FTI Consulting, Inc. Reports 2009 Third Quarter Results
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WEST PALM BEACH, Fla., Nov. 4 /PRNewswire-FirstCall/ -- FTI Consulting (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today reported its financial results for the third quarter ended September 30, 2009.
Third Quarter Results
For the third quarter of 2009 compared to the prior year period, revenues increased 7.1% to $348.6 million from $325.5 million; net income increased 42.5% to $37.6 million from $26.4 million; diluted earnings per common share, or diluted EPS, increased 45.8% to $0.70 from $0.48 and EBITDA, a non-GAAP financial measure as defined below, increased 19.4% to $77.9 million, or 22.3% of revenues, from $65.2 million, or 20.0% of revenues.
Excluding the effect of changes in foreign currency exchange rates, revenues increased 9.0%, as compared to the 2008 third quarter. Net income and EPS included the one-time effects of a non-taxable gain of $2.3 million in connection with the purchase of the outstanding 50% interest in our Strategic Communications segment's German joint venture and certain tax benefits that reduced the Company's effective tax rate for the quarter to 33.2%. Operating cash flow for the third quarter of 2009 was $119.7 million, or $68.2 million greater than the operating cash flow generated in the third quarter of 2008. Cash and short-term investments was $313.6 million as of September 30, 2009.
Commenting on the quarter, Jack Dunn, FTI's president and chief executive officer, said, "Our record third quarter performance continues to demonstrate the power of our balanced portfolio in a variety of economic cycles and the recognition of our ability to address the critical issues confronting businesses around the world. We increased revenues and profits to record third quarter levels and continued to make strategic investments in our businesses. Restructuring activity remained strong, which benefited our Corporate Finance/Restructuring segment. Our Economics segment also reported record revenue as we began to see signs of improved litigation driven activity and the partial thawing of capital markets with associated M&A transactions.
Mr. Dunn continued, "Our cash flow generation enabled us to further invest in our key practices to prepare for market share growth as others retrench. We extended our breadth of global capabilities with launches of a Forensic and Litigation Consulting practice in Paris, a restructuring advisory practice in Munich and the buy-out of the joint venture partner in our strategic communications operation in Frankfurt. Through key hires we continued to expand our International Arbitration, Forensic and Litigation Consulting and Corporate Finance/Restructuring practices. Our Technology segment enhanced its product leadership with the introduction of Ringtail QuickCull, which enables corporations to increase the efficiency of e-discovery by culling and analyzing data on-premise, and extends our reach through multiple long term agreements. On Monday, we announced the expansion of our Forensic and Litigation Consulting practice with the addition of a number of highly regarded SEC investigation professionals thereby solidifying our leadership in this important field.
Mr. Dunn concluded, "With our most challenging seasonal quarter behind us, we are optimistic about our future. In 2010, we expect to continue to work on the large number of cases that resulted from the challenging economic environment while concurrently benefiting from the early stages of an expansion. Given that the majority of our business segments benefit from a growing economy, we are confident in our ability to deliver our target organic revenue growth rate of 10% to 12% next year. It is with this confidence that our Board has approved increasing our stock buyback program authorization to $500 million. We intend to fund the initial stock buyback with our cash on hand and to continue with internally generated cash flow."
Third Quarter Business Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 39.2% to $127.8 million from $91.8 million in the prior year. Segment EBITDA increased 71.2% to $43.6 million, or 34.1% of segment revenues, from $25.5 million, or 27.7% of segment revenues, in the prior year. The segment continued to be active in restructuring assignments in a broad range of industries being impacted by the global recession, including financial services, automotive, utility/energy, media and telecommunications. Segment growth was also enhanced by continued strong contributions from its global expansion into markets outside the U.S., notably the U.K., Canada and Latin America. Profitability in the segment was strong, as the robust demand drove higher chargeable hours and billing rates, and increased revenue allowed for operating leverage.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment were $65.0 million, compared with $65.8 million in the prior year. Segment EBITDA was $14.9 million, or 22.9% of segment revenues, essentially the same as in the prior year period. Activities related to several large financial fraud investigations, the segment's intellectual property and domain expertise industry practices were strong while levels of more routine commercial litigation and investigations remained soft as the challenging global economic environment continued to restrain discretionary spending.
