SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 16, 2005
FTI CONSULTING, INC.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 001-14875 | 52-1261113 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
900 Bestgate Road, Suite 100, Annapolis, Maryland 21401
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (410) 224-8770
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. Results of Operations and Financial Condition
ITEM 7.01. Regulation FD Disclosure
On February 16, 2005, FTI Consulting, Inc. (“FTI”) announced our financial results for the fourth quarter and fiscal year ended December 31, 2004, as well as other information, including operating results by business segment and other developments and outlook. The full text of the Press Release (and Financial Tables) are set forth in Exhibit 99.1 hereto.
The Press Release contains some discussion regarding FTI’s earnings from operations before interest, taxes, depreciation and amortization (EBITDA) before one time charges (Adjusted EBITDA) and Adjusted EBITDA and EBITDA by business segment. Although Adjusted EBITDA and EBITDA are not measures of financial condition or performance determined in accordance with Generally Accepted Accounting Principles, FTI believes that they are useful operating performance measures for evaluating our results of operations 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. FTI uses EBITDA to evaluate and compare the operating performances of its segments and it is one of the primary measures used to determine employee bonuses. FTI also uses EBITDA to value businesses it acquires or anticipates acquiring. A reconciliation of Adjusted EBITDA to net earnings and EBITDA is included in the accompanying tables to the Press Release furnished as Exhibit 99.1. Adjusted EBITDA and EBITDA are 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. In addition, because the calculation of EBITDA in the maintenance covenants contained in FTI’s credit facilities is based on accounting policies in use, consistently applied from the time the indebtedness was incurred, Adjusted EBITDA and EBITDA as supplemental financial measures are also indicative of FTI’s capacity to service debt and thereby provide additional useful information to investors regarding FTI’s financial condition and results of operations. Adjusted EBITDA and EBITDA for purposes of those covenants are not calculated in the same manner as they are calculated in the table accompanying the Press Release. The Press Release also provides FTI’s outlook and outlook by business segment for 2005.
The information included herein, including Exhibit 99.1 furnished herewith, shall be deemed not to be “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing, except as expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits
| (c) | Exhibits. |
| 99.1 | Press Release dated February 16, 2005, of FTI Consulting, Inc. |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, FTI has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FTI CONSULTING, INC. | ||||||
| Dated: February 17, 2005 |
By: | /s/ THEODORE I. PINCUS | ||||
| Theodore I. Pincus | ||||||
| Executive Vice President and | ||||||
| Chief Financial Officer | ||||||
2
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated February 16, 2005, of FTI Consulting, Inc. |
Exhibit 99.1
 | ||||
 |
||||
| FOR FURTHER INFORMATION: | RE: | FTI Consulting, Inc. | ||
| 900 Bestgate Road | ||||
| Annapolis, MD 21401 | ||||
| (410) 224-8770 | ||||
| AT FTI CONSULTING: | AT FINANCIAL RELATIONS BOARD: | |||||
| Jack Dunn |
Marilyn Windsor | Lisa Fortuna | Tim Grace | |||
| President & CEO |
General Inquiries | Analyst Inquiries | Media Inquiries | |||
| (410) 224-1483 |
(702) 515-1260 | (312) 640-6779 | (312) 640-6667 | |||
FOR IMMEDIATE RELEASE
WEDNESDAY, FEBRUARY 16, 2005
FTI CONSULTING, INC. ANNOUNCES FOURTH-QUARTER, FULL-YEAR RESULTS
Fourth-Quarter EPS $0.27, Full-Year EPS $1.10 before One-Time Charges of $0.09 per Share;
Provides Additional 2005 Outlook Detail
ANNAPOLIS, MD, February 16, 2005—FTI Consulting, Inc. (NYSE: FCN), the premier provider of corporate finance/restructuring, forensic and litigation consulting, and economic consulting, today reported its results for the fourth quarter and year ended December 31, 2004. The company also provided its outlook for 2005. The financial results and 2005 outlook in this release are consistent with the preliminary unaudited results and outlook previously announced by the company on February 1, 2005.
