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): May 9, 2013
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.) |
777 South Flagler Drive, Suite 1500, West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (561) 515-1900
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 240.14a-12) |
| ¨ | 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
On May 9, 2013, FTI Consulting, Inc. (“FTI Consulting”) issued its press release (the “Press Release”) reporting financial results for the three-month period ended March 31, 2013. The full text of the Press Release (including the accompanying financial tables) is set forth in Exhibit 99.1 and is incorporated by reference herein.
ITEM 7.01. Regulation FD Disclosure
FTI Consulting defines “Adjusted EBITDA” as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets, goodwill impairment charge and special charges, “Adjusted Segment EBITDA” as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, goodwill impairment charge and special charges, and “Adjusted Net Income” and “Adjusted EPS” as net income and earnings per diluted share, respectively, excluding the net impact of any goodwill impairment charge, any special charges and any loss on early extinguishment of debt that were incurred in that period. Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EPS and Adjusted Net Income are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Although Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EPS and Adjusted Net Income are not measures of financial condition or performance determined in accordance with generally accepted accounting principles (“GAAP”), FTI Consulting believes that they can be useful operating performance measures for evaluating FTI Consulting’s results of operations as compared from period-to-period and as compared to its competitors. These non-GAAP measures should be considered in addition to, but not as a substitute for or superior to, the information contained in FTI Consulting’s Condensed Consolidated Statements of Comprehensive Income. 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 FTI Consulting’s industry. FTI Consulting uses Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of its segments. Reconciliations of GAAP to Non-GAAP financial measures are included in the accompanying financial tables to the Press Release.
The information included herein, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange 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
(d) Exhibits
| 99.1 | Press Release dated May 9, 2013, of FTI Consulting, Inc. |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, FTI Consulting has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FTI CONSULTING, INC. | ||||||
| Dated: May 10, 2013 | By: | /s/ ERIC B. MILLER | ||||
| Eric B. Miller Executive Vice President, General Counsel and Chief Risk Officer | ||||||
2
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated May 9, 2013, of FTI Consulting, Inc. | |
1
Exhibit 99.1
FTI Consulting, Inc.
777 South Flagler Drive, Suite 1500
West Palm Beach, FL 33401
+1.561.515.6078
Investor & Media Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
FTI Consulting Reports First Quarter 2013 Results
• Record First Quarter Revenues of $407.2 Million
• First Quarter Adjusted EPS of $0.59, up 37.2 Percent from Prior Year Period
West Palm Beach, Fla. – May 9, 2013 – FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value (the “Company”), today released its financial results for the quarter ended March 31, 2013.
For the quarter, revenues increased 3.0 percent to a first quarter record of $407.2 million. Fully diluted earnings per share (“EPS”) were $0.58 for the quarter. Adjusted earnings per share (“Adjusted EPS”) increased 37.2 percent to $0.59 for the quarter compared to $0.43 for the prior year quarter. Adjusted EBITDA was $59.3 million in the quarter compared to $54.0 million for the prior year quarter, representing an increase of 9.9 percent. 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, Jack Dunn, FTI Consulting President and Chief Executive Officer said, “Once again our results for the first quarter were led by the excellent performance of our market-leading Economic Consulting group. We also enjoyed the contributions from two small Corporate Finance/Restructuring acquisitions in Asia Pacific and in telecommunications, media and technology respectively, and began to see results from our efforts to cut costs in SG&A.”
Cash and Capital Allocation
Cash and cash equivalents were $100.7 million at March 31, 2013. During the quarter, the Company used $28.8 million to repurchase and retire 826,800 shares of the Company’s common stock. In addition, the Company used $14.7 million in payments for acquisitions.
First Quarter Segment Results
The following current and prior year segment-level financial information, commentary and results reflect the combination as of January 1, 2013 of approximately 200 healthcare and life sciences focused personnel that were formerly included in the Corporate Finance/Restructuring and Forensic and Litigation Consulting segments into a single practice reported in the results for Forensic and Litigation Consulting. Absent this change, revenues for the first quarter would have been $17.6 million higher in Corporate Finance/Restructuring and lower in Forensic and Litigation Consulting and Adjusted Segment EBITDA margin would have been 70 basis points higher in Forensic and Litigation Consulting and 148 basis points lower in Corporate Finance/Restructuring.
Corporate Finance/Restructuring
Revenues in the Corporate Finance/Restructuring segment increased 2.3 percent to $99.1 million from $96.9 million in the prior year quarter. Results reflect growth from the acquisition of an Australian based restructuring business in the fourth quarter of 2012 and increased demand for the telecommunications, media and technology practice and the U.K., while demand for North America bankruptcy and restructuring services declined. Adjusted Segment EBITDA decreased to $19.1 million, or 19.3 percent of segment revenues from $24.2 million, or 25.0 percent of segment revenues, in the prior year quarter due to lower utilization in the North America bankruptcy and restructuring practice.
