 million revaluation gain, which is described elsewhere in this press release. Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures defined elsewhere in this press release.

Commenting on the quarter, President and CEO, Jack Dunn, said, "At mid-year, based on the current state of the economic cycle and new case activity, we enjoyed and continue to expect solid demand and performance in our Economic Consulting and Corporate Finance/Restructuring segments. The increase in demand is related to fallout from the financial crisis, including the LIBOR probe, and the improving environment for bankruptcy and restructuring services. At the same time, Strategic Communications continues to face one of the worst environments for capital markets activity and M&A transactions since 2009 and 2004, respectively."

"In Forensic and Litigation Consulting, global investigations and data analytics remain robust, and we began to see a build-up of demand related to fall-out from the financial crisis, as mortgage-backed, auction-rate, derivative and other securities-based litigation matters began to reach the discovery and then trial stages, and whistleblower reports to the SEC under the Dodd/Frank program began to proliferate. We expect these matters to continue to ramp up in the back half of the year and to continue to replace other major matters as they burn off."

"In Technology, while competition remained robust, its tenor more and more is maturing from that of a large number of small entrants in an undisciplined market to that of a smaller number of larger, sophisticated players who compete on the basis of quality, scale and global reach. We believe we are patently, if not uniquely, qualified to serve this market and are encouraged by the results of increased sales efforts as evidenced by growth in new matter openings and by the reception to Ringtail® 8.2, our latest software introduction. As in Forensic and Litigation Consulting, we expect these initiatives to help replace major matters as they wind down."

"Based on these factors and subject to the uncertainty created by the political elections in the US and the continuing credit concerns in Europe, we expect our activities to continue at similar levels for the remainder of 2012 and to benefit from the cost reduction moves made in the quarter."

Second Quarter Segment Results

Corporate Finance/Restructuring

Corporate Finance/Restructuring revenues grew 10.2 percent to $112.3 million compared with $101.9 million in the prior year quarter. Organic growth of approximately 9.2 percent was due to greater demand for North America bankruptcy and restructuring services coupled with higher demand across the Asia Pacific region.

Adjusted Segment EBITDA was $29.2 million, including a revaluation gain of $3.8 million described elsewhere in this press release, compared with $14.1 million in the prior year quarter. Adjusted Segment EBITDA margin in the quarter was 26.0 percent of segment revenues. Excluding the revaluation gain, Adjusted Segment EBITDA margin was 22.6 percent of segment revenues compared to 13.8 percent of segment revenues in the prior year quarter as a result of revenue growth coupled with improved utilization and lower SG&A expenses. 

Economic Consulting

Economic Consulting revenues grew 5.3 percent to $99.5 million from $94.5 million in the prior year quarter. The revenue growth, all of which was organic, was attributed to continued strong demand for antitrust and early stage M&A related activity and large scale financial and securities related litigation predominantly in North America, partially offset by lower demand for the segment's international arbitration and valuation practices in Europe, Middle East and Africa ("EMEA").

Adjusted Segment EBITDA declined slightly to $18.5 million, or 18.6 percent of segment revenues, compared to Adjusted Segment EBITDA of $18.8 million, or 19.9 percent of segment revenues, for the prior year quarter as the positive impact of higher bill rates was offset by lower utilization, increased compensation for additional hires and contract extensions of key individuals. 

Forensic and Litigation Consulting

Forensic and Litigation Consulting revenues decreased 3.5 percent to $90.1 million from $93.4 million in the prior year quarter. Although the segment saw growth in its Latin America global risk and investigations practice as well as in its global financial and enterprise data analytics practice, this growth was more than fully offset by decreased demand in North America and EMEA.

Adjusted Segment EBITDA, including a revaluation gain of $0.3 million described elsewhere in this press release, was $17.6 million in the quarter, or 19.6 percent of segment revenues, compared to Adjusted Segment EBITDA of $17.9 million, or 19.2 percent of segment revenues, in the prior year quarter.  Excluding the impact of the revaluation gain, Adjusted Segment EBITDA margin was flat with the prior year quarter at 19.2 percent of segment revenues.

