Press Releases

FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE YEAR ENDED DECEMBER 31, 2013 AND 2012

(in thousands, except per share data)

Year Ended

December 31,

2013

2012

Revenues

$            1,652,432

$           1,576,871

Operating expenses

Direct cost of revenues

1,042,061

980,532

Selling, general and administrative expense

394,681

378,016

Special charges

38,414

29,557

Acquisition-related contingent consideration

(10,869)

(3,064)

Amortization of other intangible assets

22,954

22,407

Goodwill impairment charge

83,752

110,387

1,570,993

1,517,835

Operating income

81,439

59,036

Other income (expense)

Interest income and other

1,748

5,659

Interest expense

(51,376)

(56,731)

Loss on early extinguishment of debt

-

(4,850)

(49,628)

(55,922)

Income before income tax provision

31,811

3,114

Income tax provision

42,405

40,100

Net loss

$               (10,594)

$              (36,986)

Loss per common share - basic

$                   (0.27)

$                  (0.92)

Weighted average common shares outstanding - basic

39,188

40,316

Loss per common share - diluted

$                   (0.27)

$                  (0.92)

Weighted average common shares outstanding - diluted

39,188

40,316

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, including tax expense

   (benefit) of $0 and $654 in 2013 and 2012, respectively

$                 (9,720)

$                15,023

Other comprehensive income (loss), net of tax

(9,720)

15,023

Comprehensive loss

$               (20,314)

$              (21,963)

FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012

(in thousands, except per share data)

Three Months Ended

December 31,

2013

2012

Revenues

$               415,998

$              399,345

Operating expenses

Direct cost of revenues

268,901

245,080

Selling, general and administrative expense

107,196

94,058

Special charges

27,568

-

Acquisition-related contingent consideration

(4,778)

(483)

Amortization of other intangible assets

5,661

5,634

Goodwill impairment charge

-

110,387

404,548

454,676

Operating income (loss)

11,450

(55,331)

Other income (expense)

Interest income and other

46

1,156

Interest expense

(12,776)

(13,124)

Loss on early extinguishment of debt

-

(4,850)

(12,730)

(16,818)

Loss before income tax provision

(1,280)

(72,149)

Income tax provision

5,859

13,728

Net loss

$                 (7,139)

$              (85,877)

Loss per common share - basic

$                   (0.18)

$                  (2.15)

Weighted average common shares outstanding - basic

39,115

39,913

Loss per common share - diluted

$                   (0.18)

$                  (2.15)

Weighted average common shares outstanding - diluted

39,115

39,913

Other comprehensive income, net of tax:

Foreign currency translation adjustments, including tax expense

   of $0 and $654 in 2013 and 2012, respectively

$                      388

$                     403

Other comprehensive income, net of tax

388

403

Comprehensive loss

$                 (6,751)

$              (85,474)

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

  Average  

Revenue-

Adjusted

 Billable 

Generating

Revenues

EBITDA ⁽¹⁾

Margin

Utilization ⁽⁴⁾

Rate ⁽⁴⁾

Headcount

  (in thousands)  

(at period end)

Three Months Ended December 31, 2013

Corporate Finance/Restructuring ⁽³⁾

$                   92,751

$                        16,187

17.5%

62%

$          421

737

Forensic and Litigation Consulting ⁽³⁾

114,720

17,556

15.3%

71%

$          322

1,061

Economic Consulting

108,089

21,982

20.3%

74%

$          506

530

Technology  ⁽²⁾

53,562

14,670

27.4%

N/M

N/M

306

Strategic Communications  ⁽²⁾

46,876

5,928

12.6%

N/M

N/M

590

$                 415,998

76,323

18.3%

3,224

   Corporate 

(23,321)

Adjusted EBITDA⁽¹⁾

$                        53,002

12.7%

Year Ended December 31, 2013

Corporate Finance/Restructuring ⁽³⁾

$                 382,526

$                        78,797

20.6%

65%

$          410

737

Forensic and Litigation Consulting ⁽³⁾

433,632

76,422

17.6%

68%

$          317

1,061

Economic Consulting

447,366

92,204

20.6%

81%

$          503

530

Technology  ⁽²⁾

202,663

60,655

29.9%

N/M

N/M

306

Strategic Communications  ⁽²⁾

186,245

18,737

10.1%

N/M

N/M

590

$              1,652,432

326,815

19.8%

3,224

   Corporate 

(67,715)