Economic Consulting
Revenues in the Economic Consulting segment increased 15.1 percent to $115.2 million from $100.1 million in the prior year quarter. Revenues were driven by strong demand and higher average bill rates across the board including the financial economics, antitrust, European international arbitration, regulatory and valuation practices. Adjusted Segment EBITDA was $26.2 million, or 22.7 percent of segment revenues, compared to $18.4 million, or 18.4 percent of segment revenues, in the prior year quarter reflecting enhanced operating leverage from higher staff utilization and bill rates.
Forensic and Litigation Consulting
Revenues in the Forensic and Litigation Consulting segment decreased 2.8 percent to $100.7 million from $103.6 million in the prior year quarter reflecting growth in its global construction and global risk and investigations practices versus lower demand for global financial and enterprise data analytics and core North America services. Adjusted Segment EBITDA was $12.8 million in the quarter, or 12.7 percent of segment revenues, compared to $14.7 million, or 14.2 percent of segment revenues, in the prior year quarter.
Technology
Revenues in the Technology segment decreased 6.0 percent to $46.7 million from $49.7 million in the prior year quarter. The decrease in revenues was due to declines in certain large litigation and investigation related matters, fewer mergers and acquisitions second request matters and lower pricing for consulting and services. Adjusted Segment EBITDA was $13.7 million or 29.4 percent of segment revenues, compared to $13.2 million, or 26.6 percent of segment revenues, in the prior year quarter primarily due to lower overhead, research and development, travel and entertainment and facilities expenses.
Strategic Communications
Revenues in the Strategic Communications segment increased 1.0 percent to $45.5 million from $45.0 million in the prior year quarter reflecting higher project income in North America and the Europe, Middle East and Africa as well as higher pass-through revenue in North America versus fewer merger and acquisitions projects in Asia Pacific and reduced project income in Latin America. Adjusted Segment EBITDA was $3.6 million, or 7.8 percent of segment revenues, compared to $4.5 million, or 10.1 percent of segment revenues in the prior year quarter. This decrease reflects the higher proportion of low-margin pass-through revenue, lower margins in Asia Pacific and Latin America and the impact of acquisition costs related to the North America based public policy group acquired in March, 2013.
First Quarter Conference Call
FTI Consulting will hold a conference call for analysts and investors to discuss first quarter financial results at 9:00 AM Eastern Time on May 9, 2013. 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 over 3,900 employees located in 24 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 $1.58 billion in revenues during fiscal year 2012. More information can be found at www.fticonsulting.com.
Use of Non-GAAP Measures
Note: We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets, goodwill impairment charge and special charges. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, goodwill impairment charge and special charges. We define Adjusted Net Income and Adjusted EPS as net income and earnings per diluted share, respectively, excluding the net impact of any goodwill impairment charge, any special charges and any loss on early extinguishment of debt that were incurred in that period. Adjusted EBITDA, Adjusted Segment EBITDA, Adjusted EPS and Adjusted Net Income 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 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. We believe that these measures can be useful operating performance measures for evaluating our results of operations as compared from period-to-period and as compared to our competitors. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry. We use Adjusted EBITDA and Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments. Reconciliations of GAAP to Non-GAAP financial measures are included in the accompanying tables to 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 and in the Company’s other filings with the Securities and Exchange Commission, including the risks set forth under “Risks Related to Our Operating 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.