Technology
Revenues in the Technology segment were $48.7 million, compared to $55.4 million in the prior year. Segment EBITDA was $15.2 million, or 31.3% of segment revenues, compared to $15.4 million, or 27.8% of segment revenues, in the prior year. Revenues in the quarter decreased year-over-year as increased contributions from large investigation cases were offset by declines in revenues from product liability engagements and continued pricing pressure in the segment's On Demand business. Segment EBITDA declined only slightly as improved operating efficiencies and cost controls offset the decline in revenues and contributed to the year-over-year EBITDA margin increase.
Economic Consulting
Revenues in the Economic Consulting segment increased 5.6% to a record $59.6 million from $56.4 million in the prior year. Segment EBITDA was $14.0 million, or 23.4% of segment revenues, compared to $15.8 million, or 27.9% of segment revenues, in the prior year. The revenue increase resulted from continued growth in the segment's new offices in New York, Los Angeles and London, and improving activity in strategic M&A and financial dispute matters during the quarter. EBITDA margins declined year-over-year due to the cost of expansion into new markets and a 19% increase in professional headcount to meet anticipated rising demand.
Strategic Communications
Revenues in the Strategic Communications segment were $47.5 million, compared to $56.1 million in the prior year. Segment EBITDA was $6.6 million, or 13.8% of segment revenues, compared to $12.4 million, or 22.1% of revenues, in the prior year. As the segment with the largest exposure to foreign currency, unfavorable exchange rates reduced revenues for the quarter by $3.0 million. The segment continued to be challenged by a dramatically slower volume of M&A transactions compared to last year and the continued impact of the global recession causing fee pressures from retained clients. Segment EBITDA declined year-over-year due to the lower revenues, as the segment has retained most of its professionals to meet an expected increase in demand.
Share Repurchase Authorized
Today our Board of Directors authorized a new two year stock repurchase program of up to $500 million. The Company intends to execute a $250 million accelerated stock buyback with Goldman, Sachs & Co. as soon as practicable.
Third Quarter Conference Call
FTI will hold a conference call for analysts and investors to discuss third quarter financial results at 5:00 PM Eastern time on Wednesday, November 4, 2009. 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 3,500 employees located in most major business centers in the world, we work closely with clients every day to anticipate, illuminate, and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring. More information can be found at www.fticonsulting.com.
Use of Non-GAAP Measure
Note: We define EBITDA as operating income before depreciation and amortization of intangible assets plus non-operating litigation settlements. We use EBITDA in evaluating financial performance. Although EBITDA is not a measure of financial condition or performance determined in accordance with GAAP we believe that it can be a useful operating performance measure for evaluating our results of operation 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 EBITDA to evaluate and compare the operating performance of our segments and it is one of the primary measures used to determine employee bonuses. We also use EBITDA to value the businesses we acquire or anticipate acquiring. Reconciliations of EBITDA to Net Income and segment EBITDA to segment operating profit are included in the accompanying tables to today's press release. EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same. This non-GAAP measure should be considered in addition to, but not as a substitute for or superior to, the information contained in our statements of income.
Safe Harbor Statement
This press release includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 that 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 projections will result or be achieved or that actual results will not differ from expectations. The Company has experienced fluctuating revenues, operating income and cash flow in some prior periods and expects this will occur from time to time in the future. The Company's actual results may differ from our expectations. Further, preliminary results are subject to normal year-end adjustments. Other factors that could cause such differences include the current global financial crisis and economic conditions, the crisis in and deterioration of the financial and real estate markets, 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. 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 INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands, except per share data)
-----------------------------------------------------
Nine Months Ended
September 30,
------------------------
2009 2008(1)(2)
---------- -----------
(unaudited)
Revenues $1,057,008 $970,269
---------- --------
Operating expenses
Direct cost of revenues 579,797 537,703
Selling, general and administrative
expense 262,571 241,989
Amortization of other intangible assets 18,370 13,019
------ ------
860,738 792,711
------- -------
Operating income 196,270 177,558
------- -------
Other income (expense)
Interest income and other 6,085 7,536
Interest expense (33,477) (33,848)
Litigation settlement gains (losses), net 250 (711)
--- ----
(27,142) (27,023)
------- -------
Income before income tax provision 169,128 150,535
Income tax provision 62,675 59,778
------ ------
Net income $106,453 $90,757
======== =======
Earnings per common share - basic $2.11 $1.85
===== =====
Weighted average common shares
outstanding - basic 50,419 49,009
====== ======
Earnings per common share - diluted $1.99 $1.69
===== =====
Weighted average common shares
outstanding - diluted 53,584 53,640
====== ======
(1) As of January 1, 2009 we adopted FSP APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)" (FSP APB 14-1)
which addresses the accounting for convertible debt instruments
that may be settled in cash upon conversion. Our 3 3/4% Convertible
Senior Notes due 2012 issued in August 2005 are subject to
FSP APB 14-1. The adoption of FSP APB 14-1 requires retrospective
application of its effects to all previous years. The adoption of
FSP APB 14-1 resulted in a $3.0 million increase in interest expense,
a $1.2 million decrease in income tax provision, a $1.8 million
decrease in net income and a $0.04 decrease in basic and fully
diluted earnings per share for the nine months ended
September 30, 2008 as compared to the amounts previously reported.
