- Revenues up 21.7% to $162 Million; EPS up 18.5% Before Special Termination Charge BALTIMORE, Oct. 31 /PRNewswire-FirstCall/ -- FTI Consulting, Inc. (NYSE: FCN), the leading global consulting firm to organizations confronting the critical legal, financial and reputational issues that shape their futures, today reported its financial results for the third quarter ended September 30, 2006 and addressed guidance for the remainder of 2006. Comparison of Selected Financial Results (millions, except per share data) Three months ended Nine months ended September 30, September 30, % % 2006 2005 increase 2006 2005 increase Revenue $162.1 $133.2 21.7% $491.1 $373.7 31.4% GAAP Diluted EPS $(0.01) $0.27 n/a $0.61 $0.90 n/a Non-GAAP Diluted EPS Before special termination charge (1) $0.32 $0.27 18.5% $0.93 $0.90 3.3% * See "Reconciliation of GAAP Financial Information to Non-GAAP Financial Information" below (1) Excludes a special termination charge of approximately $23.0 million, primarily reflecting severance costs and a related impairment of intangibles, in connection with the restructuring of the company's U.K. operations and certain non-core practices in the U.S. Third Quarter Results For the third quarter of 2006, revenues increased 21.7 percent to $162.1 million from $133.2 million for the same period in the prior year. Earnings per share ($0.01) after a special termination charge of ($0.33) related to the restructuring of the Company's U.K. operations and the consolidation of certain non-core practices in the U.S., as previously announced), increased 18.5 percent to $0.32 before the charge from $0.27 in the prior year. Results for the third quarter of 2006 include approximately $2.8 million of pre-tax share-based compensation expense ($0.05 per share), which was not present in 2005. Excluding the effect of the special termination charge of $23.0 million, earnings from operations before interest, taxes, depreciation and amortization (Adjusted EBITDA) increased 11.2 percent to $34.7 million, from $31.2 million in the prior year. Commenting on the quarter, Jack Dunn, FTI's president and chief executive officer, said, "The third quarter was extremely successful from both an operational and strategic perspective. In a quarter that is usually impacted by seasonal factors, we generated revenues that grew 15.2% organically and 6.5% from acquisitions year over year and were inline with the 2006 second quarter, typically a seasonally stronger period for our business. In addition, we invested in key resources to meet the continued strong demand for our capabilities. Finally, we followed through on our promise to shareholders to take the steps necessary to enhance the future profitability of our Corporate Finance/Restructuring, Forensic/Litigation and Economic segments. While our actions generated a charge in the current quarter, we expect them to generate a net improvement of between $12 million and $15.0 million in our annual operating income going forward." Mr. Dunn continued, "More importantly for the long term, we set the stage for continued organic growth, both in the U.S. and throughout the world, with the acquisition of Financial Dynamics (FD). This was a transformative transaction, capping a multiyear effort to diversify our revenue base across all phases of the economic cycle and giving us a fully built-out global platform from which to drive organic growth in all our businesses around the world. In addition, because the communications function touches all of our existing practice areas, FD brings the vehicle to reinforce the culture we are building across the Company. In less than a month since closing the transaction, we have won a number of joint assignments. In addition, the strategic advantage afforded by our new global platform was underscored by our late third quarter/early fourth quarter acquisitions of G3 and BKS, where FD's global infrastructure and relationships will serve to accelerate the potential for these two operations to further expand their activities throughout Europe." Cash flow used in operations was $0.9 million in the third quarter of 2006. Excluding the impact of the special termination charge, which utilized cash of approximately $1.8 million in the third quarter, cash flow provided by operations was $0.9 million, net of cash of approximately $8.9 million issued as long-term forgivable loans in connection with the signing of certain long- term employment agreements. Cash flow provided by operations in the third quarter of 2005 was $27.5 million. At September 30, 2006, FTI had cash and cash equivalents of approximately $22.5 million. Accounts receivable days- sales-outstanding were higher than anticipated at September 30, 2006, but the quality of the Company's accounts receivable remains high, and cash collections during the month of October were substantial. The Company did not repurchase any shares of common stock during the third quarter, and the remaining amount authorized under the Company's current share repurchase program at