Adjusted EBITDA⁽¹⁾

$                      259,100

15.7%

Three Months Ended December 31, 2012

Corporate Finance/Restructuring ⁽³⁾

$                 108,535

$                        27,718

25.5%

64%

$          449

697

Forensic and Litigation Consulting ⁽³⁾

97,235

10,072

10.4%

63%

$          318

952

Economic Consulting

95,740

21,459

22.4%

80%

$          482

474

Technology  ⁽²⁾

47,551

15,464

32.5%

N/M

N/M

277

Strategic Communications  ⁽²⁾

50,284

8,742

17.4%

N/M

N/M

593

$                 399,345

83,455

20.9%

2,993

   Corporate 

(15,321)

Adjusted EBITDA⁽¹⁾

$                        68,134

17.1%

Year Ended December 31, 2012

Corporate Finance/Restructuring ⁽³⁾

$                 394,719

$                      101,137

25.6%

71%

$          416

697

Forensic and Litigation Consulting ⁽³⁾

407,586

60,572

14.9%

66%

$          314

952

Economic Consulting

391,622

77,461

19.8%

81%

$          493

474

Technology  ⁽²⁾

195,194

57,203

29.3%

N/M

N/M

277

Strategic Communications  ⁽²⁾

187,750

25,019

13.3%

N/M

N/M

593

$              1,576,871

321,392

20.4%

2,993

   Corporate 

(70,401)

Adjusted EBITDA⁽¹⁾

$                      250,991

15.9%

⁽¹⁾ We define Adjusted EBITDA as consolidated net loss before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, special charges, loss on early extinguishment of debt and goodwill impairment 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 segment's share of consolidated operating income (loss) before depreciation, amortization of intangible assets, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of special charges and goodwill impairment charges. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies. 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 financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Loss.  See also our reconciliation of GAAP to 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⁾ Effective in the first quarter of 2013, we modified our reportable segments to reflect changes in how we operate our business and the related internal management reporting. The Company's healthcare and life sciences practices from both our Corporate Finance/Restructuring segment and our Forensic and Litigation Consulting segment have been combined under a single organizational structure. This single integrated practice, our health solutions practice, is now aggregated in its entirety within the Forensic and Litigation Consulting reportable segment. Prior period Corporate Finance/Restructuring and Forensic and Litigation Consulting segment information has been reclassified to conform to the current period presentation.

⁽⁴⁾ 2013 and 2012 utilization and average bill rate calculations for our Corporate Finance/Restructuring, Forensic and Litigation Consulting, and Economic Consulting segments were updated to reflect the realignment of certain practices as well as information related to non-U.S. operations that was not previously available.

FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2013 AND 2012

Three Months Ended December 31,

Year Ended December 31,

2013

2012

2013

2012

Net loss

$                 (7,139)

$               (85,877)

$               (10,594)

$               (36,986)

Add back:

Special charges, net of tax effect ⁽¹⁾

16,167

-

23,267

19,115

Goodwill impairment charge⁽²⁾

-

110,387

83,752

110,387

Loss on early extinguishment of debt, net of tax⁽³⁾

-

2,910

-

2,910

Interim period impact of including goodwill impairment charges

  in the annual effective tax rate

10,805

-

-

-

Adjusted Net Income

$                19,833

$                27,420

$                96,425

$                95,426

Loss per common share – diluted

$                   (0.18)

$                   (2.15)

$                   (0.27)

$                   (0.92)

Add back:

Special charges, net of tax effect ⁽¹⁾

0.41

-

0.59

0.47

Goodwill impairment charge⁽²⁾

-

2.77

2.14

2.74

Loss on early extinguishment of debt, net of tax⁽³⁾

-

0.07

-

0.07

Interim period impact of including goodwill impairment charges

  in the annual effective tax rate

0.28

-

-

-

Impact of denominator for diluted adjusted earnings per common share ⁽⁴⁾

(0.02)

(0.02)

(0.07)

(0.06)

Adjusted earnings per common share – diluted 

$                    0.49

$                    0.67

$                    2.39

$                    2.30

Weighted average number of common shares outstanding – diluted⁽⁴⁾

40,529

40,990

40,421

41,578

⁽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 related to special charges for the three months and year ended December 31, 2013 were 41.4% and 39.4%, respectively. The effective tax rate for the adjustment for special charges for the year ended December 31, 2012 was 35.3%. The tax expense related to the adjustments for special charges for the three months and year ended December 31, 2013 were $11.4 million or $0.29 impact on adjusted earnings per diluted share and $15.1 million or $0.39 impact on diluted earnings per share, respectively. The tax expense related to the adjustment for special charges for the year ended December 31, 2012 was $10.4 million or $0.26 impact on adjusted earnings per diluted share.

⁽²⁾The goodwill impairment charge is non-deductible for income tax purposes and resulted in no tax benefit for the years ended December 31, 2013 and 2012.