Fourth-Quarter Results
For the quarter, revenues were $104.9 million, an increase of 9.0 percent compared with $96.2 million for the fourth quarter of 2003. Income from operations before one-time charges declined 22.4 percent to $20.1 million from $25.9 million before one-time charges in the comparable quarter last year. Income from operations for the fourth quarter of 2004 was reduced by one-time charges totaling $6.2 million described below, while income from operations for the 2003 period was reduced by one-time charges of $3.1 million.
Earnings per share before one-time charges in the fourth quarter of 2004 declined 22.9 percent to $0.27 on a diluted basis compared with $0.34 last year before one-time charges. Earnings per share for the fourth quarter of 2004 were reduced by approximately $0.01 for a change in the company’s income tax rate for calendar 2004 to 42.1 percent from the 41.6 percent estimated rate used for the first nine months of the year, and were also reduced by one-time charges totaling approximately $0.09 per share as follows: (a) a $0.06 per share charge for moving the company’s New York office and closing one of its Saddle Brook, N.J., offices; (b) a $0.02 per share non-cash charge for amortization expense on intangibles related to the fourth-quarter 2003 acquisitions of DAS and Lexecon based on the independent purchase price allocations and assigned useful lives that differed from the preliminary
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estimates; and (c) a $0.01 per share charge for a discount of $475,000 related to the prepayment of a $6.0 million note receivable, due in 2010, from the purchasers of the company’s former SEA subsidiary. Earnings per share for the fourth quarter of 2003 were reduced by approximately $0.04 per diluted share for “special termination expenses” in FTI’s corporate finance/restructuring practice. Earnings per diluted share on a Generally Accepted Accounting Principles (GAAP) basis after the one-time charges were $0.18 for the fourth quarter of 2004 and $0.30 for the fourth quarter of 2003. In addition, earnings for the fourth quarter of 2004 benefited by approximately $0.02 per share related to the settlement of various lawsuits, net of legal costs.
Earnings from operations before interest, taxes, depreciation and amortization (EBITDA) before one-time charges (Adjusted EBITDA) were $25.3 million compared with $25.9 million in the prior year, a decrease of 2.3 percent. Although Adjusted EBITDA and EBITDA are not measures of financial condition or performance determined in accordance with GAAP, FTI believes that they are useful operating performance measures for evaluating its results of operations from period to period and as compared to its 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 its industry. FTI uses EBITDA to evaluate and compare the operating performance of its segments and it is one of the primary measures used to determine employee bonuses. FTI also uses EBITDA to value businesses it acquires or anticipates acquiring. A reconciliation of Adjusted EBITDA before one-time charges to net earnings and EBITDA is included in the accompanying tables to this press release. Adjusted EBITDA and EBITDA are 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. In addition, because the calculation of EBITDA in the maintenance covenants contained in FTI’s credit facilities is based on accounting policies in use, consistently applied from the time the indebtedness was incurred, Adjusted EBITDA and EBITDA as supplemental financial measures are also indicative of the company’s capacity to service debt and thereby provide additional useful information to investors regarding the company’s financial condition and results of operations. Adjusted EBITDA and EBITDA for purposes of those covenants are not calculated in the same manner as they are calculated in the accompanying table.
Cash flow provided by operations was $28.2 million compared with $14.7 million in the fourth quarter of 2003. At December 31, 2004, FTI had cash and cash equivalents of approximately $25.7 million. Total long-term debt at December 31, 2004 was $105.0 million. During the fourth quarter, the company repurchased 78,400 shares of common stock at an average price of $18.89 per share, for an aggregate of approximately $1.5 million. At December 31, 2004, the remaining amount authorized under the company’s current share repurchase program was approximately $35.2 million.
Total headcount at December 31, 2004 was 1,035, and billable headcount was 745. Utilization of billable personnel was approximately 74 percent for the fourth quarter, and average rate per hour for the quarter was approximately $359.
Fourth-Quarter Business Segment Results
FTI’s three major business practices—corporate finance/restructuring, forensic and litigation consulting, and economic consulting—began reporting as segments beginning with the first quarter of 2004 in accordance with GAAP under Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information. In 2003, FTI’s business practices were not
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operated as segments, and accordingly the company did not report results of operations by segment. The accompanying table reports revenues and Adjusted EBITDA before one-time charges by segment for the fourth quarter and full year 2004, as well as associated segment business metrics, and for the fourth quarter and full year 2003 reports only revenues and associated business metrics by major practice area, which are estimates derived from classifying client engagements by the principal nature of the service.