FINANCIAL TABLES FOLLOW
# # #
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(in thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Revenues |
$ | 407,178 | $ | 395,228 | ||||
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| Operating expenses |
||||||||
| Direct cost of revenues |
258,480 | 245,618 | ||||||
| Selling, general and administrative expense |
96,647 | 102,589 | ||||||
| Special charges |
427 | — | ||||||
| Acquisition-related contingent consideration |
731 | 557 | ||||||
| Amortization of other intangible assets |
5,564 | 5,517 | ||||||
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| 361,849 | 354,281 | |||||||
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| Operating income |
45,329 | 40,947 | ||||||
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| Other income (expense) |
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| Interest income and other |
937 | 3,282 | ||||||
| Interest expense |
(12,715 | ) | (15,204 | ) | ||||
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| (11,778 | ) | (11,922 | ) | |||||
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| Income before income tax provision |
33,551 | 29,025 | ||||||
| Income tax provision |
9,871 | 10,594 | ||||||
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| Net income |
$ | 23,680 | $ | 18,431 | ||||
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| Earnings per common share - basic |
$ | 0.60 | $ | 0.46 | ||||
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| Weighted average common shares outstanding - basic |
39,403 | 40,358 | ||||||
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| Earnings per common share - diluted |
$ | 0.58 | $ | 0.43 | ||||
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| Weighted average common shares outstanding - diluted |
40,620 | 43,185 | ||||||
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| Other comprehensive income (loss), net of tax: |
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| Foreign currency translation adjustments, net of tax $0 |
$ | (15,509 | ) | $ | 12,849 | |||
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| Other comprehensive income (loss), net of tax |
(15,509 | ) | 12,849 | |||||
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| Comprehensive income |
$ | 8,171 | $ | 31,280 | ||||
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FTI CONSULTING, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
| Average | Revenue- | |||||||||||||||||||||||
| Adjusted | Billable | Generating | ||||||||||||||||||||||
| Revenues | EBITDA (1) | Margin | Utilization | Rate | Headcount | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Three Months Ended March 31, 2013 |
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| Corporate Finance/Restructuring (3) |
$ | 99,080 | $ | 19,085 | 19.3 | % | 69 | % | $ | 407 | 683 | |||||||||||||
| Forensic and Litigation Consulting (3) |
100,724 | 12,811 | 12.7 | % | 67 | % | $ | 412 | 965 | |||||||||||||||
| Economic Consulting |
115,194 | 26,194 | 22.7 | % | 89 | % | $ | 504 | 476 | |||||||||||||||
| Technology (2) |
46,704 | 13,716 | 29.4 | % | N/M | N/M | 275 | |||||||||||||||||
| Strategic Communications (2) |
45,476 | 3,554 | 7.8 | % | N/M | N/M | 619 | |||||||||||||||||
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| $ | 407,178 | 75,360 | 18.5 | % | 3,018 | |||||||||||||||||||
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| Unallocated Corporate Expenses |
(16,034 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 59,326 | 14.6 | % | ||||||||||||||||||||
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| Three Months Ended March 31, 2012 |
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| Corporate Finance/Restructuring (3) |
$ | 96,874 | $ | 24,171 | 25.0 | % | 76 | % | $ | 408 | 592 | |||||||||||||
| Forensic and Litigation Consulting (3) |
103,635 | 14,670 | 14.2 | % | 70 | % | $ | 323 | 955 | |||||||||||||||
| Economic Consulting |
100,052 | 18,424 | 18.4 | % | 86 | % | $ | 479 | 457 | |||||||||||||||
| Technology (2) |
49,660 | 13,215 | 26.6 | % | N/M | N/M | 304 | |||||||||||||||||
| Strategic Communications (2) |
45,007 | 4,529 | 10.1 | % | N/M | N/M | 596 | |||||||||||||||||
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| $ | 395,228 | 75,009 | 19.0 | % | 2,904 | |||||||||||||||||||
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| Unallocated Corporate Expenses |
(21,049 | ) | ||||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 53,960 | 13.7 | % | ||||||||||||||||||||
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| (1) | We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets, special charges and goodwill impairment charges. 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, special charges and goodwill impairment charge. Although Adjusted EBITDA and Adjusted Segment EBITDA are not measures of financial condition or performance determined in accordance with generally accepted accounting principles (“GAAP”), we believe that these measures can be a useful operating performance measure for evaluating our results of operations as compared from period to period and as compared to our competitors. |
