FTI Consulting Reports Second Quarter 2014 Results - Second Quarter Revenues of $454.3 Million

- Second Quarter Adjusted EPS of $0.55; Fully Diluted EPS of $0.42

WASHINGTON, July 31, 2014 /PRNewswire/ -- FTI Consulting, Inc. (NYSE: FCN) (the "Company"), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today released its financial results for the quarter ended June 30, 2014.

For the quarter, revenues increased 9.6 percent to $454.3 million compared to $414.6 million in the prior year quarter. Fully diluted earnings per share ("EPS") were $0.42 compared to $0.58 in the prior year quarter. EPS for the quarter included a special charge of $9.4 million related to the closure of the Company's West Palm Beach office and the termination of a corporate plane lease which reduced EPS by $0.14. Adjusted EPS for the quarter were $0.55. Adjusted EBITDA for the quarter was $59.9 million or 13.2 percent of revenues compared to $66.0 million or 15.9 percent of revenues in the prior year quarter.

Adjusted EPS, Adjusted EBITDA and Adjusted Segment EBITDA are non-GAAP measures defined elsewhere in this press release and are reconciled to GAAP measures in the financial tables that accompany this press release.

Commenting on these results, Steven H. Gunby, President and Chief Executive Officer of FTI Consulting said,  "Our second quarter results are in line with the focus and expectations we discussed at our June investor day,  including a focus on organic growth and continued investment to build the business."

Cash and Capital Allocation

Net cash provided by operating activities for the quarter was $33.7 million compared to $21.7 million in the prior year. Cash and cash equivalents were $94.4 million at June 30, 2014.

Second Quarter Segment Results

Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 7.6 percent to $104.0 million in the quarter compared to $96.7 million in the prior year quarter. The increase in revenues was driven by higher demand for the segment's North America non-distressed service offerings partially offset by continued softness in global bankruptcy engagements. Adjusted Segment EBITDA was $19.1 million or 18.4 percent of segment revenues compared to $17.8 million or 18.5 percent of segment revenues in the prior year quarter.

Economic Consulting 
Revenues in the Economic Consulting segment increased 5.6 percent to $117.2 million in the quarter compared to $111.0 million in the prior year quarter. The increase in revenues was due to higher demand in the segment's Europe, Middle East and Africa ("EMEA") antitrust litigation practice and higher demand and realized pricing in its EMEA international arbitration, regulatory and valuation practices. Adjusted Segment EBITDA was $18.1 million or 15.4 percent of segment revenues compared to $20.8 million or 18.7 percent of segment revenues in the prior year quarter. The decline in Adjusted Segment EBITDA margin was due largely to increased compensation expense related to extensions of employment contracts entered into late last year with key senior client-service professionals and lower utilization in the financial economics practice in North America.

Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment increased 13.3 percent to $119.1 million in the quarter compared to $105.1 million in the prior year quarter. Revenues increased organically by 10.4 percent due to increased demand related primarily to disputes and investigations in the segment's North America and Asia Pacific regions. Adjusted Segment EBITDA was $22.3 million or 18.7 percent of segment revenues compared to $18.8 million or 17.9 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to strong utilization and employee leverage in the aforementioned practices, which was partially offset by higher performance-based compensation costs as well as lower success fees and lower utilization as a result of increased hiring in our health solutions practice.

Technology
Revenues in the Technology segment increased 18.6 percent to $60.7 million in the quarter compared to $51.2 million in the prior year quarter. The increase in revenues was primarily due to increased demand related to large scale complex global investigations. Adjusted Segment EBITDA was $15.1 million or 24.9 percent of segment revenues compared to $16.9 million or 33.0 percent of segment revenues in the prior year quarter. The decrease in Adjusted Segment EBITDA margin was due to an increase in the mix of lower margin services and increased investment in business development activities.