September 30, 2006 was approximately $33.5 million. Total headcount at September 30, 2006 was 1,548, and revenue-generating headcount was 1,162. As a result of the growth of the technology segment discussed below and our acquisition of FD, the Company believes utilization of revenue-generating personnel and average rate per hour metrics are much less meaningful for the Company taken as a whole, but are presented in the accompanying tables for those business segments for which the metrics continue to be relevant. Third-Quarter Business Segment Results Forensic and Litigation Consulting Forensic and Litigation Consulting had a good quarter, both sequentially and year over year, with revenues increasing 22.8 percent to $46.8 million from $38.1 million for the same period in the prior year. Results reflected the emergence of the Company's global risk and integrity practice as well as increasing investigation activity in the stock options back-dating arena, where the Company is involved in more than 40 of the approximately 120 investigations announced to date. The Company expects this segment's strong performance will continue into the fourth quarter based on industry sources who believe there are as many as 1,000 or more potential stock options back- dating matters which the SEC intends to approach in phases in future periods. In addition, a heavier trial calendar than in recent months is anticipated, including trial activity related to the pharmaceuticals industry. This segment is a particular beneficiary of the recently announced FD transaction, where an increasingly important aspect of corporate governance investigations is communication of issues involved and findings of fact to a broad constituency, including boards of directors, stockholders, the press, and Wall Street. The combination with FD is a differentiating factor in the marketplace that is winning FTI business. During this traditionally quieter quarter, the segment also completed most of its training goals for the year. Segment Adjusted EBITDA excluding the effect of the special termination charge increased 39.6 percent to $13.4 million, from $9.6 million in the prior year. Technology Consulting Technology had an excellent quarter, with revenues increasing 75.4 percent to $30.0 million from $17.1 million for the same period in the prior year. Results included a number of corporate governance and antitrust matters, but also reflect robustness in the annuity-based hosting business, which is typically less vulnerable to the seasonal swings associated with the litigation industry. Going forward, the Company anticipates increased annuity-type licensing revenues from direct installs of our Ringtail database management system at client sites, as well as continued growth in repository services for both existing and new clients. The addition of G-3 in London should accelerate the growth of our off-shore activities, and, in anticipation of continued strong performance, a net of 10 new professionals were added during the quarter. Segment EBITDA increased 56.9 percent to $11.3 million, from $7.2 million in the prior year. Corporate Finance/Restructuring Corporate Finance/Restructuring revenues increased 2.2 percent to $50.7 million from $49.6 million for the same period in the prior year, despite continuation of soft market conditions in the restructuring practice. While conditions in the restructuring market remained challenging, the segment was able to grow revenues through increased participation in the transaction advisory market, due to a particularly active merger and acquisition landscape. Looking forward, the Company expects continued activity in the m&a arena as well as steady performance in the core restructuring practice in the automotive and healthcare industries. In addition, there are signs of weakness in the housing industry, and perhaps the beginning of a slowing economy. For example, record levels of mortgage defaults, combined with higher mortgage refinance costs, may serve to limit consumer spending and create pressure on an already saturated retail market. Segment Adjusted EBITDA excluding the effect of the special termination charge decreased 14.9 percent to $12.0 million from $14.1 million in the prior year. Economic Consulting Economic Consulting revenues increased 21.8 percent to $34.6 million from $28.4 million for the same period in the prior year despite the effect of a series of proposed rule makings by the Surface Transportation Board that caused some ongoing casework in the Company's network strategies practice to be delayed. Looking forward, the pipeline appears strong in energy, financial/securities litigation and antitrust, and an influx of engagements to manage large settlements resulting from SEC enforcement matters is expected. Segment Adjusted EBITDA, excluding the effect of the special termination charge, increased 5.6 percent to $7.6 million from $7.2 million in the prior year. Nine-Month Results For the first nine months of 2006, revenues increased 31.4 percent to $491.1 