Corporate finance/restructuring revenues were $39.2 million for the fourth quarter. Although 33.1 percent less than the $58.6 million recorded in the 2003 fourth quarter, revenues were essentially flat when allowance is made for the revenues lost after a group of professionals in the company’s restructuring practice departed in the first quarter of 2004. Its Adjusted EBITDA margin before one-time charges was 30.3 percent for the fourth quarter of 2004, and decreased sequentially from 33.6 percent in the prior quarter, primarily as a result of the continued significant investments in its transaction advisory, interim management, and merger and acquisition practices.
Forensic and litigation consulting revenues increased 53.4 percent to $44.8 million in the fourth quarter from $29.2 million last year as a result of organic growth and the acquisitions of the former dispute advisory business of KPMG (DAS) and Ten Eyck Associates in the fourth quarter of 2003, but reflected a smaller than expected increase from its third-quarter 2004 revenues of $44.0 million, primarily due to a greater than anticipated seasonal slowdown in the fourth quarter. This segment’s fourth-quarter Adjusted EBITDA margin before one-time charges of approximately 26.4 percent reflected a small sequential quarterly decrease from 26.6 percent for the same reason.
Economic consulting revenues were $20.9 million in the fourth quarter of 2004, increasing 148.8 percent from $8.4 million in the fourth quarter of 2003 as a result of the acquisition of Lexecon late in the fourth quarter of 2003 and the organic growth of FTI’s legacy network industries practice, but reflected a smaller than expected increase from its third-quarter revenues of $20.0 million primarily due to a greater than anticipated seasonal slowdown in portions of the business in the fourth quarter. This segment’s Adjusted EBITDA margin before one-time charges of 25.0 percent in the fourth quarter reflected a significant sequential quarterly increase from 16.8 percent, due primarily to a recovery from its temporary slowdown in the third quarter of its legacy telecommunications and other regulatory consulting practices that have higher margins than the portions of the business affected by the fourth quarter seasonal slowdown.
Year 2004 Results
For the year ended December 31, 2004, revenues were $427.0 million, an increase of 13.7 percent compared with $375.7 million from continuing operations for 2003. Income from operations before one-time charges declined 25.6 percent to $84.7 million from $113.8 million from continuing operations in the prior year, and earnings per diluted share before one-time charges declined 30.8 percent to $1.10 on a diluted basis compared with $1.59 last year from continuing operations. Earnings per share were reduced by the previously mentioned one-time charges totaling approximately $0.09 per share for 2004 and $0.04 per share for 2003. Earnings per share on a GAAP basis were $1.01 for 2004 and $1.54 from continuing operations for 2003. In addition, earnings for 2004 benefited by approximately $0.02 per share related to the settlement of various lawsuits, net of legal costs.
Discontinued operations in 2003 include the results of the company’s former SEA practice group, which was sold on August 31, 2003. Income from operations of discontinued operations was $1.6 million, or
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$0.04 per share, for the year ended December 31, 2003. Net loss from sale of discontinued operations for the year ended December 31, 2003 was $7.0 million, or $0.17 per share. Including the discontinued SEA practice group, earnings per diluted share for 2003 on a GAAP basis were $1.41.
Cash flow provided by operations for the year ended December 31, 2004, was $58.4 million compared with $95.6 million in the prior year. As previously reported, cash flow from operations was reduced by several one-time events in the 2004 first quarter, including approximately $7.0 million to provide working capital for one of the company’s late-2003 acquisitions, and approximately $10.0 million of retainers returned to clients in connection with the first-quarter personnel departures. Adjusted EBITDA from operations before one-time charges was $100.8 million compared with $123.5 million in the prior year, a decrease of 18.4 percent.
Utilization of billable personnel was approximately 77 percent for the full year 2004. Average rate per hour for the year was $354.
For the year, corporate finance/restructuring revenues were $162.5 million, 36.3 percent less than the $255.3 million recorded in 2003, as a result of the reduced volume of new business in the restructuring market, as well as the departure of a number of professionals in the company’s restructuring practice in the first quarter of 2004. Its Adjusted EBITDA margin before one-time charges was 31.2 percent and reflected significant investments in its transaction advisory, interim management and merger and acquisition practices.