Technology

Technology revenues decreased 16.5 percent to $47.7 million from $57.1 million in the prior year quarter. Revenues declined due to weaker demand for processing of electronically stored information from certain product liability and intellectual property matters, lower pricing for on-demand hosting and lower average pricing for consulting services due to staff mix, partially offset by sustained or greater levels of activity in a few large client engagements and continued growth in numbers of litigation and class action matters.

Adjusted Segment EBITDA for the quarter was $12.9 million, or 26.9 percent of segment revenues, compared to Adjusted Segment EBITDA of $20.3 million, or 35.6 percent of segment revenues, in the prior year quarter. Profitability in the segment was adversely impacted by the revenue declines in higher margin services, partially offset by reductions in research and development and other operating expenses.

Strategic Communications

Strategic Communications revenues decreased 12.9 percent to $46.6 million from $53.6 million in the prior year quarter. Revenues declined due to lower pass-through revenues in North America, fewer M&A-related projects in Asia Pacific, and pricing pressures on retainer fees in EMEA and North America, despite increased retainer revenues in Latin America.

Adjusted Segment EBITDA was $5.0 million, or 10.7 percent of segment revenues, compared to Adjusted Segment EBITDA of $6.4 million, or 12.0 percent of segment revenues, in the prior year quarter. The decline in Adjusted Segment EBITDA margin was due to fewer high-margin project engagements partially offset by lower variable compensation costs. 

Revaluation Gain – Acquisition-Related Contingent Consideration

Despite continued favorable performance of the Asia Pacific region as a whole, the Company reduced its acquisition related contingent consideration liability related to its acquisition of FS Asia Advisory Limited. This reduction was based upon a re-evaluation of the consideration expected to be paid during the remainder of the finite earnout period. The resulting reduction in the liability was recorded as income and is included within "Acquisition related contingent consideration" in the Condensed Consolidated Statements of Comprehensive Income, which increased Adjusted EBITDA for the quarter by $4.1 million, increasing Adjusted Segment EBITDA of the Corporate Finance/Restructuring segment by $3.8 million and Adjusted Segment EBITDA of the Forensic and Litigation Consulting segment by $0.3 million, and increased EPS and Adjusted EPS for the quarter by $0.10.

Repayment of 3 ¾% Senior Subordinated Convertible Notes

On July 16, 2012, the Company repaid at maturity the entire outstanding balance of $148.5 million in principal and $2.8 million of interest due on the 3 ¾% Senior Subordinated Convertible Notes using a combination of cash on hand and borrowings under the $250 million Senior Bank Credit Facility, after which the Company has available borrowing capacity of approximately $174 million and current cash and cash equivalents on hand of approximately $112 million.

2012 Guidance

Based on current market conditions and the factors described above, the Company now estimates that revenues for 2012 will be between $1.56 billion and $1.58 billion and Adjusted EPS will be between $2.15 and $2.35. This updated guidance assumes no acquisitions and no share repurchases.

Second Quarter Conference Call

FTI Consulting, Inc. will hold a conference call for analysts and investors to discuss second quarter financial results at 9:00 AM Eastern Time on August 2, 2012. 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, 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 24 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, strategic communications and restructuring. More information can be found at www.fticonsulting.com.

Use of Non-GAAP Measures

Note: We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets and special charges. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets and special charges. We define Adjusted Net Income and Adjusted EPS as net income and earnings per diluted share, respectively, excluding the net impact of any special charges and any loss on early extinguishment of debt that were incurred in that period. Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EPS and Adjusted Net Income are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income (Loss). We believe that these measures can be useful operating performance measures 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. Reconciliations of GAAP to Non-GAAP financial measures are included in the accompanying tables to this 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.

