SEC Filing | FTI Consulting, Inc.

FOR FURTHER INFORMATION:

FTI Consulting, Inc.

900 Bestgate Road

Annapolis, MD 21401

(410) 224-8770

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FORM 8-K

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): April 27, 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 April 27, 2005, FTI Consulting, Inc. (“FTI”) announced our financial results for the first quarter ended March 31, 2005, as well as other information, including operating results by business segment and other developments and updated outlook for the remainder of 2005. The full text of the Press Release (and Financial Tables) is 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) and EBITDA by business segment. Although EBITDA is not a measure of financial condition or performance determined in accordance with Generally Accepted Accounting Principles, FTI believes that it is a useful operating performance measure 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 EBITDA to net earnings is included in the accompanying Financial Tables to the Press Release furnished as Exhibit 99.1. 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. In addition, because the calculation of EBITDA in the maintenance covenants contained in FTI’s credit facility is based on accounting policies in use, consistently applied from the time the indebtedness was incurred, EBITDA as a supplemental financial measure is also indicative of FTI’s capacity to service debt and thereby provides additional useful information to investors regarding FTI’s financial condition and results of operations. EBITDA for purposes of those covenants is not calculated in the same manner as it is calculated in the Financial Tables accompanying the Press Release. The Press Release also updates our outlook for the remainder of 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 April 27, 2005, of FTI Consulting, Inc.

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: April 28, 2005	By:	/s/ THEODORE I. PINCUS
		Theodore I. Pincus
		Executive Vice President and
		Chief Financial Officer

EXHIBIT INDEX


Exhibit No.		Description
99.1		Press Release dated April 27, 2005, of FTI Consulting, Inc.

EXHIBIT 99.1

Exhibit 99.1


AT FTI CONSULTING:		AT THE ABERNATHY MACGREGOR GROUP:
Jack Dunn		Winnie Lerner/Jessica Liddell
President & CEO		(212) 371-5999
(410) 224-1483

FOR IMMEDIATE RELEASE

FTI CONSULTING, INC. ANNOUNCES FIRST-QUARTER 2005 RESULTS

Revenues and Net Income Increase Sequentially and Year-Over-Year

ANNAPOLIS, MD, April 27, 2005—FTI Consulting, Inc. (NYSE: FCN), the premier provider of corporate finance/restructuring, forensic/litigation/technology, and economic consulting, today reported its results for the first quarter of 2005.

First-Quarter 2005 Consolidated Results

For the quarter, revenues were $116.6 million, an increase of 5.8 percent compared with $110.2 million for the first quarter of 2004, and an increase of 11.2 percent compared with $104.9 million for the fourth quarter of 2004. Income from operations rose 10.5 percent to $23.1 million from $20.9 million in the comparable quarter last year, and 14.9 percent from $20.1 million before one-time charges in the fourth quarter of 2004. Earnings per share increased 7.4 percent to $0.29 on a diluted basis compared with $0.27 last year, and $0.27 before one-time charges in the fourth quarter of 2004.

Earnings from operations before interest, taxes, depreciation and amortization (EBITDA, see note below) increased 6.9 percent to $26.4 million, 22.6 percent of revenues, compared with EBITDA of $24.7 million, or 22.4 percent of revenues, in the first quarter of the prior year.

“We are pleased to report a strong start to the year with both sequential and year-over-year quarterly growth,” said Jack Dunn, FTI’s president and chief executive officer. “Our efforts to diversify our revenues more evenly across the business have begun to show returns, as we experienced double-digit growth in our Economic and Forensic businesses and strong revenue and profit contributions from our technology investments.

-more-

“With the integration of our fourth-quarter 2003 acquisitions completed, we are beginning to see market acceptance of the integrated platform we have put together over the past year. FTI’s competitive differentiators, our deep domain knowledge and industry expertise, are gaining traction and we believe our platform is well-positioned to capitalize on the positive trends in our markets. We expect that the active regulatory environment will continue to result in strong demand for our Forensic/Litigation services and expect default levels in the second half of the year will trigger increased demand for our corporate finance business.”

First-Quarter 2005 Business Segment Results

Forensic/Litigation/Technology

Revenues increased 12.7 percent to $49.7 million in the first quarter from $44.1 million last year, and increased 10.9 percent from $44.8 million in the fourth quarter of 2004, reflecting improved market penetration. Approximately $15.1 million in revenues were generated by our combined technology operations, with only a minimal contribution from Ringtail, which came aboard late in the quarter, as compared to $10.4 million in the prior year. The first-quarter 2005 EBITDA margin of approximately 30.0 percent increased from 29.0 percent in the prior year.

Corporate Finance/Restructuring

Revenues were $41.5 million for the first quarter, down 4.2 percent from $43.3 million recorded in the first quarter of 2004. However, adjusted for revenues lost following the departure of a group of professionals in the company’s restructuring practice in the first quarter of 2004, revenues improved modestly. Sequentially, revenue increased 5.9 percent from the $39.2 million in the fourth quarter of 2004. EBITDA margin for the business improved to 32.2 percent for the first quarter of 2005, increasing from 29.2 percent in the prior year quarter.