Forensic and litigation consulting revenues increased 73.3 percent to $178.7 million from $103.1 million last year as a result of organic growth and the acquisitions of the former dispute advisory business of KPMG (DAS) and Ten Eyck Associates in the fourth quarter of 2003. Its Adjusted EBITDA margin before one-time charges was 28.3 percent and reflected continued investments in key new personnel and the development of new and/or expanded offerings in homeland security, electronic evidence, and data repository consulting.
Economic consulting revenues were $85.9 million in 2004, increasing 396.5 percent from $17.3 million in 2003 as a result of the acquisition of Lexecon late in the fourth quarter of 2003 in addition to organic growth. This segment’s Adjusted EBITDA margin of 22.5 percent before one-time charges was approximately as anticipated.
Outlook for 2005
Revenues are anticipated to range from $460.0 million to $480.0 million, EBITDA to range from $106.0 million to $113.0 million, and earnings per diluted share to range from $1.20 to $1.30. The company expects cash flow from operations to range between $75.0 million and $85.0 million. Average bill rates and utilization are anticipated to be approximately $359 and 75 percent (on a 2,032 hours base), respectively. Average billing rates in 2005 are expected to remain similar to 2004 as rate increases will be offset by changes in staff mix. Utilization in 2005 is predicted to be somewhat lower than 2004, reflecting the company’s continued investment in people and practices. EBITDA margins are expected to improve from 2004 in each of the company’s business segments, and decrease slightly overall, reflecting greater corporate activity including a focus on marketing activities.
Commenting on the 2005 outlook, Jack Dunn, FTI’s president and chief executive officer, said, “As
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discussed in our prior press release, we expect the market drivers for FTI’s services in 2005 to include increasing default levels in the latter part of 2005 that will strengthen the market for our corporate finance/restructuring business toward the end of the year; the continued effects of Sarbanes-Oxley and federal, state and local emphasis on corporate governance that will combine to increase demand for our forensic and litigation consulting practice; and increased economic activity, generally, and merger and acquisition activity, specifically, that will benefit our economic consulting business. Given these dynamics, the investments we’ve made to build this platform and our market position, we expect to continue to add senior-level personnel and associated staff in 2005 and to aggressively increase our branding and marketing activities to capitalize on this position.”
The accompanying table also indicates business metrics by segment for 2005.
Fourth-Quarter and Year-End Conference Call
FTI will hold a conference call to discuss fourth-quarter and year-end results and management’s outlook for 2005 at 11:00 a.m. Eastern time on Thursday, February 17, 2005. The call can be accessed live and will be available for replay over the Internet by logging onto www.vcall.com as well as on the company’s website, www.fticonsulting.com, for 90 days.
About FTI Consulting
FTI is the premier provider of corporate finance/restructuring, forensic and litigation consulting, and economic consulting. Strategically located in 24 of the major US cities and London, FTI’s total workforce of approximately 1,000 employees includes numerous PhDs, MBA’s, CPAs, CIRAs and CFEs, who are committed to delivering the highest level of service to clients. These clients include the world’s largest corporations, financial institutions and law firms in matters involving financial and operational improvement and major litigation.