Strategic Communications
Revenues in the Strategic Communications segment increased 5.4 percent to $53.3 million in the quarter compared to $50.6 million in the prior year quarter. Favorable foreign currency translation resulted in a revenues increase of 2.8 percent and the remaining growth resulted from increases in the number of retainer-based relationships in EMEA. Adjusted Segment EBITDA was $5.8 million or 10.9 percent of segment revenues compared to $5.2 million or 10.3 percent of segment revenues in the prior year quarter. The increase in Adjusted Segment EBITDA margin was due to the favorable foreign currency translation impact and higher margins on pass-through revenues.

Second Quarter 2014 Conference Call
FTI Consulting will host a conference call for analysts and investors to discuss second quarter 2014 financial results at 9:00 a.m. Eastern Time on July 31, 2014. 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 at 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 4,200 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The company generated $1.65 billion in revenues during fiscal year 2013. More information can be found at www.fticonsulting.com.

Note: 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. We define Adjusted EBITDA as consolidated net income before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We define Adjusted Segment EBITDA as a segment's share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment's ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, and goodwill impairment charges. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share ("Adjusted EPS") as net income and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total Company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, the information contained in our Consolidated Statements of Comprehensive Income. Reconciliations of GAAP to non-GAAP financial measures are included elsewhere in this press release.

Safe Harbor Statement
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which 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 estimates will be achieved, and the Company's actual results may differ materially from our expectations, beliefs and estimates. Further, preliminary results are subject to normal year-end adjustments. The Company has experienced fluctuating revenues, operating income and cash flow in prior periods and expects that this will occur from time to time in the future. Other factors that could cause such differences include declines in demand for, or changes in, the mix of services and products that we offer, the mix of the geographic locations where our clients are located or where services are performed, adverse financial, real estate or other market and general economic conditions, which could impact each of our segments differently, 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 filed with the SEC and in the Company's other filings with the SEC, including the risks set forth under "Risks Related to Our Reportable Segments" and "Risks Related to Our Operations". 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.
1101 K Street NW
Washington, D.C. 20005
+1.202.312.9100

Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com

 

FINANCIAL TABLES FOLLOW 

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)






Six Months Ended


June 30,


2014


2013





Revenues

$               879,876


$              821,791





Operating expenses




Direct cost of revenues

569,824


518,008

Selling, general and administrative expense

215,419


192,972

Special charges

9,364


427

Acquisition-related contingent consideration

(1,848)


(6,721)

Amortization of other intangible assets

8,068


11,517


800,827


716,203





Operating income

79,049


105,588





Other income (expense)




Interest income and other

2,451


550

Interest expense

(25,563)


(25,786)


(23,112)


(25,236)





Income before income tax provision

55,937


80,352





Income tax provision

20,573


33,186





Net income

$                 35,364


$                47,166





Earnings per common share - basic

$                     0.89


$                    1.20

Earnings per common share - diluted

$                     0.87


$                    1.17





Weighted average common shares outstanding - basic

39,560


39,272

Weighted average common shares outstanding - diluted

40,604


40,456





Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments, net of tax of $0

$                 12,422


$              (27,223)

Total other comprehensive income (loss), net of tax

12,422


(27,223)

Comprehensive income

$                 47,786


$                19,943

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands, except per share data)

(unaudited)






Three Months Ended


June 30,


2014


2013





Revenues

$               454,324


$              414,613





Operating expenses




Direct cost of revenues

295,549


259,528

Selling, general and administrative expense

107,032


96,325

Special charges

9,364


-

Acquisition-related contingent consideration

(5)


(7,452)

Amortization of other intangible assets

3,452


5,953


415,392


354,354





Operating income

38,932


60,259





Other income (expense)




Interest income and other

1,448


(387)

Interest expense

(12,908)


(13,071)


(11,460)


(13,458)





Income before income tax provision

27,472


46,801





Income tax provision

10,225


23,315





Net income

$                 17,247


$                23,486





Earnings per common share - basic

$                     0.43


$                    0.60

Earnings per common share - diluted

$                     0.42


$                    0.58





Weighted average common shares outstanding - basic

39,681


39,143

Weighted average common shares outstanding - diluted

40,750


40,293





Other comprehensive income (loss), net of tax:




Foreign currency translation adjustments, net of tax of $0

$                   7,694


$              (11,714)