million from $373.7 million for the same period in the prior year. Earnings per diluted share ($0.61 after the one-time special termination charge of $0.33 in the 2006 third quarter) increased 4.4 percent to $0.94 before the charge from $0.90 in the prior year. Results for the first nine months of 2006 include approximately an incremental $8.3 million of FASB 123(R) compensation expense ($0.15 per share), which was not present in 2005. Excluding the effect of the special termination charge of $23.0 million, Adjusted EBITDA rose 15.2 percent to $102.5 million from $89.0 million in the prior year. Forensic and Litigation Consulting revenues increased 23.9 percent to $142.1 million from $114.7 million for the same period in the prior year. Segment Adjusted EBITDA excluding the effect of the special termination charge increased 17.1 percent to $39.7 million from $33.9 million in the prior year. Technology Consulting revenues increased 103.8 percent to $86.0 million from $42.2 million for the same period in the prior year. Segment EBITDA increased 105.4 percent to $34.3 million from $16.8 million in the prior year. Corporate Finance/Restructuring revenues increased 14.3 percent to $154.7 million from $135.4 million for the same period in the prior year. Segment Adjusted EBITDA excluding the effect of the special termination charge decreased 11.9 percent to $36.4 million from $41.3 million in the prior year. Economic Consulting revenues increased 33.1 percent to $108.3 million from $81.4 million for the same period in the prior year. Segment Adjusted EBITDA excluding the effect of the special termination charge increased 30.2 percent to $25.9 million from $19.9 million in the prior year. 2006 Guidance Updated to Reflect Acquisition of FD Based on results for the third quarter of 2006 and current market conditions, and excluding the special termination charge described above, the Company continues to expect earnings per diluted share to be in a range of $1.26 to $1.35, which includes the impact of the FD acquisition and expensing stock options. FTI continues to anticipate pre-tax share-based compensation of approximately $12.0-$13.0 million, or approximately $0.21-$0.22 per diluted share for 2006. For comparative purposes, earnings per diluted share for 2005 on a pro forma basis would have been reduced by approximately $0.18 per share if 123(R) had been adopted at the beginning of 2005. Revenue for 2006, which will include FD for the fourth quarter of 2006, is now anticipated to range from $677.0 million to $693.0 million. Including FD for the fourth quarter, Adjusted EBITDA, excluding the effect of the special termination charge and including the expensing of stock options, is expected to range from $146.0 million to $152.0 million. With the acquisition of FD and the growth of FTI's technology segment, the Company believes utilization and average bill rates are no longer meaningful metrics for FTI taken as a whole, but are presented for the Company's three other business segments in the accompanying table. Revenue-generating headcount at the end of 2006, including FD, is anticipated to be approximately 1,547. The accompanying table also indicates anticipated results for the Company's business segments for 2006 and is presented including the estimated impact of expensing stock options. Third-Quarter Conference Call FTI will hold a conference call to discuss third quarter financial results at 9:00 a.m. Eastern time on Tuesday, October 31, 2006. 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, http://www.fticonsulting.com/. About FTI Consulting FTI is a leading global firm that organizations rely on for advice and solutions in the areas of forensic analysis, investigation, economic analysis, restructuring, due diligence, strategic communication, financial communication and technology when confronting the critical legal, financial and reputational issues that shape their futures. FTI delivers solutions every day through its network of nearly 2,000 professionals in offices in every major business center in the world. Note: Although EBITDA, Adjusted EBITDA and Adjusted Net Income 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 FTI's industry. FTI uses EBITDA and Adjusted 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, Adjusted EBITDA and Adjusted Net Income to Net Income is included in the accompanying tables to this press release. Information relating to stock option issuances and stock prices during 2006 cannot be predicted and are not quantifiable with certainty at this time. Such information is not available without an unreasonable effort or otherwise. EBITDA, Adjusted EBITDA 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 unless the definition is the same. In addition, because the calculation of EBITDA and Adjusted 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 and Adjusted EBITDA as supplemental financial measures are 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 and Adjusted EBITDA for purposes of those covenants are