(2) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our accounting
for acquisition-related earnout payments. In connection with this
re-examination, we concluded that we had reported immaterial errors
in prior period financial statements. Further information related
to these immaterial errors can be found in the Current Report on
Form 8-K as filed by the Company with the Securities and Exchange
Commission on August 10, 2009. This press release should be read in
conjunction with such previously filed reports. The impact of the
correction of these errors resulted in a decrease in net income of
$1.7 million and a decrease in basic and fully diluted earnings
per share of $0.03 for the nine months ended September 30, 2008.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands, except per share data)
-------------------------------------------------------
Three Months Ended
September 30,
----------------------
2009 2008(1)(2)
-------- ------------
(unaudited)
Revenues $348,637 $325,497
-------- --------
Operating expenses
Direct cost of revenues 193,204 175,309
Selling, general and administrative
expense 84,976 91,513
Amortization of other intangible assets 6,171 5,664
----- -----
284,351 272,486
------- -------
Operating income 64,286 53,011
------ ------
Other income (expense)
Interest income and other 3,330 1,942
Interest expense (11,434) (10,942)
Litigation settlement gains (losses), net - (275)
--- ----
(8,104) (9,275)
------ ------
Income before income tax provision 56,182 43,736
Income tax provision 18,626 17,383
------ ------
Net income $37,556 $26,353
======= =======
Earnings per common share - basic $0.74 $0.53
===== =====
Weighted average common shares
outstanding - basic 50,696 49,541
====== ======
Earnings per common share - diluted $0.70 $0.48
===== =====
Weighted average common shares
outstanding - diluted 53,896 54,460
====== ======
(1) As of January 1, 2009 we adopted FSP APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)" (FSP APB 14-1)
which addresses the accounting for convertible debt instruments
that may be settled in cash upon conversion. Our 3 3/4% Convertible
Senior Notes due 2012 issued in August 2005 are subject to
FSP APB 14-1. The adoption of FSP APB 14-1 requires retrospective
application of its effects to all previous years. The adoption of
FSP APB 14-1 resulted in a $1.0 million increase in interest expense,
a $0.4 million decrease in income tax provision, a $0.6 million
decrease in net income and a $.02 decrease in basic and fully
diluted earnings per share for the quarter ended September 30, 2008
as compared to the amounts previously reported.
(2) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our accounting
for acquisition-related earnout payments. In connection with this
re-examination, we concluded that we had reported immaterial errors
in prior period financial statements. Further information related to
these immaterial errors can be found in the Current Report on
Form 8-K as filed by the Company with the Securities and Exchange
Commission on August 10, 2009. This press release should be read in
conjunction with such previously filed reports. The impact of the
correction of these errors resulted in a decrease in net income of
$0.6 million and a decrease in basic and fully diluted earnings per
share of $0.01 for the three months ended September 30, 2008.
FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
(Unaudited)
-------------------------------------
Revenues EBITDA (1) Margin Utilization(3)
-------- ---------- ------ --------------
(in thousands)
------------------- --------------------
Three Months Ended
September 30, 2009
Corporate Finance/
Restructuring $127,808 $43,584 34.1% 68%
Forensic and Litigation
Consulting 65,040 14,867 22.9% 73%
Strategic Communications 47,493 6,557 13.8% N/M
Technology 48,708 15,230 31.3% N/M
Economic Consulting 59,588 13,957 23.4% 73%
------ ------
$348,637 94,195 27.0% N/M
========
Corporate (16,324)
-------
EBITDA (1) $77,871 22.3%
=======
-------------------
Nine Months Ended
September 30, 2009
Corporate Finance/
Restructuring $389,320 $131,750 33.8% 76%
Forensic and Litigation
Consulting 197,392 46,818 23.7% 74%
Strategic Communications 134,814 18,232 13.5% N/M
Technology 163,935 58,360 35.6% N/M
Economic Consulting 171,547 34,621 20.2% 75%
------- ------
$1,057,008 289,781 27.4% N/M
==========
Corporate (53,368)
-------
EBITDA (1) $236,413 22.4%
========
-------------------
Three Months Ended
September 30, 2008
Corporate Finance/
Restructuring $91,818 $25,463 27.7% 72%
Forensic and Litigation
Consulting 65,786 14,932 22.7% 68%
Strategic Communications 56,099 12,405 22.1% N/M
Technology 55,385 15,371 27.8% N/M
Economic Consulting 56,409 15,751 27.9% 86%
------ ------
$325,497 83,922 25.8% N/M
========
Corporate (18,709)
-------
EBITDA (1) (2) $65,213 20.0%
=======
-------------------
Nine Months Ended
September 30, 2008
Corporate Finance/
Restructuring $267,224 $76,997 28.8% 76%
Forensic and Litigation
Consulting 195,351 45,305 23.2% 72%
Strategic Communications 172,910 39,674 22.9% N/M
Technology 168,195 59,906 35.6% N/M
Economic Consulting 166,589 43,054 25.8% 86%
------- ------
$970,269 264,936 27.3% N/M
========
Corporate (55,971)
-------
EBITDA (1) (2) $208,965 21.5%
========
Average Revenue-
Billable Generating
Rate (3) Headcount
-------- ---------
-------------------
Three Months Ended
September 30, 2009
Corporate Finance/
Restructuring $455 776
Forensic and Litigation
Consulting $329 656
Strategic Communications N/M 547
Technology N/M 350
Economic Consulting $460 302
---
N/M 2,631
=====
Corporate
EBITDA (1)
-------------------
Nine Months Ended
September 30, 2009
Corporate Finance/
Restructuring $436 776
Forensic and Litigation
Consulting $337 656
Strategic Communications N/M 547
Technology N/M 350
Economic Consulting $457 302
---
N/M 2,631
=====
Corporate
EBITDA (1)
-------------------
Three Months Ended
September 30, 2008
Corporate Finance/
Restructuring $439 646
Forensic and Litigation
Consulting $332 668
Strategic Communications N/M 599
Technology N/M 357
Economic Consulting $444 253
---
N/M 2,523
=====
Corporate
EBITDA (1) (2)
-------------------
Nine Months Ended
September 30, 2008
Corporate Finance/
Restructuring $433 646
Forensic and Litigation
Consulting $332 668
Strategic Communications N/M 599
Technology N/M 357
Economic Consulting $447 253
---
N/M 2,523
=====
Corporate
EBITDA (1) (2)
(1) We define EBITDA as operating income before depreciation and
amortization of intangible assets plus non-operating litigation
settlements. Although EBITDA is not a measure of financial condition
or performance determined in accordance with generally accepted
accounting principles (GAAP), we believe that it can be a useful
operating performance measure for evaluating our results of
operations as compared from period to period and as compared to our
competitors. EBITDA is a common alternative measure of operating
performance used by investors, financial analysts and credit rating
agencies to value and compare the financial performance of companies
in our industry. We use EBITDA to evaluate and compare the operating
performance of our segments and it is one of the primary measures used
to determine employee bonuses. We also use EBITDA to value the
businesses we acquire or anticipate acquiring. EBITDA is not defined
in the same manner by all companies and may not be comparable to
other similarly titled measures of other companies unless the
definition is the same. This non-GAAP measure should be considered
in addition to, but not as a substitute for or superior to, the
information contained in our statements of income. See also our
reconciliation of Non-GAAP financial measures.
