Press Releases

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(in thousands, except per share data)

(unaudited)

Nine Months Ended

September 30,

2013

2012

Revenues

$            1,236,434

$           1,177,526

Operating expenses

Direct cost of revenues

773,160

735,452

Selling, general and administrative expense

287,485

283,958

Special charges

10,846

29,557

Acquisition-related contingent consideration

(6,091)

(2,581)

Amortization of other intangible assets

17,293

16,773

Goodwill impairment charge

83,752

-

1,166,445

1,063,159

Operating income

69,989

114,367

Other income (expense)

Interest income and other

1,702

4,503

Interest expense

(38,600)

(43,607)

(36,898)

(39,104)

Income before income tax provision

33,091

75,263

Income tax provision

36,546

26,372

Net income (loss)

$                 (3,455)

$                48,891

Earnings (loss) per common share - basic

$                   (0.09)

$                    1.21

Weighted average common shares outstanding - basic

39,212

40,446

Earnings (loss) per common share - diluted

$                   (0.09)

$                    1.17

Weighted average common shares outstanding - diluted

39,212

41,882

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of tax of $0

$               (10,108)

$                14,620

Other comprehensive income (loss), net of tax

(10,108)

14,620

Comprehensive income (loss)

$               (13,563)

$                63,511

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(in thousands, except per share data)

(unaudited)

Three Months Ended

September 30,

2013

2012

Revenues

$               414,643

$              386,055

Operating expenses

Direct cost of revenues

255,152

241,614

Selling, general and administrative expense

94,513

88,909

Special charges

10,419

2,775

Acquisition-related contingent consideration

630

403

Amortization of other intangible assets

5,776

5,766

Goodwill impairment charge

83,752

-

450,242

339,467

Operating income (loss)

(35,599)

46,588

Other income (expense)

Interest income and other

1,152

1,584

Interest expense

(12,814)

(13,208)

(11,662)

(11,624)

Income (loss) before income tax provision

(47,261)

34,964

Income tax provision

3,360

12,251

Net income (loss)

$               (50,621)

$                22,713

Earnings (loss) per common share - basic

$                   (1.29)

$                    0.56

Weighted average common shares outstanding - basic

39,094

40,387

Earnings (loss) per common share - diluted

$                   (1.29)

$                    0.55

Weighted average common shares outstanding - diluted

39,094

41,102

Other comprehensive income, net of tax:

Foreign currency translation adjustments, net of tax of $0

$                 17,115

$                12,731

Other comprehensive income, net of tax

17,115

12,731

Comprehensive income (loss)

$               (33,506)

$                35,444

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT

  Average  

Revenue-

Adjusted

As a percent

 Billable 

Generating

Revenues

EBITDA ⁽¹⁾

of revenues

Utilization ⁽⁴⁾

Rate ⁽⁴⁾

Headcount

  (in thousands)  

(at period end)

Three Months Ended September 30, 2013

Corporate Finance/Restructuring ⁽³⁾

$                   93,981

$                        19,402

20.6%

64%

$          396

732

Forensic and Litigation Consulting ⁽³⁾

113,068

25,362

22.4%

67%

$          324

999

Economic Consulting

113,069

23,225

20.5%

79%

$          512

528

Technology  ⁽²⁾

51,201

15,381

30.0%

N/M

N/M

297

Strategic Communications  ⁽²⁾

43,324

4,036

9.3%

N/M

N/M

617

$                 414,643

87,406

21.1%

3,173

   Unallocated Corporate Expenses

(14,862)

Adjusted EBITDA⁽¹⁾

$                        72,544

17.5%

Nine Months Ended September 30, 2013

Corporate Finance/Restructuring ⁽³⁾

$                 289,775

$                        62,610

21.6%

66%

$          407

732

Forensic and Litigation Consulting ⁽³⁾

318,912

58,866

18.5%

68%

$          315

999

Economic Consulting

339,277

70,222

20.7%

84%

$          509

528

Technology  ⁽²⁾

149,101

45,985

30.8%

N/M

N/M

297

Strategic Communications  ⁽²⁾

139,369

12,809

9.2%

N/M

N/M

617

$              1,236,434

250,492

20.3%

3,173

   Unallocated Corporate Expenses

(44,394)

Adjusted EBITDA⁽¹⁾

$                      206,098

16.7%

Three Months Ended September 30, 2012

Corporate Finance/Restructuring ⁽³⁾

$                   93,123

$                        21,951

23.6%

72%

$          402

621

Forensic and Litigation Consulting ⁽³⁾

100,460

16,289

16.2%

63%

$          328

939

Economic Consulting

96,375

19,087

19.8%

79%

$          495

467

Technology  ⁽²⁾

50,286

15,675

31.2%

N/M

N/M

283

Strategic Communications  ⁽²⁾

45,811

6,778

14.8%

N/M

N/M

597

$                 386,055

79,780

20.7%

2,907

   Unallocated Corporate Expenses

(17,499)