Total other comprehensive income (loss), net of tax

7,694


(11,714)

Comprehensive income

$                 24,941


$                11,772

 

 

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT












  Average  


Revenue-





Adjusted






 Billable 


Generating



Revenues


EBITDA (1)


Margin(1)


Utilization


Rate


Headcount



  (in thousands)  








(at period end)

Three Months Ended June 30, 2014













Corporate Finance/Restructuring


$                 104,020


$                        19,133


18.4%


71%


$          412


713

Forensic and Litigation Consulting 


119,081


22,271


18.7%


71%


$          323


1,059

Economic Consulting


117,227


18,043


15.4%


78%


$          522


525

Technology  (2)


60,720


15,104


24.9%


N/M


N/M


328

Strategic Communications  (2)


53,276


5,834


11.0%


N/M


N/M


566



$                 454,324


80,385


17.7%






3,191

   Corporate 




(20,482)









Adjusted EBITDA(1)




$                        59,903


13.2%




















Six Months Ended June 30, 2014













Corporate Finance/Restructuring


$                 198,002


$                        30,084


15.2%


71%


$          396


713

Forensic and Litigation Consulting


240,510


48,765


20.3%


73%


$          319


1,059

Economic Consulting


224,078


31,073


13.9%


75%


$          519


525

Technology  (2)


120,783


32,452


26.9%


N/M


N/M


328

Strategic Communications  (2)


96,503


8,563


8.9%


N/M


N/M


566



$                 879,876


150,937


17.2%






3,191

   Corporate 




(39,838)









Adjusted EBITDA(1)




$                      111,099


12.6%




















Three Months Ended June 30, 2013













Corporate Finance/Restructuring


$                   96,714


$                        17,848


18.5%


62%


$          416


718

Forensic and Litigation Consulting 


105,120


18,752


17.8%


67%


$          307


969

Economic Consulting


111,014


20,803


18.7%


82%


$          505


499

Technology  (2)


51,196


16,888


33.0%


N/M


N/M


285

Strategic Communications  (2)


50,569


5,219


10.3%


N/M


N/M


611



$                 414,613


79,510


19.2%






3,082

   Corporate 




(13,498)









Adjusted EBITDA(1)




$                        66,012


15.9%




















Six Months Ended June 30. 2013













Corporate Finance/Restructuring


$                 195,794


$                        36,933


18.9%


66%


$          412


718

Forensic and Litigation Consulting


205,844


31,563


15.3%


65%


$          314


969

Economic Consulting


226,208


46,997


20.8%


86%


$          501


499

Technology  (2)


97,900


30,604


31.3%


N/M


N/M


285

Strategic Communications  (2)


96,045


8,773


9.1%


N/M


N/M


611



$                 821,791


154,870


18.8%






3,082

   Corporate 




(29,532)









Adjusted EBITDA(1)




$                      125,338


15.3%









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


(2) The majority of the Technology and Strategic Communications segments' revenues are not generated based on billable hours.  Accordingly, utilization and average billable rate metrics are not presented as they are not meaningful as a segment-wide metric.

 

 

FTI CONSULTING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(in thousands, except per share data)


















Three Months Ended June 30,


Six Months Ended June 30,






2014


2013


2014


2013









Net income





$                      17,247


$                      23,486


$                      35,364


$                      47,166

Add back:












Special charges, net of tax effect (1)


5,523


-


5,523


253

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

(164)


(8,216)


(1,514)


(8,216)

Adjusted Net Income (3)




$                      22,606


$                      15,270


$                      39,373


$                      39,203













Earnings per common share – diluted


$                          0.42


$                          0.58


$                          0.87


$                          1.17

Add back:












Special charges, net of tax effect (1)


0.14


-


0.14


-

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

(0.01)


(0.20)


(0.04)


(0.20)

Adjusted earnings per common share – diluted (3)

$                          0.55


$                          0.38


$                          0.97


$                          0.97













Weighted average number of common shares outstanding – diluted

40,750


40,293


40,604


40,456

























(1) The tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rate for the adjustments related to special charges for the three and six months ended June 30, 2014 was 41.0%. The tax expense related to the adjustment for special charges for the three and six months ended June 30, 2014 were $3.8 million or a $0.09 impact on diluted earnings per share. The effective tax rate for the adjustments related to special charges for the six months ended June 30, 2013 was 40.7%. The tax expense related to the adjustment for special charges for the six months ended June 30,  2013 was $0.2 million with no impact on diluted earnings per share. In the three months ended June 30, 2013, there were no special charges.