(2) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our accounting
for acquisition-related earnout payments. In connection with this
re-examination, we concluded that we had reported immaterial errors
in prior period financial statements. Further information related
to these immaterial errors can be found in the Current Report on
Form 8-K as filed by the Company with the Securities and Exchange
Commission on August 10, 2009. This press release should be read in
conjunction with such previously filed reports.
(3) The majority of the Technology and Strategic Communications segments'
revenues are not generated on an hourly basis. Accordingly,
utilization and average billable rate metrics are not presented as
they are not meaningful. Utilization where presented is based on a
2,032 hour year.
RECONCILIATION OF OPERATING INCOME AND NET INCOME TO EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(Unaudited)
--------------------------------------------------------------------
Corporate Forensic and Strategic
Finance / Litigation Communi-
Restructuring Consulting cations Technology
------------- ------------ ---------- ----------
Three Months Ended
September 30, 2009
Net income
Interest income and
other
Interest expense
Litigation
settlement losses
Income tax
provision
Operating income $41,058 $13,656 $4,267 $10,179
Depreciation 934 582 949 2,993
Amortization
of other
intangible
assets 1,592 629 1,341 2,058
Litigation
settlement
gains - - - -
--- --- --- ---
EBITDA (1) 43,584 14,867 6,557 15,230
====== ====== ===== ======
Nine Months Ended
September 30, 2009
Net income
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $124,475 $43,164 $11,885 $43,290
Depreciation 2,513 1,728 2,499 8,884
Amortization
of other
intangible
assets 4,762 1,926 3,848 6,186
Litigation
settlement
gains - - - -
--- --- --- ---
EBITDA (1) 131,750 46,818 18,232 58,360
======= ====== ====== ======
Three Months Ended
September 30, 2008(2)(3)
Net income
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $23,904 $13,521 $10,163 $10,519
Depreciation 693 621 955 2,752
Amortization
of other
intangible
assets 866 790 1,337 2,100
Litigation
settlement
losses - - (50) -
--- --- --- ---
EBITDA (1) 25,463 14,932 12,405 15,371
====== ====== ====== ======
Nine Months Ended
September 30, 2008(2)(3)
Net income (loss)
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $72,745 $41,318 $33,703 $49,656
Depreciation 1,880 1,885 2,313 7,560
Amortization
of other
intangible
assets 2,372 2,102 3,909 2,925
Litigation
settlement
losses - - (251) (235)
--- --- ---- ----
EBITDA (1) 76,997 45,305 39,674 59,906
====== ====== ====== ======
Economic
Consulting Corp HQ Total
---------- ------- -----
Three Months Ended
September 30, 2009
Net income $37,556
Interest income and
other (3,330)
Interest expense 11,434
Litigation settlement
losses -
Income tax provision 18,626
------
Operating income $12,925 $(17,799) 64,286
Depreciation 481 1,475 7,414
Amortization
of other
intangible
assets 551 - 6,171
Litigation
settlement
gains - - -
--- --- ---
EBITDA (1) 13,957 (16,324) 77,871
====== ======= ======
Nine Months Ended
September 30, 2009
Net income $106,453
Interest income and
other (6,085)
Interest expense 33,477
Litigation settlement
losses (250)
Income tax provision 62,675
------
Operating income $31,665 $(58,209) 196,270
Depreciation 1,308 4,591 21,523
Amortization
of other
intangible
assets 1,648 - 18,370
Litigation
settlement
gains - 250 250
--- --- ---
EBITDA (1) 34,621 (53,368) 236,413
====== ======= =======
Three Months Ended
September 30, 2008(2)(3)
Net income $26,353
Interest income and
other (1,942)
Interest expense 10,942
Litigation settlement
losses 275
Income tax provision 17,383
------
Operating income $14,798 $(19,894) 53,011
Depreciation 382 1,410 6,813
Amortization
of other
intangible
assets 571 - 5,664
Litigation
settlement
losses - (225) (275)
--- ---- ----
EBITDA (1) 15,751 (18,709) 65,213
====== ======= ======
Nine Months Ended
September 30, 2008(2)(3)
Net income (loss) $90,757
Interest income and
other (7,536)
Interest expense 33,848
Litigation settlement
losses 711
Income tax provision 59,778
------
Operating income $40,096 $(59,960) 177,558
Depreciation 1,247 4,214 19,099
Amortization
of other
intangible
assets 1,711 - 13,019
Litigation
settlement
losses - (225) (711)
--- ---- ----
EBITDA (1) 43,054 (55,971) 208,965
====== ======= =======
(1) We define EBITDA as operating income before depreciation and
amortization of intangible assets plus non-operating litigation
settlements. Although EBITDA is not a measure of financial condition
or performance determined in accordance with generally accepted
accounting principles (GAAP), we believe that it can be a useful
operating performance measure for evaluating our results of
operations as compared from period to period and as compared to
our competitors. EBITDA is a common alternative measure of operating
performance used by investors, financial analysts and credit rating
agencies to value and compare the financial performance of companies
in our industry. We use EBITDA to evaluate and compare the operating
performance of our segments and it is one of the primary measures
used to determine employee bonuses. We also use EBITDA to value
the businesses we acquire or anticipate acquiring. EBITDA is not
defined in the same manner by all companies and may not be comparable
to other similarly titled measures of other companies unless the
definition is the same. This non-GAAP measure should be considered
in addition to, but not as a substitute for or superior to, the
information contained in our statements of income.
