FTI Consulting, Inc. Reports Record 2009 Fourth Quarter and Record Full Year Results
- Fourth Quarter Revenues of $342.9 Million, Net Income of $36.6 Million, EPS of $0.71 and EBITDA of $80.8 Million; All Fourth Quarter Records
- Full Year Revenues of $1.4 Billion, Net Income of $143 Million, EBITDA of $317 Million, Cash Provided by Operations of $251 Million and EPS of $2.70; All Full Year Records
- 2010 Guidance of Revenues from $1.47 Billion to $1.57 Billion; EPS Before Special Charges (a non-GAAP measure) Will be Between $3.00 and $3.25
WEST PALM BEACH, Fla., Feb. 26 /PRNewswire-FirstCall/ -- FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today reported its financial results for the fourth quarter and full year ended December 31, 2009.
For the fourth quarter of 2009, revenues increased 6.2% to $342.9 million from $322.9 million in the prior year period. Net income increased 21.3% to $36.6 million, or $0.71 per diluted common share, from $30.1 million, or $0.56 per diluted common share. EBITDA, a non-GAAP financial measure as defined below, increased 14.5% to $80.8 million, or 23.6% of revenues, from $70.6 million, or 21.9% of revenues, in the fourth quarter of 2008.
In the fourth quarter of 2009, the Company entered into a $250 million accelerated stock buyback ("ASB"). The transaction was completed on January 21, 2010 and resulted in the purchase of 5,455,591 shares, of which 4,874,807 shares were delivered in the fourth quarter of 2009.
As of December 31, 2009, cash, cash equivalents and short-term investments totaled $133.9 million after funding the $250 million ASB. Cash provided by operations for the year was $251 million, compared to $197 million in the prior year.
Commenting on the these results, Jack Dunn, FTI's president and chief executive officer, said, "We are pleased to have produced another record quarter and year of performance as we continue to transition from a period dominated by the issues of a declining economy to one where we are beginning to see evidence of economic growth and greater willingness on the part of companies to make investments in their futures. Even as credit conditions have eased and there is improved access to capital, in the fourth quarter our restructuring and bankruptcy practice continued to perform at high levels of activity across a broad range of industries, although not at the exceptional rates of growth seen in prior quarters.
Mr. Dunn continued, "At the same time, we are experiencing signs of improving trends in discretionary spending and capital markets activity that drive our pro-cyclical businesses. The Economic Consulting segment continued to work on an increasing number of cases in its financial economics and network industries practices which we expect to provide accelerating growth and improving margins in 2010. The number of matters opened within the Forensic and Litigation Consulting segment is also increasing. Our most economically sensitive segment – Strategic Communications – won more retainer revenues than it lost during the fourth quarter for the first time since the economic downturn began in 2008.
"Over the past several years, we have invested in businesses and professionals that provide FTI with growth drivers across the economic cycle. In 2009, we continued these investments, including expanding our brand through our first programmatic use of TV, print media and high profile branding events. We also increased our investment in research and development in our Technology segment resulting in the introduction of Acuity, our new integrated document review offering, at LegalTech on February 1, 2010.
Mr. Dunn concluded, "There is still a great deal of uncertainty regarding the direction of the world's economies and financial markets. While certain regions and sectors are rebounding, others still face structural hurdles that will take time and resources to resolve. As a business that is positioned to advise its clients on both the upside and downside of the economic cycle, we believe there are ample opportunities across the economic and regulatory landscape to enable FTI to achieve another record year in 2010."