This press release includes “forward-looking” statements that involve uncertainties and risks. There can be no assurance that actual results will not differ from the company’s expectations. The company has experienced fluctuating revenues, operating income and cash flow in some prior periods and expects this may occur from time to time in the future. As a result of these possible fluctuations, the company’s actual results may differ from our projections. Further, preliminary results are subject to normal year-end adjustments. Other factors that could cause such differences include pace and timing of additional 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 in the company’s 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
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FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004 AND 2003
(in thousands, except per share data)
| Year Ended |
||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| Revenues |
$ | 427,005 | $ | 375,695 | ||||
| Direct cost of revenues |
234,970 | 176,429 | ||||||
| Selling, general and administrative expenses |
102,060 | 78,701 | ||||||
| Loss on abandoned facilities |
4,670 | — | ||||||
| Special termination charges |
— | 3,060 | ||||||
| Amortization related to revaluation of other intangible assets acquired in 2003 |
1,559 | — | ||||||
| Amortization of other intangible assets |
5,277 | 3,680 | ||||||
| 348,536 | 261,870 | |||||||
| Operating income |
78,469 | 113,825 | ||||||
| Other income (expense) |
||||||||
| Interest expense, net |
(5,611 | ) | (4,196 | ) | ||||
| Discount on note receivable |
(475 | ) | — | |||||
| Litigation settlements |
1,672 | — | ||||||
| Income from continuing operations before income tax provision |
74,055 | 109,629 | ||||||
| Income tax provision |
31,177 | 44,838 | ||||||
| Income from continuing operations |
42,878 | 64,791 | ||||||
| Income from operations of discontinued operations, net of income tax provision(1) |
— | 1,649 | ||||||
| Loss from sale of discontinued operations, net of income tax provision |
— | (6,971 | ) | |||||
| Loss from discontinued operations |
— | (5,322 | ) | |||||
| Net income |
$ | 42,878 | $ | 59,469 | ||||
| Earnings per common share - basic |
||||||||
| Income from continuing operations |
$ | 1.02 | $ | 1.58 | ||||
| Loss from discontinued operations |
— | (0.13 | ) | |||||
| Net income |
$ | 1.02 | $ | 1.45 | ||||
| Weighted average common shares outstanding - basic |
42,099 | 40,925 | ||||||
| Earnings per common share - diluted |
||||||||
| Income from continuing operations |
$ | 1.01 | $ | 1.54 | ||||
| Loss from discontinued operations |
— | $ | (0.13 | ) | ||||
| Net income |
$ | 1.01 | $ | 1.41 | ||||
| Weighted average common shares outstanding - diluted |
42,512 | 42,046 | ||||||
(1) Revenues included in discontinued operations were $24,011 for the year ended December 31, 2003. |
|
|||||||
| Supplemental Financial Data | ||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| (in thousands) | ||||||||
| EBITDA Reconciliation: |
||||||||
| Adjusted EBITDA from continuing operations(3) |
$ | 100,760 | $ | 123,537 | ||||
| Loss from subleases |
4,670 | — | ||||||
| Litigation settlements |
1,672 | — | ||||||
| EBITDA from continuing operations(2) |
94,418 | 123,537 | ||||||
| Depreciation and other amortization |
9,113 | 6,032 | ||||||
| Amortization of other intangible assets |
6,836 | 3,680 | ||||||
| Operating income |
78,469 | 113,825 | ||||||
| Litigation settlements |
1,672 | — | ||||||
| Interest expense, net |
(5,611 | ) | (4,196 | ) | ||||
| Discount on note receivable |
(475 | ) | — | |||||
| Income taxes |
(31,177 | ) | (44,838 | ) | ||||
| Income from continuing operations |
42,878 | 64,791 | ||||||
| Loss from discontinued operations |
— | (5,322 | ) | |||||
| Net income |
$ | 42,878 | $ | 59,469 | ||||
| (2) | We define EBITDA (earnings before net interest, taxes, depreciation and amortization) as operating income before depreciation and amortization which may not be similar to EBITDA measures of other companies. EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statement of operations. We believe that EBITDA is useful to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund capital expenditures and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. EBITDA is a common alternative performance measure used by investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies with our industry. |
| (3) | Adjusted EBITDA represents EBITDA excluding certain gains, losses and other charges that do not related to the ongoing operations of our business. Adjusted EBITDA as defined above may not be similar to adjusted EBITDA measures of other companies. Adjusted EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statements of income. We believe that adjusted EBITDA is useful to investors because it allows investors to evaluate our operating results and related financial performance for different periods on a more comparable basis by excluding items that do not relate to the ongoing operations of our business. |
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FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(in thousands, except per share data)
| Three Months Ended |
||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| Revenues |
$ | 104,887 | $ | 96,225 | ||||
| Direct cost of revenues |
57,976 | 49,377 | ||||||
| Selling, general and administrative expenses |
25,712 | 19,636 | ||||||
| Loss on abandoned facilities |
4,670 | — | ||||||
| Special termination charges |
— | 3,060 | ||||||