(2)The  tax effect takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). As a result, the effective tax rates for the adjustments related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 were 37.2% and 36.5%, respectively. The tax expense related to the remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2014 was $0.1 million with no impact on diluted earnings per share and $0.9 million or a $0.02 impact on diluted earnings per share. The adjustments related to remeasurement of acquisition-related contingent consideration for the three and six months ended June 30, 2013 were not taxable.

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

 

RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA

(in thousands)





















Three Months Ended June 30, 2014


Corporate Finance
/ Restructuring


Forensic and
Litigation
Consulting


Economic
Consulting


Technology


Strategic
Communications


Corp HQ


Total





















Net income
















$             17,247



Interest income and other














(1,448)



Interest expense















12,908



Income tax provision















10,225


Operating income (1)




$                   17,068


$                   20,839


$                   16,840


$                   10,905


$                     4,030


$                 (30,750)


$             38,932



Depreciation and amortization


854


1,019


981


3,981


677


904


8,416



Amortization of other intangible assets

1,211


674


222


218


1,127


-


3,452



Special charges



-


-


-


-


-


9,364


9,364



Remeasurement of acquisition-related contingent consideration

-


(261)


-


-


-


-


(261)


Adjusted EBITDA (2)




$                   19,133


$                   22,271


$                   18,043


$                   15,104


$                     5,834


$                 (20,482)


$             59,903



























































Six Months Ended June 30, 2014




































Net income
















$             35,364



Interest income and other














(2,451)



Interest expense















25,563



Income tax provision















20,573


Operating income (1)




$                   25,675


$                   46,241


$                   29,270


$                   23,971


$                     5,035


$                 (51,143)


$             79,049



Depreciation and amortization


1,645


2,034


2,062


8,045


1,274


1,941


17,001



Amortization of other intangible assets




3,426


1,424


528


436


2,254


-


8,068



Special charges



-


-


-


-


-


9,364


9,364



Remeasurement of acquisition-related contingent consideration

(662)


(934)


(787)


-


-


-


(2,383)


Adjusted EBITDA (2)




$                   30,084


$                   48,765


$                   31,073


$                   32,452


$                     8,563


$                 (39,838)


$           111,099








































Three Months Ended June 30, 2013


Corporate Finance
/ Restructuring


Forensic and
Litigation
Consulting


Economic
Consulting


Technology


Strategic
Communications


Corp HQ


Total





















Net income
















$             23,486



Interest income and other














387



Interest expense















13,071



Income tax provision















23,315


Operating income (1)




$                   21,436


$                   19,177


$                   19,530


$                   11,292


$                     3,394


$                 (14,570)


$             60,259



Depreciation and amortization


855


937


863


3,611


678


1,072


8,016



Amortization of other intangible assets

1,832


579


410


1,985


1,147


-


5,953



Remeasurement of acquisition-related contingent consideration

(6,275)


(1,941)


-


-


-


-


(8,216)


Adjusted EBITDA (2)




$                   17,848


$                   18,752


$                   20,803


$                   16,888


$                     5,219


$                 (13,498)


$             66,012



























































Six Months Ended June 30, 2013


































Net income
















$             47,166



Interest income and other














(550)



Interest expense















25,786



Income tax provision















33,186


Operating income (1)




$                   38,135


$                   30,279


$                   44,525


$                   19,374


$                     5,121


$                 (31,846)


$           105,588



Depreciation and amortization


1,622


1,961


1,668


7,246


1,323


2,202


16,022



Amortization of other intangible assets




3,383


1,091


808


3,970


2,265


-


11,517



Special charges



68


173


(4)


14


64


112


427



Remeasurement of acquisition-related contingent consideration

(6,275)