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(in thousands, except per share data)

(unaudited)

       
 

Six Months Ended

 

June 30,

 

2012

 

2011

       

Revenues

$               791,471

 

$              762,253

       

Operating expenses

     

Direct cost of revenues

493,838

 

473,928

Selling, general and administrative expense

195,049

 

182,745

Special charges

26,782

 

15,212

Acquisition-related contingent consideration

(2,984)

 

1,595

Amortization of other intangible assets

11,007

 

10,952

 

723,692

 

684,432

       

Operating income

67,779

 

77,821

       

Other income (expense)

     

Interest income and other

2,919

 

4,923

Interest expense

(30,399)

 

(29,810)

 

(27,480)

 

(24,887)

       

Income before income tax provision

40,299

 

52,934

       

Income tax provision

14,121

 

18,351

       

Net income 

$                 26,178

 

$                34,583

       

Earnings  per common share - basic

$                     0.65

 

$                    0.82

Weighted average common shares outstanding - basic

40,475

 

42,223

       

Earnings per common share - diluted

$                     0.61

 

$                    0.78

Weighted average common shares outstanding - diluted

42,672

 

44,420

       

Other comprehensive income, net of tax:

     

Foreign currency translation adjustments, including tax expense

     

   (benefit) of $0 and ($2,068) in 2012 and 2011, respectively

$                   1,889

 

$                16,655

Other comprehensive income, net of tax

1,889

 

16,655

Comprehensive income

$                 28,067

 

$                51,238

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011

(in thousands, except per share data)

(unaudited)

       
 

Three Months Ended

 

June 30,

 

2012

 

2011

       

Revenues

$               396,243

 

$              400,437

       

Operating expenses

     

Direct cost of revenues

248,220

 

250,844

Selling, general and administrative expense

92,460

 

94,442

Special charges

26,782

 

15,212

Acquisition-related contingent consideration

(3,541)

 

799

Amortization of other intangible assets

5,490

 

5,498

 

369,411

 

366,795

       

Operating income

26,832

 

33,642

       

Other income (expense)

     

Interest income and other

(363)

 

2,923

Interest expense

(15,195)

 

(14,500)

 

(15,558)

 

(11,577)

       

Income before income tax provision

11,274

 

22,065

       

Income tax provision

3,527

 

6,740

       

Net income 

$                   7,747

 

$                15,325

       

Earnings  per common share - basic

$                     0.19

 

$                    0.38

Weighted average common shares outstanding - basic

40,592

 

40,587

       

Earnings per common share - diluted

$                     0.18

 

$                    0.36

Weighted average common shares outstanding - diluted

42,074

 

42,912

       

Other comprehensive income (loss), net of tax:

     

Foreign currency translation adjustments, including tax expense

     

   (benefit) of $0 and $100 in 2012 and 2011, respectively

$               (10,960)

 

$                  1,836

Other comprehensive income (loss), net of tax

(10,960)

 

1,836

Comprehensive income (loss)

$                 (3,213)

 

$                17,161

       

 

 

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

 
                 

  Average  

 

Revenue-

     

Adjusted

         

 Billable 

 

Generating

 

Revenues

 

EBITDA (1)

 

Margin

 

Utilization

 

Rate

 

Headcount

 

  (in thousands)  

               

Three Months Ended June 30, 2012

                     

Corporate Finance/Restructuring

$                 112,336

 

$                        29,210

 

26.0%

 

72%

 

$          400

 

718

Forensic and Litigation Consulting 

90,107

 

17,628

 

19.6%

 

65%

 

$          326

 

808

Economic Consulting

99,455

 

18,491

 

18.6%

 

80%

 

$          509

 

467

Technology  (2)

47,697

 

12,849

 

26.9%

 

N/M

 

N/M  

 

311

Strategic Communications  (2)

46,648

 

4,970

 

10.7%

 

N/M

 

N/M  

 

599

 

$                 396,243

 

83,148

 

21.0%

         

2,903

   Corporate 

   

(16,532)

               

Adjusted EBITDA(1)

   

$                        66,616

 

16.8%

           
                       

Six Months Ended June 30, 2012

                     

Corporate Finance/Restructuring

$                 225,814

 

$                        55,974

 

24.8%

 

74%

 

$          399

 

718

Forensic and Litigation Consulting 

177,138

 

29,705

 

16.8%

 

68%

 

$          326

 

808

Economic Consulting

199,507

 

36,915

 

18.5%

 

83%

 

$          493

 

467

Technology  (2)

97,357

 

26,064

 

26.8%

 

N/M

 

N/M  

 

311

Strategic Communications  (2)

91,655

 

9,499

 

10.4%

 