⁽³⁾ 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 rate for the adjustments related to the loss on early extinguishment of debt for the three months and year ended December 31, 2012 were 40.0%. The tax expense related to the adjustments for the three months and year ended December 31, 2012 was $1.9 million or $0.05 impact on adjusted earnings per diluted share.  

⁽⁴⁾ For the three months and years ended December 31, 2013 and 2012, the Company reported a net loss.  For such periods, the basic weighted average common shares outstanding equals the diluted weighted average common shares outstanding for purposes of calculating U.S. GAAP earnings per share because potentially dilutive securities would be antidilutive. For non-GAAP purposes, the per share and share amounts presented herein reflect the impact of the inclusion of share-based awards and convertible notes that are considered dilutive based on the impact of the add backs included in Adjusted Net Income above.

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

(in thousands)

Three Months Ended December 31, 2013

Corporate Finance

/ Restructuring ⁽³⁾

Forensic and

Litigation

Consulting ⁽³⁾

Economic

Consulting

Technology 

Strategic

Communications

Corp HQ

Total

Net loss

$             (7,139)

Interest income and other

(46)

Interest expense

12,776

Income tax provision

5,859

Operating income (loss) ⁽¹⁾

$                     9,869

$                   16,017

$                   20,481

$                     8,909

$                     4,240

$                 (48,066)

$             11,450

Depreciation and amortization

908

1,000

1,024

3,773

566

1,052

8,323

Amortization of other intangible assets

1,535

539

477

1,988

1,122

-

5,661

Special charges

3,875

-

-

-

-

23,693

27,568

Adjusted EBITDA ⁽²⁾

$                   16,187

$                   17,556

$                   21,982

$                   14,670

$                     5,928

$                 (23,321)

$             53,002

Year Ended December 31, 2013

Net loss

$           (10,594)

Interest income and other

(1,748)

Interest expense

51,376

Income tax provision

42,405

Operating income (loss) ⁽¹⁾

$                   58,594

$                   68,211

$                   86,714

$                   38,038

$                 (72,129)

$                 (97,989)

81,439

Depreciation and amortization

3,449

3,958

3,671

14,661

2,464

4,338

32,541

Amortization of other intangible assets

6,480

2,142

1,808

7,940

4,584

-

22,954

Special charges

10,274

2,111

11

16

66

25,936

38,414

Goodwill impairment charge

-

-

-

-

83,752

-

83,752

Adjusted EBITDA ⁽²⁾

78,797

76,422

92,204

60,655

18,737

(67,715)

259,100

Three Months Ended December 31, 2012

Net loss

$           (85,877)

Interest income and other

(1,156)

Interest expense

13,124

Income tax provision

13,728

Loss on early extinguishment of debt

4,850

Operating income (loss) ⁽¹⁾

$                   25,482

$                     8,449

$                   20,311

$                   10,239

$               (103,459)

$                 (16,353)

$           (55,331)

Depreciation and amortization

788

1,011

732

3,239

642

1,032

7,444

Amortization of other intangible assets

1,448

612

416

1,986

1,172

-

5,634

Special charges

-

-

-

-

-

-

-

Goodwill impairment charge

-

-

-

-

110,387

-

110,387

Adjusted EBITDA ⁽²⁾

$                   27,718

$                   10,072

$                   21,459

$                   15,464

$                     8,742

$                 (15,321)

$             68,134

Year Ended December 31, 2012

Net loss

$           (36,986)

Interest income and other

(5,659)

Interest expense

56,731

Income tax provision

40,100

Loss on early extinguishment of debt

4,850

Operating income (loss) ⁽¹⁾

$                   80,970

$                   45,809

$                   71,992

$                   33,642

$                 (97,298)

$                 (76,079)

59,036

Depreciation and amortization

3,066

4,073

2,863

12,501

2,555

4,546

29,604

Amortization of other intangible assets

5,769

2,414

1,615

7,946

4,663

-

22,407

Special charges

11,332

8,276

991

3,114

4,712

1,132

29,557

Goodwill impairment charge

-

-

-

-

110,387

-

110,387

Adjusted EBITDA ⁽²⁾

101,137

60,572

77,461

57,203

25,019

(70,401)

250,991

⁽¹⁾ We define Segment Operating Income (Loss) as a segment's share of consolidated operating income (loss). We define Total Segment Operating Income (Loss) as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA.

⁽²⁾ We define Adjusted EBITDA as consolidated net loss before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, special charges, loss on early extinguishment of debt and goodwill impairment charges. Amounts presented in the Adjusted EBITDA row for each segment reflect the segments' respective Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income (loss) before depreciation, amortization of intangible assets, special charges and goodwill impairment charges. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of special charges and goodwill impairment charges. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies. 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 financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Loss.  See also our reconciliation of GAAP to non-GAAP financial measures.