Fourth Quarter Business Segment Results
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 16.5% to $124.9 million from $107.3 million in the fourth quarter of the prior year. Segment EBITDA increased 17.8% to $43.8 million, or 35.1% of segment revenues, from $37.2 million, or 34.7% of segment revenues, in the prior year quarter. Performance was driven by strong growth in the segment's healthcare and communications/media/entertainment practices, and its international practices, notably the Canadian and Latin America practices, launched in December 2008. The segment continues to see strong activity in the financial services, real estate, insurance, entertainment and energy sectors.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 5.5% to $61.8 million from $58.6 million in the fourth quarter of the prior year. Segment EBITDA increased to $12.8 million, or 20.6% of segment revenues, compared to $12.2 million, or 20.8% of segment revenues, in the prior year quarter. The segment performed well in an environment in which corporations are actively controlling expenses and deferring litigation, and regulatory agencies have yet to complete building out their infrastructures and staff. Continued contributions from several large financial fraud investigations and strong performances by the segment's intellectual property, regulated industries and Latin American investigations practices were partially offset by lower revenues from its trial services practice, which was particularly impacted by the ongoing softness in litigation activity. The segment is experiencing an increasing number of active engagements, most notably in financial consulting and construction.
Economic Consulting
Revenues in the Economic Consulting segment increased 18.5% to a record $63.2 million from $53.3 million in the fourth quarter of the prior year. Segment EBITDA was $13.2 million, or 20.9% of segment revenues, compared to $16.0 million, or 30.0% of segment revenues, for the prior year quarter. The segment's record revenue performance in the quarter reflects strong activity in its strategic mergers and acquisitions ("M&A"), financial economics and network industries practices, continued growth in the segment's offices opened during the year in New York and Los Angeles, and acceleration in the level of work in its recently-formed European practice based in London. Margins in the segment declined relative to an outstanding performance in 2008, reflecting the cost of expansion of activities into new markets and the hiring of additional professionals to meet anticipated future demand. The segment continues to see increasing demand, particularly in its financial economics and network industries practices, as evidenced by more active engagements compared to both the prior year quarter and third quarter.
Technology
Revenues in the Technology segment were $47.7 million, compared to $52.2 million in the fourth quarter of the prior year. Segment EBITDA increased 27.6% to $17.4 million, or 36.3% of segment revenues, compared to $13.6 million, or 26.1% of segment revenues, in the prior year quarter. Revenues in the segment decreased year-over-year as the demand related to complex litigation and regulatory investigations continued to be soft. In addition, pricing for certain aspects of the Technology segment continued to be challenging. Segment margins improved due to operating efficiencies and the completion earlier in the year of the integration of the Attenex acquisition that adversely affected margins in 2008.
Strategic Communications
Revenues in the Strategic Communications segment were $45.3 million, compared to $51.6 million in the fourth quarter of the prior year. Segment EBITDA was $6.7 million, or 14.8% of segment revenues, compared to $12.2 million, or 23.6% of revenues, in the prior year quarter. The segment continued to face the challenges of a dramatically lower volume of M&A transactions and the continued impact of the global recession on discretionary spending during the quarter, which caused a decline in revenues related to M&A engagements and ongoing pressure on fees from retained clients with a resulting shift from retainer-based to project revenues. While the segment did take actions early in the year to reduce headcount in response to lower demand, certain core resources were retained to enable the segment to service the expected upturn in activity as the recession ends and capital markets activity returns to more normal levels.
Special Charge
The Company intends to record a special charge in the first quarter of 2010 of approximately $25 million relating to the termination of approximately 150 employees and the consolidation of three office locations. These actions are intended to eliminate certain redundancies resulting from acquisitions completed over the last two years, to better align capacity with expected demand, and to provide for appropriate levels of administrative support, but in a more efficient manner. This charge is expected to require approximately $20 million in cash with the balance relating to non-cash charges primarily resulting from terminating certain employees who are contractually entitled to employee loan forgiveness and vesting of equity compensation. The Company believes this reduction in headcount is all that will be required this year.
2010 Guidance
Based on current market conditions, the Company estimates that revenues for the year will be between $1.47 billion and $1.57 billion and EPS Before Special Charges (a non-GAAP measure) will be between $3.00 and $3.25. The Special Charge, described above, is expected to be approximately $25 million, or $0.31 cents per share.
Fourth Quarter Conference Call
FTI will hold a conference call for analysts and investors to discuss fourth quarter and full year financial results at 9:00 AM Eastern Time on Friday, February 26, 2010. 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.