N/M

 

N/M  

 

599

 

$                 791,471

 

158,157

 

20.0%

         

2,903

   Corporate 

   

(37,581)

               

Adjusted EBITDA(1)

   

$                      120,576

 

15.2%

           
                       

Three Months Ended June 30, 2011

                     

Corporate Finance/Restructuring

$                 101,896

 

$                        14,075

 

13.8%

 

65%

 

$          420

 

730

Forensic and Litigation Consulting

93,368

 

17,932

 

19.2%

 

71%

 

$          330

 

863

Economic Consulting

94,480

 

18,823

 

19.9%

 

86%

 

$          496

 

409

Technology  (2)

57,130

 

20,313

 

35.6%

 

N/M

 

N/M  

 

261

Strategic Communications  (2)

53,563

 

6,443

 

12.0%

 

N/M

 

N/M  

 

562

 

$                 400,437

 

77,586

 

19.4%

         

2,825

   Corporate 

   

(16,090)

               

Adjusted EBITDA(1)

   

$                        61,496

 

15.4%

           
                       

Six Months Ended June 30, 2011

                     

Corporate Finance/Restructuring

$                 209,150

 

$                        31,677

 

15.1%

 

68%

 

$          426

 

730

Forensic and Litigation Consulting

176,281

 

33,924

 

19.2%

 

70%

 

$          330

 

863

Economic Consulting

168,739

 

31,985

 

19.0%

 

87%

 

$          487

 

409

Technology  (2)

108,165

 

38,743

 

35.8%

 

N/M

 

N/M  

 

261

Strategic Communications  (2)

99,918

 

11,839

 

11.8%

 

N/M

 

N/M  

 

562

 

$                 762,253

 

148,168

 

19.4%

         

2,825

   Corporate 

   

(30,094)

               

Adjusted EBITDA(1)

   

$                      118,074

 

15.5%

           
                       

 

(1) We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets 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 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 are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income (Loss). 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.

 

                       

  

FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(unaudited)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2012

 

2011

 

2012

 

2011

               

Net income

$               7,747

 

$             15,325

 

$             26,178

 

$             34,583

Add back: Special charges, net of tax effect (1)

17,320

 

9,285

 

17,320

 

9,285

Adjusted Net Income (2)

$             25,067

 

$             24,610

 

$             43,498

 

$             43,868

               

Earnings per common share - diluted

$                 0.18

 

$                 0.36

 

$                 0.61

 

$                 0.78

Add back: Special charges, net of tax effect (1)

0.42

 

0.21

 

0.41

 

0.21

Adjusted EPS (2)

$                 0.60

 

$                 0.57

 

$                 1.02

 

$                 0.99

               

Weighted average number of common shares outstanding - diluted

42,074

 

42,912

 

42,672

 

44,420

               
               
               

(1) The tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s).  As a result, the effective tax rates for the adjustments for the second quarter of 2012 and 2011 were 35.3% and 39.0%, respectively.  The tax expense for the three and six months ended June 30, 2012 was $9,462 or $0.22 per share.  The tax expense for the three and six months ended June 30, 2011 was $5,927 and $0.14 and $0.13 per share, respectively.

               

(2)  We define Adjusted Net Income and Adjusted EPS as net income and earnings per diluted share, respectively, excluding the net impact of any special charges and any loss on early extinguishment of debt that were incurred in that period. 

 

 

RECONCILIATION OF NET INCOME AND OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

(in thousands)

 
                                     

Three Months Ended June 30, 2012

 

Corporate Finance / Restructuring

 

Forensic and Litigation Consulting

 

Economic Consulting

 

Technology 

 

Strategic Communi- cations

 

Corp HQ

 

Total

 
                                     

Net income 

                             

$               7,747

 
 

Interest income and other

                         

363

 
 

Interest expense

                           

15,195

 
 

Income tax provision

                           

3,527

 

Operating income (loss)

   

$               15,783

 

$               8,938

 

$             16,551

 

$               4,757

 

$             (1,370)

 

$           (17,827)

 

$             26,832

 
 

Depreciation and amortization

 

858

 

942

 

724

 

3,142

 

669

 

1,177

 