Economic Consulting

Revenues in the economic consulting segment were strong at $25.4 million in the first quarter of 2005, increasing 11.4 percent from $22.8 million in the first quarter of 2004, and 21.5 percent from $20.9 million in the fourth quarter of 2004. This segment’s EBITDA margin of 22.8 percent in the first quarter compares to 23.7 percent in the prior year.

Cash flow used in operations for the first quarter of 2005 was $15.5 million compared with $20.2 million used in the first quarter of 2004. The company anticipates normal seasonal improvements to its collections and cash flow from operations in the second quarter and for the remainder of the year.

-more-

Total long-term debt at March 31, 2005 was $122.5 million, including $22.5 million outstanding under its revolving credit agreement primarily related to the acquisition of Ringtail Solutions and share repurchases. On April 19, the company increased the term loan portion of its credit facility by $50 million, a portion of which was used to repay all amounts outstanding under the revolving credit, bringing net debt outstanding to $122.3 million.

During the first quarter, the company repurchased 392,800 shares of common stock at an average price of $19.62 per share, for an aggregate of approximately $7.7 million. At March 31, 2005, the remaining amount authorized under the company’s current share repurchase program was approximately $27.5 million.

Total headcount at March 31, 2005 was 1,068, and revenue-generating headcount was 785, including 23 Ringtail personnel. Utilization of revenue-generating personnel measurable by billable hours was approximately 81 percent for the first quarter, and average rate per hour for the quarter was approximately $341.

Outlook for Remainder of 2005

Revenues are now anticipated to range from $465.0 million to $485.0 million for the full year. The improved outlook for revenues is due largely to the acquisition of Ringtail Solutions Group at the end of February. Earnings per diluted share are still expected to range from $1.20 to $1.30, primarily as the acquisition of Ringtail is expected to be neutral to FTI’s earnings per share in 2005 due to rapid amortization of intangible assets. EBITDA is now expected to range from $111.0 million to $118.0 million and cash flow from operations to range between $80.0 million and $90.0 million. Based upon the results from the first quarter, the company believes its average bill rate and utilization guidance to be in line with the company’s previous guidance of approximately $359 and 75 percent (on a 2,032 hours base), respectively.

First-Quarter Conference Call

FTI will hold a conference call to discuss first-quarter results and management’s outlook for the remainder of 2005 at 11:00 a.m. Eastern time on Thursday, April 28, 2005. The call can be accessed live and will be available for replay over the Internet by logging onto the company’s website, www.fticonsulting.com, for 90 days.

About FTI Consulting

FTI is the premier provider of corporate finance/restructuring, forensic/litigation/technology consulting, and economic consulting. Strategically located in 24 of the major US cities, London and Melbourne, FTI’s total workforce of more than 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.

-more-

Note: Although EBITDA is not a measure of financial condition or performance determined in accordance with GAAP, FTI believes that it is a useful operating performance measure 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 EBITDA to net earnings is included in the accompanying tables to this 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. 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, EBITDA as a supplemental financial measure is also indicative of the company’s capacity to service debt and thereby provides additional useful information to investors regarding the company’s financial condition and results of operations. EBITDA for purposes of those covenants is not calculated in the same manner as it is calculated in the accompanying table.

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

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(in thousands, except per share data)


	Three Months Ended
	March 31, 2005			March 31, 2004
	(unaudited)
Revenues	$	116,614		$	110,240

Direct cost of revenues		64,345			61,898
Selling, general and administrative expenses		28,457			25,726
Amortization of other intangible assets		749			1,721

		93,551			89,345

Operating income		23,063			20,895

Other income (expense)

Interest expense, net		(1,555	)		(1,407	)

Income from continuing operations before income tax provision		21,508			19,488
Income tax provision		9,033			7,971

Net income	$	12,475		$	11,517

Earnings per common share - basic	$	0.29		$	0.27

Weighted average common shares outstanding - basic		42,319			42,097

Earnings per common share - diluted	$	0.29		$	0.27

Weighted average common shares outstanding - diluted		42,741			42,605


Supplemental Financial Data

	March 31, 2005			March 31, 2004
	(in thousands)
EBITDA Reconciliation:
EBITDA ⁽¹⁾	$	26,413		$	24,716
Depreciation and other amortization		2,601			2,100
Amortization of other intangible assets		749			1,721

Operating income		23,063			20,895
Interest expense, net		(1,555	)		(1,407	)
Income taxes		(9,033	)		(7,971	)

Net income	$	12,475		$	11,517

⁽¹⁾

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.