FINANCIAL TABLES FOLLOW
FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(in thousands, except per share data)
-------------------------------------
Year Ended December 31,
-----------------------
2009 2008(1)(2)
---- ----------
Revenues $1,399,946 $1,293,145
---------- ----------
Operating expenses
Direct cost of revenues 767,387 708,783
Selling, general and administrative expense 344,318 330,191
Amortization of other intangible assets 24,701 18,824
------ ------
1,136,406 1,057,798
--------- ---------
Operating income 263,540 235,347
------- -------
Other income (expense)
Interest income and other 8,158 8,840
Interest expense (44,923) (45,105)
Litigation settlement gains (losses), net 250 (661)
--- ----
(36,515) (36,926)
------- -------
Income before income tax provision 227,025 198,421
Income tax provision 83,999 77,515
------ ------
Net income $143,026 $120,906
======== ========
Earnings per common share - basic $2.86 $2.46
===== =====
Weighted average common shares outstanding -
basic 49,963 49,193
====== ======
Earnings per common share - diluted $2.70 $2.26
===== =====
Weighted average common shares outstanding -
diluted 53,044 53,603
====== ======
(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 $4.0 million increase in interest expense, a $1.6 million
decrease in income tax provision, a $2.4 million decrease in net
income and a $0.05 decrease in basic and diluted earnings per share
for the year ended December 31, 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 Form 10-Q for the
quarterly period ended September 30, 2009 as filed by the Company
with the Securities and Exchange Commission on November 5, 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 $2.1 million and a decrease in basic
and diluted earnings per share of $0.04 for the year ended
December 31, 2008 as compared to the amounts previously reported.
FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(in thousands, except per share data)
-------------------------------------
Three Months Ended
December 31,
------------
2009 2008(1)(2)
---- ----------
Revenues $342,938 $322,876
-------- --------
Operating expenses
Direct cost of revenues 187,590 171,080
Selling, general and administrative expense 81,747 88,202
Amortization of other intangible assets 6,331 5,805
----- -----
275,668 265,087
------- -------
Operating income 67,270 57,789
------ ------
Other income (expense)
Interest income and other 2,073 1,304
Interest expense (11,446) (11,257)
Litigation settlement gains, net - 50
- --
(9,373) (9,903)
------ ------
Income before income tax provision 57,897 47,886
Income tax provision 21,324 17,737
------ ------
Net income $36,573 $30,149
======= =======
Earnings per common share - basic $0.75 $0.61
===== =====
Weighted average common shares outstanding -
basic 48,612 49,738
====== ======
Earnings per common share - diluted $0.71 $0.56
===== =====
Weighted average common shares outstanding -
diluted 51,433 53,411
====== ======
(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 $.01 decrease in basic and diluted earnings per share
for the three months ended December 31, 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 Form 10-Q for the
quarterly period ended September 30, 2009 as filed by the Company with
the Securities and Exchange Commission on November 5, 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 $0.4 million and a decrease in basic and
diluted earnings per share of $0.01 for the three months ended
December 31, 2008 as compared to the amounts previously reported.
FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
Revenues EBITDA (1) Margin
------------------------------------ -------- ---------- ------
(in thousands)
Three Months Ended December 31, 2009
Corporate Finance/Restructuring $124,940 $43,801 35.1%
Forensic and Litigation Consulting 61,812 12,763 20.6%
Economic Consulting 63,176 13,224 20.9%
Technology 47,745 17,355 36.3%
Strategic Communications 45,265 6,709 14.8%
------ -----
$342,938 93,852 27.4%
========
Corporate (13,010)
-------
EBITDA (1) $80,842 23.6%
=======
----------------------------
Year Ended December 31, 2009
Corporate Finance/Restructuring $514,260 $175,551 34.1%
Forensic and Litigation Consulting 259,204 59,581 23.0%
Economic Consulting 234,723 47,845 20.4%
Technology 211,680 75,715 35.8%
Strategic Communications 180,079 24,941 13.9%
------- ------
$1,399,946 383,633 27.4%
==========
Corporate (66,378)
-------
EBITDA (1) $317,255 22.7%
========
------------------------------------
Three Months Ended December 31, 2008
Corporate Finance/Restructuring $107,280 $37,181 34.7%
Forensic and Litigation Consulting 58,567 12,188 20.8%
Economic Consulting 53,294 15,966 30.0%
Technology 52,164 13,600 26.1%
Strategic Communications 51,571 12,179 23.6%
------ ------
$322,876 91,114 28.2%
========
Corporate (20,532)
-------
EBITDA (1) (2) $70,582 21.9%
=======
----------------------------
Year Ended December 31, 2008
Corporate Finance/Restructuring $374,504 $114,178 30.5%
Forensic and Litigation Consulting 253,918 57,493 22.6%
Economic Consulting 219,883 59,020 26.8%
Technology 220,359 73,506 33.4%
Strategic Communications 224,481 51,853 23.1%
------- ------
$1,293,145 356,050 27.5%
==========
Corporate (76,503)
-------
EBITDA (1) (2) $279,547 21.6%
========
Average Revenue-
Billable Generating
Utilization(3) Rate(3) Headcount
------------------------------------ -------------- ------- ---------
Three Months Ended December 31, 2009
Corporate Finance/Restructuring 64% $453 758
Forensic and Litigation Consulting 67% $328 667
Economic Consulting 78% $453 302
Technology N/M N/M 338
Strategic Communications N/M N/M 573
---
N/M N/M 2,638
=====
Corporate
EBITDA (1)
----------------------------
Year Ended December 31, 2009
Corporate Finance/Restructuring 73% $439 758
Forensic and Litigation Consulting 73% $333 667
Economic Consulting 76% $456 302
Technology N/M N/M 338
Strategic Communications N/M N/M 573
---
N/M N/M 2,638
=====
Corporate
EBITDA (1)
------------------------------------
Three Months Ended December 31, 2008
Corporate Finance/Restructuring 73% $451 669
Forensic and Litigation Consulting 65% $332 639
Economic Consulting 76% $456 264
Technology N/M N/M 357
Strategic Communications N/M N/M 592
---
N/M N/M 2,521
=====
Corporate
EBITDA (1) (2)
----------------------------
Year Ended December 31, 2008
Corporate Finance/Restructuring 75% $438 669
Forensic and Litigation Consulting 70% $330 639
Economic Consulting 83% $446 264
Technology N/M N/M 357
Strategic Communications N/M N/M 592
---
N/M N/M 2,521
=====
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 Form 10-Q for the
quarterly period ended September 30, 2009 as filed by the Company
with the Securities and Exchange Commission on November 5, 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
(in thousands)
--------------
Corporate Forensic and
Three Months Ended Finance / Litigation Economic
December 31, 2009 Restructuring Consulting Consulting Technology
------------- ---------- ----------- ----------
Net income
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $41,282 $11,292 $12,263 $12,309
Depreciation 949 591 490 2,989