7,512

 
 

Amortization of other intangible assets

1,453

 

495

 

398

 

1,984

 

1,160

 

-

 

5,490

 
 

Special charges

   

11,116

 

7,253

 

818

 

2,966

 

4,511

 

118

 

26,782

 

Adjusted EBITDA (1)

     

$               29,210

 

$             17,628

 

$             18,491

 

$             12,849

 

$               4,970

 

$           (16,532)

 

$             66,616

 
                                     
                                     

Six Months Ended June 30, 2012

                               
                                     

Net income

                             

$             26,178

 
 

Interest income and other

                         

(2,919)

 
 

Interest expense

                           

30,399

 
 

Income tax provision

                           

14,121

 

Operating income 

     

$               40,230

 

$             19,532

 

$             33,871

 

$             12,958

 

$               1,287

 

$           (40,099)

 

67,779

 
 

Depreciation and amortization

 

1,723

 

1,923

 

1,429

 

6,164

 

1,369

 

2,400

 

15,008

 
 

Amortization of other intangible assets

2,905

 

997

 

797

 

3,976

 

2,332

 

-

 

11,007

 
 

Special charges

   

11,116

 

7,253

 

818

 

2,966

 

4,511

 

118

 

26,782

 

Adjusted EBITDA (1)

     

55,974

 

29,705

 

36,915

 

26,064

 

9,499

 

(37,581)

 

120,576

 
                                     
                                     

Three Months Ended June 30, 2011

                             
                                     

Net income 

                             

$             15,325

 
 

Interest income and other

                         

(2,923)

 
 

Interest expense

                           

14,500

 
 

Income tax provision

                           

6,740

 

Operating income 

     

$                 2,321

 

$             15,640

 

$             15,798

 

$             15,594

 

$               4,497

 

$           (20,208)

 

33,642

 
 

Depreciation and amortization

 

894

 

857

 

635

 

2,741

 

739

 

1,278

 

7,144

 
 

Amortization of other intangible assets

     

1,420

 

596

 

297

 

1,978

 

1,207

 

-

 

5,498

 
 

Special charges

   

9,440

 

839

 

2,093

 

-

 

-

 

2,840

 

15,212

 

Adjusted EBITDA (1)

     

14,075

 

17,932

 

18,823

 

20,313

 

6,443

 

(16,090)

 

61,496

 
                                     
                                     

Six Months Ended June 30, 2011

                               
                                     

Net income 

                             

$             34,583

 
 

Interest income and other

                         

(4,923)

 
 

Interest expense

                           

29,810

 
 

Income tax provision

                           

18,351

 

Operating income 

     

$               17,629

 

$             30,186

 

$             28,096

 

$             29,364

 

$               7,955

 

$           (35,409)

 

77,821

 
 

Depreciation and amortization

 

1,770

 

1,712

 

1,203

 

5,425

 

1,504

 

2,475

 

14,089

 
 

Amortization of other intangible assets

2,838

 

1,187

 

593

 

3,954

 

2,380

 

-

 

10,952

 
 

Special charges

   

9,440

 

839

 

2,093

 

-

 

-

 

2,840

 

15,212

 

Adjusted EBITDA (1)

     

31,677

 

33,924

 

31,985

 

38,743

 

11,839

 

(30,094)

 

118,074

 
                                     
                                     
                                     

 

(1) We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets 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 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 are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Condensed Consolidated Statements of Comprehensive Income (Loss).

 

 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(in thousands)

(unaudited)

       
 

Six Months Ended 

 

June 30,

 

2012

 

2011

Operating activities

     

Net income

$           26,178

 

$           34,583

Adjustments to reconcile net income to net cash used in operating activities:

     

Depreciation and amortization

18,449

 

14,088

Amortization of other intangible assets

11,186

 

10,952

Acquisition-related contingent consideration

(2,984)

 

1,595

Provision for doubtful accounts 

7,027

 

5,768

Non-cash share-based compensation 

17,805

 

22,283

Excess tax benefits from share-based compensation

(71)

 

(124)

Non-cash interest expense

3,887

 

4,190

Other

141

 

136

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

     

Accounts receivable, billed and unbilled

(50,190)