| Amortization related to revaluation of other intangible assets acquired in 2003 |
1,559 | — | ||||||
| Amortization of other intangible assets |
1,057 | 1,355 | ||||||
| 90,974 | 73,428 | |||||||
| Operating income |
13,913 | 22,797 | ||||||
| Other income (expense) |
||||||||
| Interest expense, net |
(1,433 | ) | (780 | ) | ||||
| Prepayment discount on note receivable |
(475 | ) | — | |||||
| Litigation settlements |
1,672 | — | ||||||
| Income from continuing operations before income tax provision |
13,677 | 22,017 | ||||||
| Income tax provision |
6,060 | 9,353 | ||||||
| Net income |
$ | 7,617 | $ | 12,664 | ||||
| Earnings per common share - basic |
$ | 0.18 | $ | 0.30 | ||||
| Weighted average common shares outstanding - basic |
41,994 | 41,893 | ||||||
| Earnings per common share - diluted |
$ | 0.18 | $ | 0.30 | ||||
| Weighted average common shares outstanding - diluted |
42,450 | 42,627 | ||||||
| Supplemental Financial Data | ||||||||
| December 31, 2004 |
December 31, 2003 |
|||||||
| (in thousands) | ||||||||
| EBITDA Reconciliation: |
||||||||
| Adjusted EBITDA from continuing operations(3) |
$ | 25,337 | $ | 25,897 | ||||
| Loss from subleases |
4,670 | — | ||||||
| Litigation settlements |
1,672 | — | ||||||
| EBITDA from continuing operations(2) |
18,995 | 25,897 | ||||||
| Depreciation and other amortization |
2,466 | 1,745 | ||||||
| Amortization of other intangible assets |
2,616 | 1,355 | ||||||
| Operating income |
13,913 | 22,797 | ||||||
| Litigation settlements |
1,672 | — | ||||||
| Interest expense, net |
(1,433 | ) | (780 | ) | ||||
| Discount on note receivable |
(475 | ) | — | |||||
| Income taxes |
(6,060 | ) | (9,353 | ) | ||||
| Net income |
$ | 7,617 | $ | 12,664 | ||||
| (2) | We define EBITDA (earnings before net interest, taxes, depreciation and amortization) as operating income before depreciation and amortization which may not be similar to EBITDA measures of other companies. EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statement of operations. We believe that EBITDA is useful to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund capital expenditures and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. EBITDA is a common alternative performance measure used by investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies with our industry. |
| (3) | Adjusted EBITDA represents EBITDA excluding certain gains, losses and other charges that do not related to the ongoing operations of our business. Adjusted EBITDA as defined above may not be similar to adjusted EBITDA measures of other companies. Adjusted EBITDA is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our statements of income. We believe that adjusted EBITDA is useful to investors because it allows investors to evaluate our operating results and related financial performance for different periods on a more comparable basis by excluding items that do not relate to the ongoing operations of our business. |
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FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2004 AND 2003
(in thousands)
| December 31, 2004 |
December 31, 2003 |
|||||||
| Operating activities |
||||||||
| Net income |
$ | 42,878 | $ | 59,469 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
| Depreciation and other amortization |
9,114 | 7,003 | ||||||
| Amortization of other intangible assets |
6,836 | 3,680 | ||||||
| Provision for doubtful accounts |
7,062 | 5,109 | ||||||
| Income tax benefit from stock option exercises |
2,181 | 11,599 | ||||||
| Loss from sale of discontinued operations |
— | 6,971 | ||||||
| Loss on abandoned facilities |
4,670 | — | ||||||
| Non-cash interest and other |
(2,177 | ) | 2,814 | |||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
(22,411 | ) | 179 | |||||
| Prepaid expenses and other current assets |
(10,328 | ) | (1,401 | ) | ||||
| Accounts payable and other liabilities |
13,824 | 6,109 | ||||||
| Accrued compensation expense |
6,568 | (1,841 | ) | |||||
| Billings in excess of services provided |
(7,412 | ) | (3,825 | ) | ||||
| Income taxes payable |
7,638 | 4,311 | ||||||
| Net cash provided by operating activities |
58,443 | 100,177 | ||||||
| Investing activities |
||||||||
| Purchases of property and equipment |
(11,939 | ) | (10,612 | ) | ||||
| Cash received from sale of discontinued operations |
— | 12,150 | ||||||
| Payments for acquisition of businesses, including contingent payments and acquisition costs |
(1,253 | ) | (234,117 | ) | ||||
| Change in other assets |
(501 | ) | 838 | |||||
| Net cash used in investing activities |
(13,693 | ) | (231,741 | ) | ||||
| Financing activities |
||||||||
| Issuance of common stock, net of offering costs |
— | 99,223 | ||||||
| Issuance of common stock under equity compensation plans |
2,870 | 12,897 | ||||||
| Purchase and retirement of common stock |
(10,810 | ) | (4,032 | ) | ||||
| Borrowings under revolving credit facility |
47,500 | 109,121 | ||||||
| Payments of revolving credit facility |
(47,500 | ) | — | |||||
| Payments of long-term debt |
(16,250 | ) | (85,704 | ) | ||||
| Payments of debt financing fees, capital lease obligations and other |
(621 | ) | (4,082 | ) | ||||
| Net cash (used in) provided by financing activities |
(24,811 | ) | 127,423 | |||||
| Net increase in cash and cash equivalents |
19,939 | (4,141 | ) | |||||
| Cash and cash equivalents, beginning of period |
5,765 | 9,906 | ||||||
| Cash and cash equivalents, end of period |
$ | 25,704 | $ | 5,765 | ||||
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FTI Consulting, Inc.