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(in thousands)


	March 31, 2005			March 31, 2004
Operating activities
Net income	$	12,475		$	11,517
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and other amortization		2,601			2,100
Amortization of other intangible assets		749			1,721
Provision for doubtful accounts		(580	)		1,475
Income tax benefit from stock option exercises		75			1,215
Non-cash interest and other		1,520			417
Changes in operating assets and liabilities
Accounts receivable		(25,277	)		(20,957	)
Prepaid expenses and other assets		(1,511	)		(2,884	)
Accounts payable and other liabilities		187			(584	)
Accrued compensation expense		(8,372	)		(7,836	)
Billings in excess of services provided		(129	)		(6,223	)
Income taxes payable		2,753			(156	)

Net cash provided by operating activities		(15,509	)		(20,195	)

Investing activities
Purchases of property and equipment		(4,025	)		(2,798	)
Payments for acquisition of businesses, including contingent payments and acquisition costs		(20,146	)		(860	)
Proceeds from note receivable due from owners of former subsidiary		5,525
Change in other assets		10			1,150

Net cash used in investing activities		(18,636	)		(2,508	)

Financing activities
Issuance of common stock under equity compensation plans		2,491			1,928
Purchase and retirement of common stock		(7,707	)		(1,161	)
Borrowings under revolving credit facility		25,000			23,000
Payments of revolving credit facility		(2,500	)		—
Payments of long-term debt		(5,000	)		(3,750	)
Payments of debt financing fees, capital lease obligations and other		(71	)		(186	)

Net cash (used in) provided by financing activities		12,213			19,831

Net increase in cash and cash equivalents		(21,932	)		(2,872	)
Cash and cash equivalents, beginning of period		25,704			5,765

Cash and cash equivalents, end of period	$	3,772		$	2,893

FTI CONSULTING, INC.

OPERATING RESULTS BY BUSINESS SEGMENT


	Revenues		EBITDA ⁽¹⁾			Margin		Utilization		Average Rate		Billable Headcount
	(in thousands)
First Quarter Ended March 31, 2004
Forensic and Litigation Consulting	$	44,113	$	12,621		28.6	%	76	%	$	284	371
Corporate Finance/Restructuring		43,287		12,637		29.2	%	83	%	$	438	222
Economic Consulting		22,840		5,412		23.7	%	83	%	$	376	144

EBITDA before corporate expenses	$	110,240		30,670		27.8	%	80	%	$	357	737

Corporate expenses				(5,954	)

EBITDA ⁽¹⁾			$	24,716		22.4	%

First Quarter Ended March 31, 2005
Forensic and Litigation Consulting	$	49,696	$	14,925		30.0	%	78	%	$	277	398
Corporate Finance/Restructuring		41,494		13,380		32.2	%	83	%	$	411	237
Economic Consulting		25,424		5,803		22.8	%	85	%	$	382	150

EBITDA before corporate expenses	$	116,614		34,108		29.2	%	81	%	$	341	785

Corporate expenses				(7,695	)

EBITDA ⁽¹⁾			$	26,413		22.6	%


Outlook Range for 2005

From ($1.20 per share)
Forensic and Litigation Consulting	$	205,000	$	62,000		30.2	%	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

	$	465,000		141,000		30.3	%	75	%	$	361	813

Corporate expenses				(30,000	)

EBITDA ⁽¹⁾			$	111,000		23.9	%


To ($1.30 per share)
Forensic and Litigation Consulting	$	212,000	$	67,000		31.6	%	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

	$	485,000		149,000		30.7	%	75	%	$	359	861

Corporate expenses				(31,000	)

EBITDA ⁽¹⁾			$	118,000		24.3	%

⁽¹⁾

FTI CONSULTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2005 AND DECEMBER 31, 2004

(in thousands, except per share amounts)


	March 31, 2005			December 31, 2004
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	3,772		$	25,704
Accounts receivable
Billed		97,365			89,536
Unbilled		47,412			30,663
Allowance for doubtful accounts and unbilled services		(14,865	)		(16,693	)

		129,912			103,506
Other current assets		17,868			21,359

Total current assets		151,552			150,569

Property and equipment, net		24,720			23,342
Goodwill, net		535,083			507,656
Other intangible assets, net		17,329			10,978
Other assets		14,444			15,980

Total assets	$	743,128		$	708,525

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, accrued expenses and other	$	17,347		$	20,771
Accrued compensation		31,276			39,383
Current portion of long-term debt		22,500			21,250
Billings in excess of services provided		9,522			8,924

Total current liabilities		80,645			90,328

Long-term debt, less current portion		100,000			83,750
Deferred income taxes, deferred rent and other liabilities		42,030			38,293

Stockholders’ equity
Preferred stock, $0.01 par value; 5,000 shares authorized, none outstanding		—			—
Common stock, $0.01 par value; 75,000 shares authorized; 43,128 shares issued and outstanding in 2004 and 42,487 shares issued and outstanding in 2003		431			425
Additional paid-in capital		345,102			333,735
Unearned compensation		(8,100	)		(8,551	)
Retained earnings		183,020			170,545
Accumulated other comprehensive loss		—			—

Total stockholders’ equity		520,453			496,154

Total liabilities and stockholders’ equity	$	743,128		$	708,525