(1,941)


-


-


-


-


(8,216)


Adjusted EBITDA (2)




$                   36,933


$                   31,563


$                   46,997


$                   30,604


$                     8,773


$                 (29,532)


$           125,338






















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


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

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

(in thousands)

(unaudited)






Six Months Ended


June 30,


2014


2013

Operating activities




Net income

$           35,364


$           47,166

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




Depreciation and amortization

18,138


16,022

Amortization of other intangible assets

8,068


11,517

Acquisition-related contingent consideration

(1,848)


(6,721)

Provision for doubtful accounts 

8,671


7,478

Non-cash share-based compensation 

15,194


17,046

Non-cash interest expense

1,348


1,349

Other

(368)


(197)

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




Accounts receivable, billed and unbilled

(115,787)


(58,827)

Notes receivable

(22,559)


(11,113)

Prepaid expenses and other assets

8,860


(1,485)

Accounts payable, accrued expenses and other

2,645


(1,354)

Income taxes 

4,832


14,740

Accrued compensation

(47,418)


(10,467)

Billings in excess of services provided

7,756


(5,785)

                           Net cash (used in) provided by operating activities

(77,104)


19,369





Investing activities




Payments for acquisition of businesses, net of cash received 

(15,611)


(40,512)

Purchases of property and equipment

(21,778)


(14,130)

Other

(6)


21

                          Net cash used in investing activities

(37,395)


(54,621)





Financing activities




Purchase and retirement of common stock

(4,367)


(28,758)

Net issuance of common stock under equity compensation plans

(2,692)


1,245

Deposits

11,580


-

Other

(891)


(616)

                          Net cash used in financing activities

3,630


(28,129)





Effect of exchange rate changes on cash and cash equivalents

(552)


(850)





Net decrease in cash and cash equivalents

(111,421)


(64,231)

Cash and cash equivalents, beginning of period

205,833


156,785

Cash and cash equivalents, end of period

$           94,412


$           92,554

 

 

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2014 AND DECEMBER 31, 2013

(in thousands, except per share amounts)






June 30,


December 31,


2014


2013

Assets

(unaudited)



Current assets




   Cash and cash equivalents

$            94,412


$                    205,833

   Accounts receivable:




       Billed receivables

423,058


352,411

       Unbilled receivables

296,299


233,307

       Allowance for doubtful accounts and unbilled services

(139,620)


(109,273)

          Accounts receivable, net

579,737


476,445

   Current portion of notes receivable

29,911


33,093

   Prepaid expenses and other current assets

52,162


61,800

   Current portion of deferred tax assets

29,046


26,690

 Total current assets

785,268


803,861

Property and equipment, net of accumulated depreciation

83,495


79,007

Goodwill

1,225,403


1,218,733

Other intangible assets, net of amortization

86,270


97,148

Notes receivable, net of current portion

131,707


108,298

Other assets

61,097


57,900

Total assets

$       2,373,240


$                 2,364,947





Liabilities and Stockholders' Equity




Current liabilities




    Accounts payable, accrued expenses and other

$            96,005


$                    126,886

   Accrued compensation

169,923


222,738

   Current portion of long-term debt

6,000


6,014

    Billings in excess of services provided

36,946


28,692

  Total current liabilities

308,874


384,330

Long-term debt, net of current portion

711,000


711,000

Deferred income taxes

149,130


137,697

Other liabilities

96,316


89,661

Total liabilities

1,265,320


1,322,688





Stockholders' equity




Preferred stock, $0.01 par value; shares authorized ―5,000; none outstanding

-


-

Common stock, $0.01 par value; shares authorized ―75,000; shares issued and
     outstanding ―40,936 (2014) and 40,526 (2013)

409


405

Additional paid-in capital

380,193


362,322

Retained earnings

765,985


730,621

Accumulated other comprehensive loss

(38,667)


(51,089)

Total stockholders' equity

1,107,920


1,042,259

Total liabilities and stockholders' equity

$       2,373,240


$                 2,364,947

 

 

 

SOURCE FTI Consulting, Inc.



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