Add 8
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2004 AND DECEMBER 31, 2003
(in thousands, except per share amounts)
| December 31, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 25,704 | $ | 5,765 | ||||
| Accounts receivable |
||||||||
| Billed |
89,536 | 68,906 | ||||||
| Unbilled |
30,663 | 34,672 | ||||||
| Allowance for doubtful accounts and unbilled services |
(16,693 | ) | (20,045 | ) | ||||
| 103,506 | 83,533 | |||||||
| Other current assets |
21,359 | 9,905 | ||||||
| Total current assets |
150,569 | 99,203 | ||||||
| Property and equipment, net |
23,342 | 21,921 | ||||||
| Goodwill, net |
507,656 | 514,544 | ||||||
| Other intangible assets, net |
10,978 | 10,137 | ||||||
| Other assets |
15,980 | 14,760 | ||||||
| Total assets |
$ | 708,525 | $ | 660,565 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities |
||||||||
| Accounts payable, accrued expenses and other |
$ | 20,771 | $ | 18,869 | ||||
| Accrued compensation |
39,383 | 32,815 | ||||||
| Current portion of long-term debt |
21,250 | 16,250 | ||||||
| Billings in excess of services provided |
8,924 | 16,336 | ||||||
| Total current liabilities |
90,328 | 84,270 | ||||||
| Long-term debt, less current portion |
83,750 | 105,000 | ||||||
| Deferred income taxes, deferred rent and other liabilities |
38,293 | 16,139 | ||||||
| Stockholders’ equity |
||||||||
| Preferred stock, $0.01 par value; 5,000 shares authorized, none outstanding |
— | — | ||||||
| Common stock, $0.01 par value; 75,000 shares authorized; 42,487 shares issued and outstanding in 2004 and 42,253 shares issued and outstanding in 2003 |
425 | 423 | ||||||
| Additional paid-in capital |
333,735 | 332,823 | ||||||
| Unearned compensation |
(8,551 | ) | (5,733 | ) | ||||
| Retained earnings |
170,545 | 127,667 | ||||||
| Accumulated other comprehensive loss |
— | (24 | ) | |||||
| Total stockholders’ equity |
496,154 | 455,156 | ||||||
| Total liabilities and stockholders’ equity |
$ | 708,525 | $ | 660,565 | ||||
MORE
FTI Consulting, Inc.