(2) As of January 1, 2009 we adopted FSP No. APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash upon
Conversion (Including Partial Cash Settlement)" (FSP APB 14-1) which
addresses the accounting for convertible debt that may be settled in
cash upon conversion. Our 3 3/4% Convertible Senior Subordinated
Notes due 2012 issued in August 2005 are subject to FSP APB 14-1.
The adoption of FSP APB 14-1 requires retrospective application of
its effects to all previous years. The adoption of FSP APB 14-1
resulted in a $1.0 million increase in interest expense, a
$0.4 million decrease in income tax provision, and a $0.6 million
decrease in net income for the quarter ended September 30, 2008 as
compared to the amounts previously reported. For the nine months
ended September 30, 2008, the adoption of FSP APB 14-1 resulted in
a $3.0 million increase in interest expense, a $1.2 million decrease
in income tax provision, and a $1.8 million decrease in net income
as compared to the amounts previously reported.
(3) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our accounting
for acquisition-related earnout payments. In connection with this
re-examination, we concluded that we had reported immaterial errors
in prior period financial statements. Further information related
to these immaterial errors can be found in the Current Report on
Form 8-K as filed by the Company with the Securities and Exchange
Commission on August 10, 2009. This press release should be read
in conjunction with such previously filed reports.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands)
-----------------------------------------------------
Nine Months Ended
September 30,
----------------------
2009 2008(1)(2)
-------- ------------
(unaudited)
Operating activities
Net income $106,453 $90,757
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21,523 19,099
Amortization of other intangible assets 18,370 13,019
Provision for doubtful accounts 15,040 13,107
Non-cash share-based compensation 18,439 21,392
Excess tax benefits from share-based
compensation (3,647) (5,653)
Non-cash interest expense 5,449 5,311
Other (1,801) 3,022
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Accounts receivable, billed and unbilled (30,120) (81,898)
Notes receivable (19,638) (6,322)
Prepaid expenses and other assets 3,451 (8,319)
Accounts payable, accrued expenses and other (16,218) (4,382)
Income taxes 30,761 20,812
Accrued compensation 18,017 25,224
Billings in excess of services provided (2,535) 1,279
------ -----
Net cash provided by operating
activities 163,544 106,448
------- -------
Investing activities
Payments for acquisition of
businesses, including contingent
payments and acquisition costs, net of
cash received (38,152) (313,402)
Purchases of property and equipment (17,975) (24,385)
Purchases of short-term investments (35,717) -
Other 303 991
--- ---
Net cash (used in) investing
activities (91,541) (336,796)
------- --------
Financing activities
Payments of short-term borrowings of
acquired subsidiary - (2,275)
Payments of long-term debt and capital
lease obligations (13,459) (7,511)
Cash received for settlement of
interest rate swaps 2,288 -
Net issuance of common stock under equity
compensation plans 15,671 22,476
Excess tax benefit from share based
compensation 3,647 5,653
Other (4) (171)
-- ----
Net cash provided by financing
activities 8,143 18,172
----- ------
Effect of exchange rate changes and fair value
adjustments on cash and cash equivalents 5,981 (2,110)
----- ------
Net increase (decrease) in cash and
cash equivalents 86,127 (214,286)
Cash and cash equivalents,
beginning of period 191,842 360,463
------- -------
Cash and cash equivalents, end of period $277,969 $146,177
======== ========
(1) As of January 1, 2009 we adopted FSP APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)" (FSP APB 14-1) which
addresses the accounting for convertible debt instruments that may
be settled in cash upon conversion. Our 3 3/4% Convertible Senior
Notes due 2012 issued in August 2005 are subject to FSP APB 14-1.