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 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 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. |
| (3) | Effective in the first quarter of 2013, we modified our reportable segments to reflect changes in how we operate our business and the related internal management reporting. The Company’s healthcare practices from both our Corporate Finance/Restructuring segment and our Forensic and Litigation Consulting segment have been combined under a single organizational structure. This single integrated practice, our health solutions practice, is now aggregated in its entirety within the Forensic and Litigation Consulting reportable segment. Prior period Corporate Finance/Restructuring and Forensic and Litigation Consulting segment information has been reclassified to conform to the current period presentation. |
FTI CONSULTING, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(in thousands, except per share data)
(unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Net income |
$ | 23,680 | $ | 18,431 | ||||
| Add back: Special charges, net of tax effect (1) |
253 | — | ||||||
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| Adjusted Net Income (2) |
$ | 23,933 | $ | 18,431 | ||||
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| Earnings per common share - diluted |
$ | 0.58 | $ | 0.43 | ||||
| Add back: Special charges, net of tax effect (1) |
0.01 | — | ||||||
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| Adjusted EPS (2) |
$ | 0.59 | $ | 0.43 | ||||
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| Weighted average number of common shares outstanding - diluted |
40,620 | 43,185 | ||||||
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| (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 adjustment for the three months ended March 31, 2013 was 40.7%. The tax expense related to the adjustments for the three months ended March 31, 2013 was $0.2 million with no impact on diluted earnings per share. |
| (2) | We define Adjusted Net Income and Adjusted EPS as net income and earnings per diluted share, respectively, excluding the impact of any special charges, goodwill impairment and loss on extinguishment of debt that were incurred in that period. |
RECONCILIATION OF NET INCOME AND OPERATING INCOME TO ADJUSTED EBITDA
(in thousands)
| Corporate Finance / Restructuring (2) |
Forensic and Litigation Consulting (2) |
Economic Consulting |
Technology |
Strategic Communi- cations |
Unallocated Corporate Expenses |
Total | ||||||||||||||||||||||
| Three Months Ended March 31, 2013 |
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| Net income |
$ | 23,680 | ||||||||||||||||||||||||||
| Interest income and other |
(937 | ) | ||||||||||||||||||||||||||
| Interest expense |
12,715 | |||||||||||||||||||||||||||
| Income tax provision |
9,871 | |||||||||||||||||||||||||||
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| Operating income |
$ | 16,699 | $ | 11,102 | $ | 24,995 | $ | 8,082 | $ | 1,727 | $ | (17,276 | ) | $ | 45,329 | |||||||||||||
| Depreciation and amortization |
767 | 1,024 | 805 | 3,635 | 645 | 1,130 | 8,006 | |||||||||||||||||||||
| Amortization of other intangible assets |
1,551 | 512 | 398 | 1,985 | 1,118 | — | 5,564 | |||||||||||||||||||||
| Special charges |
68 | 173 | (4 | ) | 14 | 64 | 112 | 427 | ||||||||||||||||||||
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| Adjusted EBITDA (1) |
$ | 19,085 | $ | 12,811 | $ | 26,194 | $ | 13,716 | $ | 3,554 | $ | (16,034 | ) | $ | 59,326 | |||||||||||||
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| Three Months Ended March 31, 2012 |
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| Net income |
$ | 18,431 | ||||||||||||||||||||||||||
| Interest income and other |
(3,282 | ) | ||||||||||||||||||||||||||
| Interest expense |
15,204 | |||||||||||||||||||||||||||
| Income tax provision |
10,594 | |||||||||||||||||||||||||||
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| Operating income |
$ | 21,944 | $ | 13,097 | $ | 17,320 | $ | 8,201 | $ | 2,657 | $ | (22,272 | ) | 40,947 | ||||||||||||||
| Depreciation and amortization |
789 | 1,057 | 705 | 3,022 | 700 | 1,223 | 7,496 | |||||||||||||||||||||
| Amortization of other intangible assets |
1,438 | 516 | 399 | 1,992 | 1,172 | — | 5,517 | |||||||||||||||||||||
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| Adjusted EBITDA (1) |
24,171 | 14,670 | 18,424 | 13,215 | 4,529 | (21,049 | ) | 53,960 | ||||||||||||||||||||
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| (1) | We define Adjusted EBITDA as net income before income tax provision, other income (expense), depreciation, amortization of intangible assets, special charges and goodwill impairment charges. 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, special charges and goodwill impairment charge. Although Adjusted Segment EBITDA is not a measure of financial condition or performance determined in accordance with GAAP, we use Adjusted Segment EBITDA to evaluate and compare the operating performance of our segments. |
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 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.