 

(99,137)

Notes receivable

(23,834)

 

(4,638)

Prepaid expenses and other assets

(4,363)

 

(5,893)

Accounts payable, accrued expenses and other

(1,216)

 

227

Income taxes 

(17,108)

 

(8,599)

Accrued compensation

(43,081)

 

4,093

Billings in excess of services provided

886

 

7,652

                           Net cash used in operating activities

(57,288)

 

(12,824)

       

Investing activities

     

Payments for acquisition of businesses, net of cash received 

(21,550)

 

(50,888)

Purchases of property and equipment

(13,728)

 

(12,705)

Other

93

 

(405)

                          Net cash used in investing activities

(35,185)

 

(63,998)

       

Financing activities

     

Borrowings under revolving line of credit

-

 

25,000

Payments of revolving line of credit

-

 

(25,000)

Payments of long-term debt and capital lease obligations

(1,974)

 

(937)

Purchase and retirement of common stock

-

 

(209,400)

Net issuance of common stock under equity compensation plans

(840)

 

685

Excess tax benefit from share-based compensation 

71

 

124

Other

(1,395)

 

51

                          Net cash used in financing activities

(4,138)

 

(209,477)

       

Effect of exchange rate changes on cash and cash equivalents

(1,831)

 

474

       

Net decrease in cash and cash equivalents

(98,442)

 

(285,825)

Cash and cash equivalents, beginning of period

264,423

 

384,570

Cash and cash equivalents, end of period

$         165,981

 

$           98,745

       

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2012 AND DECEMBER 31, 2011

(in thousands, except per share amounts)

       
 

June 30,

 

December 31,

 

2012

 

2011

Assets

(unaudited)

   

Current assets

     

   Cash and cash equivalents

$          165,981

 

$          264,423

   Restricted cash

1,152

 

10,213

   Accounts receivable:

     

       Billed receivables

355,598

 

335,758

       Unbilled receivables

200,361

 

173,440

       Allowance for doubtful accounts and unbilled services

(83,300)

 

(80,096)

          Accounts receivable, net

472,659

 

429,102

   Current portion of notes receivable

33,454

 

26,687

   Prepaid expenses and other current assets

35,400

 

30,448

   Income taxes receivable

15,790

 

10,081

Total current assets

724,436

 

770,954

Property and equipment, net of accumulated depreciation

68,807

 

74,448

Goodwill

1,313,382

 

1,309,358

Other intangible assets, net of amortization

107,782

 

118,889

Notes receivable, net of current portion

99,191

 

81,748

Other assets

60,483

 

55,687

Total assets

$       2,374,081

 

$       2,411,084

       

Liabilities and Stockholders' Equity

     

Current liabilities

     

    Accounts payable, accrued expenses and other

$            96,421

 

$          132,773

Accrued compensation

137,378

 

180,366

Current portion of long-term debt and capital lease obligations

154,305

 

153,381

    Billings in excess of services provided

19,958

 

19,063

    Deferred income taxes

7,375

 

12,254

Total current liabilities

415,437

 

497,837

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

643,078

 

643,579

Deferred income taxes

94,376

 

88,071

Other liabilities

70,867

 

75,395

Total liabilities

1,223,758

 

1,304,882

       

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 ―42,039 (2012) and 41,555 (2011)

420

 

415

Additional paid-in capital

400,027

 

383,978

Retained earnings

804,379

 

778,201

Accumulated other comprehensive loss

(54,503)

 

(56,392)

Total stockholders' equity

1,150,323

 

1,106,202

Total liabilities and stockholders' equity

$       2,374,081

 

$       2,411,084

       

 

SOURCE FTI Consulting, Inc.

Investors Relations Contact: Mollie Hawkes, +1-617-747-1791, Mollie.Hawkes@FTIConsulting.com; Media Contact: Sherrie Weldon, +1-415-293-4408, Sherrie.Weldon@FTIConsulting.com

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Investor Relations Contacts

Mollie Hawkes

Vice President, Investor Relations & Communications

+1 617.747.1791

Megan McLaughlin Hawkins

Manager of Investor Relations & Corporate Citizenship

+1 617.747.1740