Adjusted EBITDA⁽¹⁾

$                        62,281

16.1%

Nine Months Ended September 30, 2012

Corporate Finance/Restructuring ⁽³⁾

$                 286,184

$                        73,419

25.7%

75%

$          409

621

Forensic and Litigation Consulting ⁽³⁾

310,351

50,500

16.3%

65%

$          323

939

Economic Consulting

295,882

56,002

18.9%

82%

$          493

467

Technology  ⁽²⁾

147,643

41,739

28.3%

N/M

N/M

283

Strategic Communications  ⁽²⁾

137,466

16,277

11.8%

N/M

N/M

597

$              1,177,526

237,937

20.2%

2,907

   Unallocated Corporate Expenses

(55,080)

Adjusted EBITDA⁽¹⁾

$                      182,857

15.5%

⁽¹⁾ We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, special charges 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 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 Condensed Consolidated Statements of Comprehensive Income (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 AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Net income (loss)

$           (50,621)

$             22,713

$             (3,455)

$             48,891

Add back:

    Special charges, net of tax effect ⁽¹⁾

6,847

1,794

7,100

19,115

    Goodwill impairment charges ⁽²⁾

83,752

-

83,752

-

Less:

    Interim period impact of including goodwill impairment charges
    in the annual effective tax rate

(10,805)

-

(10,805)

-

Adjusted Net Income ⁽⁴⁾

$             29,173

$             24,507

$             76,592

$             68,006

Earnings (loss) per common share - diluted

$               (1.29)

$                 0.55

$               (0.09)

$                 1.17

Add back:

    Special charges, net of tax effect ⁽¹⁾

0.18

0.05

0.18

0.45

    Goodwill impairment charges ⁽²⁾

2.14

-

2.14

-

Less:

    Interim period impact of including goodwill impairment charges
    in the annual effective tax rate

(0.27)

-

(0.28)

-

Impact of denominator for diluted earnings per common share ⁽³⁾

(0.04)

-

(0.05)

-

Adjusted EPS ⁽⁴⁾

$                 0.72

$                 0.60

$                 1.90

$                 1.62

Weighted average number of common shares outstanding - diluted ⁽³⁾

40,244

41,102

40,385

41,882

⁽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 related to the special charges for the three and nine months ended September 30, 2013 were 34.3% and 34.5%, respectively, and 35.3% for both of the three and nine months ended September 30, 2012. The tax expense related to the special charges for the three and nine months ended September 30, 2013 was $3.6 million or $0.09 impact on diluted earnings per common share and $3.7 million or $0.10 impact on diluted earnings per common share, respectively. The tax expense related to the special charges for the three and nine months ended September 30, 2012 was $1.0 million or $0.02 impact on diluted earnings per common share and $10.4 million or $0.25 impact on diluted earnings per common share, respectively.

⁽²⁾The goodwill impairment charge is non-deductible for income tax purposes and will result in no tax benefit for the year ending December 31, 2013.

⁽³⁾For the three and nine months ended September 30, 2013, the Company reported a net loss. For those 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. 

⁽⁴⁾  We define Adjusted Net Income and Adjusted Earnings per Diluted Share as net income and earnings per diluted share, respectively, excluding the impact of 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 special charges, goodwill impairment charges and losses on early extinguishment of debt.

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

(in thousands)

Three Months Ended September 30, 2013

Corporate
Finance /
Restructuring ⁽³⁾

Forensic and
Litigation
Consulting ⁽³⁾

Economic Consulting

Technology 

Strategic
Communi-
cations

Unallocated
Corporate
Expenses

Total

Net income (loss)

$           (50,621)

Interest income and other

(1,152)

Interest expense

12,814

Income tax provision

3,360

Operating income (loss) ⁽¹⁾

$                  10,590

$             21,915

$             21,708

$               9,755

$           (81,490)

$           (18,077)

$           (35,599)

Depreciation and amortization

919

997

979

3,642

575

1,084

8,196

Amortization of other intangible assets

1,562

512

523

1,982

1,197

-

5,776

Special Charges

6,331

1,938

15

2

2

2,131

10,419

Goodwill impairment charge

-

-

-

-

83,752

-

83,752

Adjusted EBITDA ⁽²⁾

$                  19,402

$             25,362

$             23,225

$             15,381

$               4,036

$           (14,862)

$             72,544

Nine Months Ended September 30, 2013

Net income (loss)

$             (3,455)

Interest income and other

(1,702)

Interest expense

38,600

Income tax provision

36,546

Operating income (loss) ⁽¹⁾

$                  48,725

$             52,194

$             66,233

$             29,129

$           (76,369)

$           (49,923)

69,989

Depreciation and amortization

2,541

2,958

2,647

10,888

1,898

3,286

24,218

Amortization of other intangible assets

4,945

1,603

1,331

5,952

3,462

-

17,293

Special charges

6,399

2,111

11

16

66

2,243

10,846

Goodwill impairment charge

-

-

-

-

83,752

-

83,752

Adjusted EBITDA ⁽²⁾

62,610

58,866

70,222

45,985

12,809

(44,394)

206,098

Three Months Ended September 30, 2012

Corporate Finance / Restructuring ⁽³⁾

Forensic and Litigation Consulting ⁽³⁾

Economic Consulting

Technology 

Strategic Communi- cations

Unallocated Corporate Expenses

Total

Net income 

$             22,713

Interest income and other

(1,584)

