Press Releases

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

Six Months Ended

June 30,

2014

2013

Revenues

$               879,876

$              821,791

Operating expenses

Direct cost of revenues

569,824

518,008

Selling, general and administrative expense

215,419

192,972

Special charges

9,364

427

Acquisition-related contingent consideration

(1,848)

(6,721)

Amortization of other intangible assets

8,068

11,517

800,827

716,203

Operating income

79,049

105,588

Other income (expense)

Interest income and other

2,451

550

Interest expense

(25,563)

(25,786)

(23,112)

(25,236)

Income before income tax provision

55,937

80,352

Income tax provision

20,573

33,186

Net income

$                 35,364

$                47,166

Earnings per common share - basic

$                     0.89

$                    1.20

Earnings per common share - diluted

$                     0.87

$                    1.17

Weighted average common shares outstanding - basic

39,560

39,272

Weighted average common shares outstanding - diluted

40,604

40,456

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax of $0

$                 12,422

$              (27,223)

Total other comprehensive income (loss), net of tax

12,422

(27,223)

Comprehensive income

$                 47,786

$                19,943

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)

Three Months Ended

June 30,

2014

2013

Revenues

$               454,324

$              414,613

Operating expenses

Direct cost of revenues

295,549

259,528

Selling, general and administrative expense

107,032

96,325

Special charges

9,364

-

Acquisition-related contingent consideration

(5)

(7,452)

Amortization of other intangible assets

3,452

5,953

415,392

354,354

Operating income

38,932

60,259

Other income (expense)

Interest income and other

1,448

(387)

Interest expense

(12,908)

(13,071)

(11,460)

(13,458)

Income before income tax provision

27,472

46,801

Income tax provision

10,225

23,315

Net income

$                 17,247

$                23,486

Earnings per common share - basic

$                     0.43

$                    0.60

Earnings per common share - diluted

$                     0.42

$                    0.58

Weighted average common shares outstanding - basic

39,681

39,143

Weighted average common shares outstanding - diluted

40,750

40,293

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax of $0

$                   7,694

$              (11,714)

Total other comprehensive income (loss), net of tax

7,694

(11,714)

Comprehensive income

$                 24,941

$                11,772

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

  Average  

Revenue-

Adjusted

 Billable 

Generating

Revenues

EBITDA ⁽¹⁾

Margin⁽¹⁾

Utilization

Rate

Headcount

  (in thousands)  

(at period end)

Three Months Ended June 30, 2014

Corporate Finance/Restructuring

$                 104,020

$                        19,133

18.4%

71%

$          412

713

Forensic and Litigation Consulting 

119,081

22,271

18.7%

71%

$          323

1,059

Economic Consulting

117,227

18,043

15.4%

78%

$          522

525

Technology  ⁽²⁾

60,720

15,104

24.9%

N/M

N/M

328

Strategic Communications  ⁽²⁾

53,276

5,834

11.0%

N/M

N/M

566

$                 454,324

80,385

17.7%

3,191

   Corporate 

(20,482)

Adjusted EBITDA⁽¹⁾

$                        59,903

13.2%

Six Months Ended June 30, 2014

Corporate Finance/Restructuring

$                 198,002

$                        30,084

15.2%

71%

$          396

713

Forensic and Litigation Consulting

240,510

48,765

20.3%

73%

$          319

1,059

Economic Consulting

224,078

31,073

13.9%

75%

$          519

525

Technology  ⁽²⁾

120,783

32,452

26.9%

N/M

N/M

328

Strategic Communications  ⁽²⁾

96,503

8,563

8.9%

N/M

N/M

566

$                 879,876

150,937

17.2%

3,191

   Corporate 

(39,838)

Adjusted EBITDA⁽¹⁾

$                      111,099

12.6%

Three Months Ended June 30, 2013

Corporate Finance/Restructuring

$                   96,714

$                        17,848

18.5%

62%

$          416

718

Forensic and Litigation Consulting 

105,120

18,752

17.8%

67%

$          307

969

Economic Consulting

111,014

20,803

18.7%

82%

$          505

499

Technology  ⁽²⁾

51,196

16,888

33.0%

N/M

N/M

285

Strategic Communications  ⁽²⁾

50,569

5,219

10.3%

N/M

N/M

611

$                 414,613

79,510

19.2%

3,082

   Corporate 

(13,498)

Adjusted EBITDA⁽¹⁾

$                        66,012

15.9%

Six Months Ended June 30. 2013

Corporate Finance/Restructuring

$                 195,794

$                        36,933

18.9%

66%

$          412

718

Forensic and Litigation Consulting

205,844

31,563

15.3%

65%

$          314

969

Economic Consulting

226,208

46,997

20.8%

86%

$          501

499

Technology  ⁽²⁾

97,900

30,604

31.3%

N/M

N/M

285

Strategic Communications  ⁽²⁾

96,045

8,773

9.1%

N/M

N/M

611

$                 821,791

154,870

18.8%

3,082

   Corporate 

(29,532)

Adjusted EBITDA⁽¹⁾

$                      125,338

15.3%

(1)  We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. 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 before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, 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 remeasurement of acquisition-related contingent consideration, 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. Margin is equal to Adjusted Segment EBITDA divided by the respective Segment Revenues. 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 Condensed Consolidated Statements of Comprehensive Income. 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.

FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE AND SIX MONTHS ENDED JUNE, 2014 AND 2013

(in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2014

2013

2014

2013

Net income

$                      17,247

$                      23,486

$                      35,364

$                      47,166

Add back:

Special charges, net of tax effect ⁽¹⁾

5,523

-

5,523

253

Remeasurement of acquisition-related contingent consideration, net of tax effect ⁽²⁾

(164)

(8,216)

(1,514)

(8,216)

Adjusted Net Income ⁽³⁾

$                      22,606

$                      15,270

$                      39,373

$                      39,203

Earnings per common share – diluted

$                          0.42

$                          0.58

$                          0.87

$                          1.17

Add back:

Special charges, net of tax effect ⁽¹⁾

0.14

-

0.14

-

Remeasurement of acquisition-related contingent consideration, net of tax effect ⁽²⁾

(0.01)

(0.20)

(0.04)

(0.20)

Adjusted earnings per common share – diluted ⁽³⁾

$                          0.55

$                          0.38

$                          0.97

$                          0.97

Weighted average number of common shares outstanding – diluted

40,750

40,293

40,604

40,456

⁽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 rate for the adjustments related to special charges for the three and six months ended June 30, 2014 was 41.0%. The tax expense related to the adjustment for special charges for the three and six months ended June 30, 2014 were $3.8 million or a $0.09 impact on diluted earnings per share. The effective tax rate for the adjustments related to special charges for the six months ended June 30, 2013 was 40.7%. The tax expense related to the adjustment for special charges for the six months ended June 30,  2013 was $0.2 million with no impact on diluted earnings per share. In the three months ended June 30, 2013, there were no special charges.

⁽²⁾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 the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 were 37.2% and 36.5%, respectively. The tax expense related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 was $0.1 million with no impact on diluted earnings per share and $0.9 million or a $0.02 impact on diluted earnings per share. The adjustments related to remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2013 were not taxable.

⁽³⁾We define Adjusted Net Income and Adjusted Earnings per Diluted Share as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted Earnings per Diluted Share. Management uses Adjusted Earnings per Diluted Share to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. 

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)

Three Months Ended June 30, 2014

Corporate Finance
/ Restructuring

Forensic and
Litigation
Consulting

Economic
Consulting

Technology

Strategic
Communications

Corp HQ

Total

Net income

$             17,247

Interest income and other

(1,448)

Interest expense

12,908

Income tax provision

10,225

Operating income ⁽¹⁾

$                   17,068

$                   20,839

$                   16,840

$                   10,905

$                     4,030

$                 (30,750)

$             38,932

Depreciation and amortization

854

1,019

981

3,981

677

904

8,416

Amortization of other intangible assets

1,211

674

222

218

1,127

-

3,452

Special charges

-

-

-

-

-

9,364

9,364

Remeasurement of acquisition-related contingent consideration

-

(261)

-

-

-

-

(261)

Adjusted EBITDA ⁽²⁾

$                   19,133

$                   22,271

$                   18,043

$                   15,104

$                     5,834

$                 (20,482)

$             59,903

Six Months Ended June 30, 2014

Net income

$             35,364

Interest income and other

(2,451)

Interest expense

25,563

Income tax provision

20,573

Operating income ⁽¹⁾

$                   25,675

$                   46,241

$                   29,270

$                   23,971

$                     5,035

$                 (51,143)

$             79,049

Depreciation and amortization

1,645

2,034

2,062

8,045

1,274

1,941

17,001

Amortization of other intangible assets

3,426

1,424

528

436

2,254

-

8,068

Special charges

-

-

-

-

-

9,364

9,364

Remeasurement of acquisition-related contingent consideration

(662)

(934)

(787)

-

-

-

(2,383)

Adjusted EBITDA ⁽²⁾

$                   30,084

$                   48,765

$                   31,073

$                   32,452

$                     8,563

$                 (39,838)

$           111,099

Three Months Ended June 30, 2013

Corporate Finance
/ Restructuring

Forensic and
Litigation
Consulting

Economic
Consulting

Technology

Strategic
Communications

Corp HQ

Total

Net income

$             23,486

Interest income and other

387

Interest expense

13,071

Income tax provision

23,315

Operating income ⁽¹⁾

$                   21,436

$                   19,177

$                   19,530

$                   11,292

$                     3,394

$                 (14,570)

$             60,259

Depreciation and amortization

855

937

863

3,611

678

1,072

8,016

Amortization of other intangible assets

1,832

579

410

1,985

1,147

-

5,953

Remeasurement of acquisition-related contingent consideration

(6,275)