⁽³⁾  Effective in the first quarter of 2013, we modified our reportable segments to reflect changes in how we operate our business and the related internal management reporting. The Company's healthcare and life sciences practices from both our Corporate Finance/Restructuring segment and our Forensic and Litigation Consulting segment have been combined under a single organizational structure. This single integrated practice, our health solutions practice, is now aggregated in its entirety within the Forensic and Litigation Consulting reportable segment. Prior period Corporate Finance/Restructuring and Forensic and Litigation Consulting segment information has been reclassified to conform to the current period presentation. 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 financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Loss.

FTI CONSULTING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013 AND 2012

(in thousands)

Year Ended 

December 31,

2013

2012

Operating activities

Net loss

$          (10,594)

$          (36,986)

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

Depreciation and amortization

32,638

33,919

Amortization and impairment of other intangible assets

22,954

22,586

Goodwill impairment charge

83,752

110,387

Acquisition-related contingent consideration

(10,869)

(3,064)

Provision for doubtful accounts 

13,335

14,179

Non-cash share-based compensation 

35,129

29,361

Non-cash interest expense and loss on extinguishment of debt

2,699

9,824

Other

(1,582)

(488)

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

Accounts receivable, billed and unbilled

(56,290)

(3,691)

Notes receivable

(7,544)

(25,730)

Prepaid expenses and other assets

(6,784)

(1,895)

Accounts payable, accrued expenses and other

8,505

(12,458)

Income taxes 

7,963

(6,816)

Accrued compensation

82,917

(21,074)

Billings in excess of services provided

(2,958)

12,134

                           Net cash provided by operating activities

193,271

120,188

Investing activities

Payments for acquisition of businesses, net of cash received 

(55,498)

(62,893)

Purchases of property and equipment

(42,544)

(27,759)

Purchases of investments

(5,094)

-

Other

45

246

                          Net cash used in investing activities

(103,091)

(90,406)

Financing activities

Borrowings under revolving line of credit

-

75,000

Payments of revolving line of credit

-

(75,000)

Payments of long-term debt and capital lease obligations

(6,021)

(377,859)

Issuance of debt securities, net

-

292,608

Purchase and retirement of common stock

(66,763)

(50,032)

Net issuance of common stock under equity compensation plans

29,392

1,598

Other

263

(4,561)

                          Net cash used in financing activities

(43,129)

(138,246)

Effect of exchange rate changes on cash and cash equivalents

1,997

826

Net decrease in cash and cash equivalents

49,048

(107,638)

Cash and cash equivalents, beginning of period

156,785

264,423

Cash and cash equivalents, end of period

$         205,833

$         156,785

FTI CONSULTING, INC.

CONSOLIDATED BALANCE SHEETS

AT DECEMBER 31, 2013 AND DECEMBER 31, 2012

(in thousands, except per share amounts)

December 31,

December 31,

2013

2012

Assets

Current assets

   Cash and cash equivalents

$          205,833

$          156,785

   Accounts receivable:

       Billed receivables

352,411

314,491

       Unbilled receivables

233,307

208,797

       Allowance for doubtful accounts and unbilled services

(109,273)

(94,048)

          Accounts receivable, net

476,445

429,240

   Current portion of notes receivable

33,093

33,194

   Prepaid expenses and other current assets

61,800

51,541

   Current portion of deferred tax assets

26,690

3,615

Total current assets

803,861

674,375

Property and equipment, net of accumulated depreciation

79,007

68,192

Goodwill

1,218,733

1,260,035

Other intangible assets, net of amortization

97,148

104,181

Notes receivable, net of current portion

108,298

101,623

Other assets

57,900

67,046

Total assets

$       2,364,947

$       2,275,452

Liabilities and Stockholders' Equity

Current liabilities

    Accounts payable, accrued expenses and other

$          126,886

$            98,109

   Accrued compensation

222,738

168,392

   Current portion of long-term debt and capital lease obligations

6,014

6,021

    Billings in excess of services provided

28,692

31,675

  Total current liabilities

384,330

304,197

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

711,000

717,024

Deferred income taxes

137,697

105,751

Other liabilities

89,661

80,248

Total liabilities

1,322,688

1,207,220

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 ―40,526 (2013) and 40,775 (2012)

405

408

Additional paid-in capital

362,322

367,978

Retained earnings

730,621

741,215

Accumulated other comprehensive loss

(51,089)

(41,369)

Total stockholders' equity

1,042,259

1,068,232

Total liabilities and stockholders' equity

$       2,364,947

$       2,275,452