Add 9
FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
| Revenues |
Adjusted EBITDA |
Margin |
Utilization |
Average Rate |
Billable Headcount | |||||||||||||
| (in thousands) | ||||||||||||||||||
| Three Months Ended December 31, 2003 |
estimated | |||||||||||||||||
| Forensic and Litigation Consulting |
$ | 29,239 | n/a | n/a | 59 | % | $ | 245 | 343 | |||||||||
| Corporate Finance/Restructuring |
58,593 | n/a | n/a | 90 | % | $ | 424 | 305 | ||||||||||
| Economic Consulting |
8,393 | n/a | n/a | 80 | % | $ | 328 | 179 | ||||||||||
| EBITDA before corporate expenses |
$ | 96,225 | $ | 30,239 | 31.4 | % | 74 | % | $ | 375 | 827 | |||||||
| Corporate expenses |
(4,342 | ) | ||||||||||||||||
| $ | 25,897 | 26.9 | % | |||||||||||||||
| Year Ended December 31, 2003 |
estimated | |||||||||||||||||
| Forensic and Litigation Consulting |
$ | 103,101 | n/a | n/a | 70 | % | $ | 273 | 343 | |||||||||
| Corporate Finance/Restructuring |
255,336 | n/a | n/a | 91 | % | $ | 408 | 305 | ||||||||||
| Economic Consulting |
17,258 | n/a | n/a | 82 | % | $ | 291 | 179 | ||||||||||
| EBITDA before corporate expenses |
$ | 375,695 | $ | 142,257 | 37.9 | % | 83 | % | $ | 363 | 827 | |||||||
| Corporate expenses |
(18,720 | ) | ||||||||||||||||
| $ | 123,537 | 32.9 | % | |||||||||||||||
| n/a - data not available |
||||||||||||||||||
| Three Months Ended December 31, 2004 |
||||||||||||||||||
| Forensic and Litigation Consulting |
$ | 44,760 | $ | 11,819 | 26.4 | % | 72 | % | $ | 282 | 357 | |||||||
| Corporate Finance/Restructuring |
39,223 | 11,898 | 30.3 | % | 77 | % | $ | 463 | 243 | |||||||||
| Economic Consulting |
20,904 | 5,221 | 25.0 | % | 75 | % | $ | 370 | 145 | |||||||||
| EBITDA before corporate expenses |
$ | 104,887 | 28,938 | 27.6 | % | 74 | % | $ | 359 | 745 | ||||||||
| Corporate expenses |
(3,601 | ) | ||||||||||||||||
| Adjusted EBITDA |
$ | 25,337 | 24.2 | % | ||||||||||||||
| Year Ended December 31, 2004 |
||||||||||||||||||
| Forensic and Litigation Consulting |
$ | 178,650 | $ | 50,556 | 28.3 | % | 74 | % | $ | 284 | 357 | |||||||
| Corporate Finance/Restructuring |
162,495 | 50,714 | 31.2 | % | 82 | % | $ | 441 | 243 | |||||||||
| Economic Consulting |
85,860 | 19,333 | 22.5 | % | 78 | % | $ | 374 | 145 | |||||||||
| EBITDA before corporate expenses |
$ | 427,005 | 120,603 | 28.2 | % | 77 | % | $ | 354 | 745 | ||||||||
| Corporate expenses |
(19,843 | ) | ||||||||||||||||
| Adjusted EBITDA |
$ | 100,760 | 23.6 | % | ||||||||||||||
| Outlook Range for 2005 |
||||||||||||||||||
| From ($1.20 per share) |
||||||||||||||||||
| Forensic and Litigation Consulting |
$ | 200,000 | $ | 57,000 | 28.5 | % | 73 | % | $ | 299 | 383 | |||||||
| Corporate Finance/Restructuring |
170,000 | 58,000 | 34.1 | % | 79 | % | $ | 443 | 275 | |||||||||
| Economic Consulting |
90,000 | 21,000 | 23.3 | % | 71 | % | $ | 373 | 155 | |||||||||
| $ | 460,000 | 136,000 | 29.6 | % | 75 | % | $ | 361 | 813 | |||||||||
| Corporate expenses |
(30,000 | ) | ||||||||||||||||
| $ | 106,000 | 23.0 | % | |||||||||||||||
| To ($1.30 per share) |
||||||||||||||||||
| Forensic and Litigation Consulting |
$ | 207,000 | $ | 62,000 | 30.0 | % | 73 | % | $ | 299 | 400 | |||||||
| Corporate Finance/Restructuring |
177,000 | 60,000 | 33.9 | % | 80 | % | $ | 441 | 296 | |||||||||
| Economic Consulting |
96,000 | 22,000 | 22.9 | % | 71 | % | $ | 373 | 165 | |||||||||
| $ | 480,000 | 144,000 | 30.0 | % | 75 | % | $ | 359 | 861 | |||||||||
| Corporate expenses |
(31,000 | ) | ||||||||||||||||
| $ | 113,000 | 23.5 | % | |||||||||||||||
###