Amortization of other
intangible assets 1,570 880 471 2,057
Litigation settlement
gains - - - -
- - - -
EBITDA (1) 43,801 12,763 13,224 17,355
====== ====== ====== ======
Year Ended December 31, 2009
Net income
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $165,757 $54,456 $43,928 $55,599
Depreciation 3,462 2,319 1,798 11,873
Amortization of other
intangible assets 6,332 2,806 2,119 8,243
Litigation settlement
gains - - - -
- - - -
EBITDA (1) 175,551 59,581 47,845 75,715
======= ====== ====== ======
Three Months Ended
December 31, 2008(2)(3)
Net income
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $35,268 $10,800 $15,027 $8,434
Depreciation 723 597 369 3,067
Amortization of other
intangible assets 1,190 791 570 2,099
Litigation settlement
losses - - - -
- - - -
EBITDA (1) 37,181 12,188 15,966 13,600
====== ====== ====== ======
Year Ended December 31,
2008(2)(3)
Net income (loss)
Interest income and
other
Interest expense
Litigation settlement
losses
Income tax provision
Operating income $108,013 $52,118 $55,123 $58,090
Depreciation 2,603 2,482 1,616 10,627
Amortization of other
intangible assets 3,562 2,893 2,281 5,024
Litigation settlement
losses - - - (235)
- - - ----
EBITDA (1) 114,178 57,493 59,020 73,506
======= ====== ====== ======
Strategic
Three Months Ended Communi-
December 31,2009 cations Corp HQ Total
---------- ------- -----
Net income $36,573
Interest income and other (2,073)
Interest expense 11,446
Litigation settlement losses -
Income tax provision 21,324
------
Operating income $4,570 $(14,446) 67,270
Depreciation 786 1,436 7,241
Amortization of other intangible
assets 1,353 - 6,331
Litigation settlement gains - - -
- - -
EBITDA (1) 6,709 (13,010) 80,842
===== ======= ======
Year Ended December 31, 2009
Net income $143,026
Interest income and other (8,158)
Interest expense 44,923
Litigation settlement losses (250)
Income tax provision 83,999
------
Operating income $16,455 $(72,655) 263,540
Depreciation 3,285 6,027 28,764
Amortization of other intangible
assets 5,201 - 24,701
Litigation settlement gains - 250 250
- --- ---
EBITDA (1) 24,941 (66,378) 317,255
====== ======= =======
Three Months Ended December 31,
2008(2)(3)
Net income $30,149
Interest income and other (1,304)
Interest expense 11,257
Litigation settlement losses (50)
Income tax provision 17,737
------
Operating income $10,273 $(22,013) 57,789
Depreciation 701 1,481 6,938
Amortization of other intangible
assets 1,155 - 5,805
Litigation settlement losses 50 - 50
-- - --
EBITDA (1) 12,179 (20,532) 70,582
====== ======= ======
Year Ended December 31, 2008 (2) (3)
Net income (loss) $120,906
Interest income and other (8,840)
Interest expense 45,105
Litigation settlement losses 661
Income tax provision 77,515
------
Operating income $43,976 $(81,973) 235,347
Depreciation 3,014 5,695 26,037
Amortization of other intangible
assets 5,064 - 18,824
Litigation settlement losses (201) (225) (661)
---- ---- ----
EBITDA (1) 51,853 (76,503) 279,547
====== ======= =======
(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 three months ended December 31, 2008
as compared to the amounts previously reported. For the year ended
December 31, 2008, the adoption of FSP APB 14-1 resulted in a
$4.0 million increase in interest expense, a $1.6 million decrease
in income tax provision, and a $2.4 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 Form 10-Q for the
quarterly period ended September 30, 2009 as filed by the Company
with the Securities and Exchange Commission on November 5, 2009.
This press release should be read in conjunction with such previously
filed reports.