The adoption of FSP APB 14-1 requires retrospective application of
its effects to all previous years.
(2) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our accounting
for acquisition-related earnout payments. In connection with this
re-examination, we concluded that we had reported immaterial errors
in prior period financial statements. Further information related to
these immaterial errors can be found in the Current Report on
Form 8-K as filed by the Company with the Securities and Exchange
Commission on August 10, 2009. This press release should be read in
conjunction with such previously filed reports.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(in thousands, except per share amounts)
-----------------------------------------------
September 30, December 31,
2009 2008(1)(2)
------------- ------------
Assets (unaudited)
Current assets
Cash and cash equivalents $277,969 $191,842
Short term investments 35,655 -
Accounts receivable:
Billed receivables 254,601 237,009
Unbilled receivables 119,172 98,340
Allowance for doubtful
accounts and unbilled
services (63,590) (45,309)
------- -------
Accounts receivable, net 310,183 290,040
Notes receivable 20,472 15,145
Prepaid expenses and other
current assets 28,376 34,989
Deferred income taxes 24,742 24,372
------ ------
Total current assets 697,397 556,388
Property and equipment, net of
accumulated depreciation 74,792 78,575
Goodwill 1,173,552 1,143,461
Other intangible assets, net of
amortization 180,597 189,304
Notes receivable, net of current
portion 71,093 56,500
Other assets 54,348 59,349
------ ------
Total assets $2,251,779 $2,083,577
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses
and other $60,026 $108,905
Accrued compensation 149,409 135,922
Current portion of long-term debt and
capital lease obligations 137,613 132,915
Billings in excess of services
provided 28,635 30,872
------ ------
Total current liabilities 375,683 408,614
Long-term debt and capital lease
obligations, net of current portion 417,532 418,592
Deferred income taxes 98,255 83,777
Other liabilities 48,970 45,037
------ ------
Total liabilities 940,440 956,020
Stockholders' equity
Preferred stock, $0.01 par value;
5,000 shares authorized, none
outstanding - -
Common stock, $0.01 par value;
75,000 shares authorized;
75,000 shares issued and
outstanding - 51,815 (2009)
and 50,903 (2008) 518 509
Additional paid-in capital 776,870 733,520
Retained earnings 578,956 472,503
Accumulated other
comprehensive income (45,005) (78,975)
------- -------
Total stockholders' equity 1,311,339 1,127,557
--------- ---------
Total liabilities and
stockholders' equity $2,251,779 $2,083,577
========== ==========
(1) As of January 1, 2009 we adopted FSP APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash
Upon Conversion (Including Partial Cash Settlement)"
(FSP APB 14-1) which addresses the accounting for convertible debt
instruments that may be settled in cash upon conversion.
Our 3 3/4% Convertible Senior Notes due 2012 issued in August 2005
are subject to FSP APB 14-1. The adoption of FSP APB 14-1 requires
retrospective application of its effects to all previous years.
The adoption of this FSP resulted in a $0.6 million decrease in
other assets, a $18.0 decrease in the current portion of long-term
debt, a $7.0 million increase in deferred income taxes, an $18.0
million increase in additional paid in capital and a $7.6 million
decrease in retained earnings from the amounts previously reported
at December 31, 2008.
(2) These amounts are revised based upon our completion of an internal
re-examination of our historical practices regarding our
accounting for acquisition-related earnout payments. In connection
with this re-examination, we concluded that we had reported
immaterial errors in prior period financial statements. Further
information related to these immaterial errors can be found in the
Current Report on Form 8-K as filed by the Company with the
Securities and Exchange Commission on August 10, 2009. This
press release should be read in conjunction with such previously
filed reports.
SOURCE FTI Consulting, Inc.
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