| (2) | Effective in the first quarter of 2013, we modified our reportable segments to reflect changes in how we operate our business and the related internal management reporting. The Company’s healthcare practices from both our Corporate Finance/Restructuring segment and our Forensic and Litigation Consulting segment have been combined under a single organizational structure. This single integrated practice, our health solutions practice, is now aggregated in its entirety within the Forensic and Litigation Consulting reportable segment. Prior period Corporate Finance/Restructuring and Forensic and Litigation Consulting segment information has been reclassified to conform to the current period presentation. |
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(in thousands)
(unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Operating activities |
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| Net income |
$ | 23,680 | $ | 18,431 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
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| Depreciation and amortization |
8,006 | 7,496 | ||||||
| Amortization of other intangible assets |
5,564 | 5,517 | ||||||
| Acquisition-related contingent consideration |
731 | 557 | ||||||
| Provision for doubtful accounts |
4,094 | 4,569 | ||||||
| Non-cash share-based compensation |
10,055 | 10,553 | ||||||
| Excess tax benefits from share-based compensation |
(124 | ) | (55 | ) | ||||
| Non-cash interest expense |
670 | 1,933 | ||||||
| Other |
(11 | ) | 73 | |||||
| Changes in operating assets and liabilities, net of effects from acquisitions: |
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| Accounts receivable, billed and unbilled |
(47,711 | ) | (21,996 | ) | ||||
| Notes receivable |
(227 | ) | (14,481 | ) | ||||
| Prepaid expenses and other assets |
531 | (7,735 | ) | |||||
| Accounts payable, accrued expenses and other |
16,603 | 17,694 | ||||||
| Income taxes |
2,937 | (15,627 | ) | |||||
| Accrued compensation |
(28,862 | ) | (67,079 | ) | ||||
| Billings in excess of services provided |
1,760 | 2,329 | ||||||
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| Net cash used in operating activities |
(2,304 | ) | (57,821 | ) | ||||
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| Investing activities |
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| Payments for acquisition of businesses, net of cash received |
(14,676 | ) | (18,595 | ) | ||||
| Purchases of property and equipment |
(7,323 | ) | (4,756 | ) | ||||
| Other |
12 | 16 | ||||||
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| Net cash used in investing activities |
(21,987 | ) | (23,335 | ) | ||||
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| Financing activities |
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| Payments of long-term debt and capital lease obligations |
— | (156 | ) | |||||
| Purchase and retirement of common stock |
(28,758 | ) | — | |||||
| Net issuance of common stock under equity compensation plans |
(1,335 | ) | (647 | ) | ||||
| Excess tax benefit from share-based compensation |
124 | 55 | ||||||
| Other |
(224 | ) | (370 | ) | ||||
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| Net cash used in financing activities |
(30,193 | ) | (1,118 | ) | ||||
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| Effect of exchange rate changes on cash and cash equivalents |
(1,598 | ) | 289 | |||||
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| Net decrease in cash and cash equivalents |
(56,082 | ) | (81,985 | ) | ||||
| Cash and cash equivalents, beginning of period |
156,785 | 264,423 | ||||||
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| Cash and cash equivalents, end of period |
$ | 100,703 | $ | 182,438 | ||||
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FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2013 AND DECEMBER 31, 2012
(in thousands, except per share amounts)
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets |
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| Cash and cash equivalents |
$ | 100,703 | $ | 156,785 | ||||
| Restricted cash |
1,118 | 1,190 | ||||||
| Accounts receivable: |
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| Billed receivables |
334,539 | 314,491 | ||||||
| Unbilled receivables |
234,961 | 208,797 | ||||||
| Allowance for doubtful accounts and unbilled services |
(98,904 | ) | (94,048 | ) | ||||
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| Accounts receivable, net |
470,596 | 429,240 | ||||||
| Current portion of notes receivable |
32,452 | 33,194 | ||||||
| Prepaid expenses and other current assets |
43,157 | 50,351 | ||||||
| Current portion of deferred tax assets |
3,703 | 3,615 | ||||||
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| Total current assets |
651,729 | 674,375 | ||||||
| Property and equipment, net of accumulated depreciation |
66,706 | 68,192 | ||||||
| Goodwill |
1,252,440 | 1,260,035 | ||||||
| Other intangible assets, net of amortization |
101,858 | 104,181 | ||||||
| Notes receivable, net of current portion |
100,948 | 101,623 | ||||||
| Other assets |
65,771 | 67,046 | ||||||
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| Total assets |
$ | 2,239,452 | $ | 2,275,452 | ||||
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| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities |
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| Accounts payable, accrued expenses and other |
$ | 97,877 | $ | 98,109 | ||||
| Accrued compensation |
132,109 | 168,392 | ||||||
| Current portion of long-term debt and capital lease obligations |
6,021 | 6,021 | ||||||
| Billings in excess of services provided |
33,238 | 31,675 | ||||||
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| Total current liabilities |
269,245 | 304,197 | ||||||
| Long-term debt and capital lease obligations, net of current portion |
717,024 | 717,024 | ||||||
| Deferred income taxes |
111,440 | 105,751 | ||||||
| Other liabilities |
83,415 | 80,248 | ||||||
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| Total liabilities |
1,181,124 | 1,207,220 | ||||||
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| Stockholders’ equity |
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| 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 — 40,208 (2013) and 40,755 (2012) |
402 | 408 | ||||||
| Additional paid-in capital |
349,909 | 367,978 | ||||||
| Retained earnings |
764,895 | 741,215 | ||||||
| Accumulated other comprehensive loss |
(56,878 | ) | (41,369 | ) | ||||
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| Total stockholders’ equity |
1,058,328 | 1,068,232 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 2,239,452 | $ | 2,275,452 | ||||
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