Interest expense

13,208

Income tax provision

12,251

Operating income ⁽¹⁾

$                  19,024

$             14,062

$             17,810

$             10,445

$               4,874

$           (19,627)

$             46,588

Depreciation and amortization

713

981

702

3,098

544

1,114

7,152

Amortization of other intangible assets

1,443

778

402

1,984

1,159

-

5,766

Special charges

771

468

173

148

201

1,014

2,775

Adjusted EBITDA ⁽¹⁾

$                  21,951

$             16,289

$             19,087

$             15,675

$               6,778

$           (17,499)

$             62,281

Nine Months Ended September 30, 2012

Net income 

$             48,891

Interest income and other

(4,503)

Interest expense

43,607

Income tax provision

26,372

Operating income ⁽¹⁾

$                  55,488

$             37,360

$             51,681

$             23,403

$               6,161

$           (59,726)

114,367

Depreciation and amortization

2,278

3,062

2,131

9,262

1,913

3,514

22,160

Amortization of other intangible assets

4,321

1,802

1,199

5,960

3,491

-

16,773

Special charges

11,332

8,276

991

3,114

4,712

1,132

29,557

Adjusted EBITDA ⁽²⁾

73,419

50,500

56,002

41,739

16,277

(55,080)

182,857

⁽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, special charges 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 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 Condensed Consolidated Statements of Comprehensive Income (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 Condensed Consolidated Statements of Comprehensive Income (Loss). 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(in thousands)

(unaudited)

Nine Months Ended 

September 30,

2013

2012

Operating activities

Net income (loss)

$            (3,455)

$           48,891

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

Depreciation and amortization

24,218

26,475

Amortization of other intangible assets

17,293

16,948

Goodwill impairment charge

83,752

-

Acquisition-related contingent consideration

(6,091)

(2,581)

Provision for doubtful accounts 

10,404

9,387

Non-cash share-based compensation 

22,544

24,465

Non-cash interest expense

2,024

4,505

Other

(286)

10

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

Accounts receivable, billed and unbilled

(72,266)

(62,466)

Notes receivable

(9,644)

(20,732)

Prepaid expenses and other assets

(2,313)

(3,701)

Accounts payable, accrued expenses and other

16,822

5,608

Income taxes 

12,989

(5,595)

Accrued compensation

13,198

(33,734)

Billings in excess of services provided

(5,383)

6,144

                           Net cash provided by operating activities

103,806

13,624

Investing activities

Payments for acquisition of businesses, net of cash received 

(40,766)

(26,453)

Purchases of property and equipment

(22,994)

(20,534)

Other

24

(1,105)

                          Net cash used in investing activities

(63,736)

(48,092)

Financing activities

Borrowings under revolving line of credit

-

75,000

Payments of long-term debt

(6,000)

(156,487)

Purchase and retirement of common stock

(48,769)

(20,013)

Net issuance of common stock under equity compensation plans

6,208

523

Other

(800)

(1,982)

                          Net cash used in financing activities

(49,361)

(102,959)

Effect of exchange rate changes on cash and cash equivalents

432

(68)

Net decrease in cash and cash equivalents

(8,859)

(137,495)

Cash and cash equivalents, beginning of period

156,785

264,423

Cash and cash equivalents, end of period

$         147,926

$         126,928

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

(in thousands, except per share amounts)

September 30,

December 31,

2013

2012

Assets

(unaudited)

Current assets

   Cash and cash equivalents

$          147,926

$          156,785

   Restricted cash

-

1,190

   Accounts receivable:

       Billed receivables

345,407

314,491

       Unbilled receivables

260,211

208,797

       Allowance for doubtful accounts and unbilled services

(110,708)

(94,048)

          Accounts receivable, net

494,910

429,240

   Current portion of notes receivable

32,112

33,194

   Prepaid expenses and other current assets

40,334

50,351

   Current portion of deferred tax assets

31,628

3,615

Total current assets

746,910

674,375

Property and equipment, net of accumulated depreciation

66,300

68,192

Goodwill

1,194,414

1,260,035

Other intangible assets, net of amortization

92,738

104,181

Notes receivable, net of current portion

112,194

101,623

Other assets

64,986

67,046

Total assets

$       2,277,542

$       2,275,452

Liabilities and Stockholders' Equity

Current liabilities

    Accounts payable, accrued expenses and other

$          107,363

$            98,109

    Accrued compensation

164,585

168,392

    Current portion of long-term debt

6,000

6,021

    Billings in excess of services provided

26,186

31,675

Total current liabilities

304,134

304,197

Long-term debt, net of current portion

711,000

717,024

Deferred income taxes

140,746

105,751

Other liabilities

85,561

80,248

Total liabilities

1,241,441

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 ―40,089 (2013) and 40,755 (2012)

401

408

Additional paid-in capital

349,417

367,978

Retained earnings

737,760

741,215

Accumulated other comprehensive loss

(51,477)

(41,369)

Total stockholders' equity

1,036,101

1,068,232

Total liabilities and stockholders' equity

$       2,277,542

$       2,275,452