(1,941)

-

-

-

-

(8,216)

Adjusted EBITDA ⁽²⁾

$                   17,848

$                   18,752

$                   20,803

$                   16,888

$                     5,219

$                 (13,498)

$             66,012

Six Months Ended June 30, 2013

Net income

$             47,166

Interest income and other

(550)

Interest expense

25,786

Income tax provision

33,186

Operating income ⁽¹⁾

$                   38,135

$                   30,279

$                   44,525

$                   19,374

$                     5,121

$                 (31,846)

$           105,588

Depreciation and amortization

1,622

1,961

1,668

7,246

1,323

2,202

16,022

Amortization of other intangible assets

3,383

1,091

808

3,970

2,265

-

11,517

Special charges

68

173

(4)

14

64

112

427

Remeasurement of acquisition-related contingent consideration

(6,275)

(1,941)

-

-

-

-

(8,216)

Adjusted EBITDA ⁽²⁾

$                   36,933

$                   31,563

$                   46,997

$                   30,604

$                     8,773

$                 (29,532)

$           125,338

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

(2) We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. 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 before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, 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 remeasurement of acquisition-related contingent consideration, 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 Condensed Consolidated Statements of Comprehensive Income.  See also our reconciliation of GAAP to non-GAAP financial measures.

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands)

(unaudited)

Six Months Ended

June 30,

2014

2013

Operating activities

Net income

$           35,364

$           47,166

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization

18,138

16,022

Amortization of other intangible assets

8,068

11,517

Acquisition-related contingent consideration

(1,848)

(6,721)

Provision for doubtful accounts 

8,671

7,478

Non-cash share-based compensation 

15,194

17,046

Non-cash interest expense

1,348

1,349

Other

(368)

(197)

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

Accounts receivable, billed and unbilled

(115,787)

(58,827)

Notes receivable

(22,559)

(11,113)

Prepaid expenses and other assets

8,860

(1,485)

Accounts payable, accrued expenses and other

2,645

(1,354)

Income taxes 

4,832

14,740

Accrued compensation

(47,418)

(10,467)

Billings in excess of services provided

7,756

(5,785)

                           Net cash (used in) provided by operating activities

(77,104)

19,369

Investing activities

Payments for acquisition of businesses, net of cash received 

(15,611)

(40,512)

Purchases of property and equipment

(21,778)

(14,130)

Other

(6)

21

                          Net cash used in investing activities

(37,395)

(54,621)

Financing activities

Purchase and retirement of common stock

(4,367)

(28,758)

Net issuance of common stock under equity compensation plans

(2,692)

1,245

Deposits

11,580

-

Other

(891)

(616)

                          Net cash used in financing activities

3,630

(28,129)

Effect of exchange rate changes on cash and cash equivalents

(552)

(850)

Net decrease in cash and cash equivalents

(111,421)

(64,231)

Cash and cash equivalents, beginning of period

205,833

156,785

Cash and cash equivalents, end of period

$           94,412

$           92,554

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2014 AND DECEMBER 31, 2013

(in thousands, except per share amounts)

June 30,

December 31,

2014

2013

Assets

(unaudited)

Current assets

   Cash and cash equivalents

$            94,412

$                    205,833

   Accounts receivable:

       Billed receivables

423,058

352,411

       Unbilled receivables

296,299

233,307

       Allowance for doubtful accounts and unbilled services

(139,620)

(109,273)

          Accounts receivable, net

579,737

476,445

   Current portion of notes receivable

29,911

33,093

   Prepaid expenses and other current assets

52,162

61,800

   Current portion of deferred tax assets

29,046

26,690

 Total current assets

785,268

803,861

Property and equipment, net of accumulated depreciation

83,495

79,007

Goodwill

1,225,403

1,218,733

Other intangible assets, net of amortization

86,270

97,148

Notes receivable, net of current portion

131,707

108,298

Other assets

61,097

57,900

Total assets

$       2,373,240

$                 2,364,947

Liabilities and Stockholders' Equity

Current liabilities

    Accounts payable, accrued expenses and other

$            96,005

$                    126,886

   Accrued compensation

169,923

222,738

   Current portion of long-term debt

6,000

6,014

    Billings in excess of services provided

36,946

28,692

  Total current liabilities

308,874

384,330

Long-term debt, net of current portion

711,000

711,000

Deferred income taxes

149,130

137,697

Other liabilities

96,316

89,661

Total liabilities

1,265,320

1,322,688

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 ―40,936 (2014) and 40,526 (2013)

409

405

Additional paid-in capital

380,193

362,322

Retained earnings

765,985

730,621

Accumulated other comprehensive loss

(38,667)

(51,089)

Total stockholders' equity

1,107,920

1,042,259

Total liabilities and stockholders' equity

$       2,373,240

$                 2,364,947