RECONCILIATION OF FULLY DILUTED EARNINGS PER SHARE TO
EPS BEFORE SPECIAL CHARGES
--------------------------------------------------------------------------
In our press release hereof, we provide 2010 guidance based on GAAP and non-GAAP measures. The following table provides a reconciliation between 2010 guidance based on non-GAAP measures to the most directly comparable GAAP measure
--------------------------------------------------------------------------
EPS Before Special Charges $3.00-3.25
Less: Special Charges $0.31-0.31
--------------------- ----------
Earnings per common share - diluted $2.69-2.94
----------------------------------- ----------
FTI CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(in thousands)
--------------
Year Ended December 31,
-----------------------
2009 2008(1)(2)
---- ----------
Operating activities
Net income $143,026 $120,906
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 28,765 26,037
Amortization of other intangible assets 24,702 18,824
Provision for doubtful accounts 19,866 22,474
Non-cash share-based compensation 25,631 26,381
Excess tax benefits from share-based
compensation (5,193) (10,820)
Non-cash interest expense 7,214 7,124
Other (1,604) 3,407
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable, billed and unbilled (13,314) (49,251)
Notes receivable (18,364) (9,377)
Prepaid expenses and other assets 1,334 (11,577)
Accounts payable, accrued expenses and other (14,179) (3,382)
Income taxes 29,877 12,990
Accrued compensation 20,090 32,836
Billings in excess of services provided 2,918 10,908
----- ------
Net cash provided by
operating activities 250,769 197,480
------- -------
Investing activities
Payments for acquisition of businesses,
including contingent payments and
acquisition costs, net of cash received (46,710) (343,169)
Purchases of property and equipment (28,557) (35,674)
Purchases of short-term investments (35,717) -
Proceeds from sale of short-term investments 20,576 -
Other 520 4,703
--- -----
Net cash used in
investing activities (89,888) (374,140)
------- --------
Financing activities
Payments of short-term borrowings of acquired
subsidiary - (2,275)
Payments of long-term debt and capital lease
obligations (13,761) (8,744)
Cash received for settlement of interest rate
swaps 2,288 -
Purchase and retirement of common stock (250,000) -
Net issuance of common stock under equity
compensation plans 15,699 20,562
Excess of tax benefits from share based
compensation 5,193 10,820
Other 303 (112)
--- ----
Net cash (used in)
provided by financing
activities (240,278) 20,251
-------- ------
Effect of exchange rate changes and fair value
adjustments on cash and cash equivalents 6,427 (12,212)
----- -------
Net decrease in cash and cash equivalents (72,970) (168,621)
Cash and cash equivalents, beginning of period 191,842 360,463
------- -------
Cash and cash equivalents, end of period $118,872 $191,842
======== ========
(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 Form 10-Q for the
quarterly period ended September 30, 2009 as filed by the Company
with the Securities and Exchange Commission on November 5, 2009.
This press release should be read in conjunction with such previously
filed reports.
FTI CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
(in thousands, except per share amounts)
----------------------------------------
December 31, December 31,
2009 2008(1)(2)
---- ----------
Assets
Current assets
Cash and cash equivalents $118,872 $191,842
Accounts receivable:
Billed receivables 241,911 237,009
Unbilled receivables 104,959 98,340
Allowance for doubtful accounts and unbilled
services (59,328) (45,309)
------- -------
Accounts receivable, net 287,542 290,040
Notes receivable 20,853 15,145
Prepaid expenses and other current assets 52,172 34,989
Deferred income taxes 20,476 24,372
------ ------
Total current assets 499,915 556,388
Property and equipment, net of accumulated
depreciation 80,678 78,575
Goodwill 1,195,949 1,143,461
Other intangible assets, net of amortization 175,962 189,304
Notes receivable, net of current portion 69,213 56,500
Other assets 55,621 59,349
------ ------
Total assets $2,077,338 $2,083,577
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable, accrued expenses and other $81,193 $108,905
Accrued compensation 152,807 135,922
Current portion of long-term debt and
capital lease obligations 138,101 132,915
Billings in excess of services provided 34,101 30,872
------ ------
Total current liabilities 406,202 408,614
Long-term debt and capital lease obligations,
net of current portion 417,397 418,592
Deferred income taxes 95,704 83,777
Other liabilities 53,821 45,037
------ ------
Total liabilities 973,124 956,020
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 - 46,985 (2009) and 50,903 (2008) 470 509
Additional paid-in capital 535,754 733,520
Retained earnings 615,529 472,503
Accumulated other comprehensive loss (47,539) (78,975)
------- -------
Total stockholders' equity 1,104,214 1,127,557
--------- ---------
Total liabilities and stockholders'
equity $2,077,338 $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 million 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
Form 10-Q for the quarterly period ended September 30, 2009 as filed
by the Company with the Securities and Exchange Commission on
November 5, 2009. This press release should be read in conjunction
with such previously filed reports.
SOURCE FTI Consulting, Inc.
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