not calculated in the same manner as they are calculated in the accompanying table. Safe Harbor Statement 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 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 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. FTI CONSULTING, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (in thousands, except per share data) Nine Months Ended September 30, September 30, 2006 2005 (unaudited) Revenues $491,092 $373,720 Direct cost of revenues 276,896 202,878 Selling, general and administrative expense 121,547 89,110 Loss from subleased facilities - 920 Special termination charges 22,972 - Amortization of other intangible assets 8,310 4,309 429,725 297,217 Operating income 61,367 76,503 Other income (expense) Interest and other expense, net (16,105) (8,192) Loss on early extinguishment of term loans - (1,687) Litigation settlements 419 (991) Income before income tax provision 45,681 65,633 Income tax provision 21,013 27,566 Net income $24,668 $38,067 Earnings per common share - basic $0.63 $0.91 Weighted average common shares outstanding - basic 39,338 41,760 Earnings per common share - diluted $0.61 $0.90 Weighted average common shares outstanding - diluted 40,112 42,404 FTI CONSULTING, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (in thousands, except per share data) Three Months Ended September 30, September 30, 2006 2005 (unaudited) Revenues $162,068 $133,189 Direct cost of revenues 91,554 73,341 Selling, general and administrative expense 39,711 31,667 Loss from subleased facilities - 920 Special termination charges 22,972 - Amortization of other intangible assets 2,551 1,952 156,788 107,880 Operating income 5,280 25,309 Other income (expense) Interest and other expense, net (5,692) (4,327) Loss on early extinguishment of term loans - (1,687) Litigation settlements 688 21 Income before income tax provision 276 19,316 Income tax provision 562 8,113 Net income $(286) $11,203 Earnings per common share - basic $(0.01) $0.28 Weighted average common shares outstanding - basic 39,236 40,177 Earnings per common share - diluted $(0.01) $0.27 Weighted average common shares outstanding - diluted 39,236 41,170 FTI CONSULTING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (in thousands) September 30, September 30, 2006 2005 Operating activities Net income $24,668 $38,067 Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation and other amortization 9,394 8,308 Amortization of other intangible assets 8,310 4,309 Provision for doubtful accounts 6,060 2,945 Income tax benefit from stock option exercises - 1,188 Loss on early extinguishment of term loans - 1,687 Non-cash stock-based compensation expense 10,708 1,374 Loss from subleased facilities - 920 Impairment of other intangible assets 933 - Non-cash interest and other 870 2,056 Changes in operating assets and liabilities Accounts receivable, billed and unbilled (50,724) (31,471) Notes receivable (33,985) 1,467 Prepaid expenses and other assets (5,940) (3,414) Accounts payable, accrued expenses and other 10,140 6,985 Special termination charges 18,590 - Income taxes payable (5,206) 4,261 Accrued compensation (24,748) 6,115 Billings in excess of services provided 27 (1,294) Net cash (used in) provided by operating activities (30,903) 43,503 Investing activities Payments for acquisition of businesses, including contingent payments and acquisition costs (69,756) (50,972) Purchases of property and equipment (13,803) (12,077) Proceeds from note receivable due from purchasers of former subsidiary - 5,525 Change in other assets 247 (134) Net cash used in investing activities (83,312) (57,658) Financing activities Issuance of debt securities - 350,000 Purchase and retirement of common stock (23,376) (133,088) Borrowings under long-term credit facility 400 50,000 Payments of long-term debt (15) (155,000) Borrowings under revolving line of credit - 33,500 Payments of revolving line of credit - (33,500) Issuance of common stock under equity compensation plans 6,471 5,016 Income tax benefit from stock option exercises 910 - Payments of debt financing fees, capital lease obligations and other (1,067) (13,220) Net cash (used in) provided by financing activities (16,677) 103,708 Net decrease in cash and cash equivalents (130,892) 89,553 Cash and cash equivalents, beginning of period 153,383 25,704 Cash and cash equivalents, end of period $22,491 $115,257 FTI CONSULTING, INC. OPERATING RESULTS BY BUSINESS SEGMENT ADJUSTED Average Revenue- Revenues EBITDA Margin Utilization Rate Generating (1) (2) (2) Headcount (in thousands) Three Months Ended September 30, 2006 Forensic and Litigation Consulting $46,833 $13,351 28.5% 73% $332 389 Corporate Finance/ Restructuring 50,725 12,026 23.7% 73% $417 333 Economic Consulting 34,554 7,631 22.1% 76% $391 202 Technology 29,956 11,346 37.9% N/M N/M 238 $162,068 44,354 27.4% N/M N/M 1,162 Corporate expenses (9,643) ADJUSTED EBITDA (1) $34,711 21.4% Nine Months Ended September 30, 2006 Forensic and Litigation Consulting $142,058 $39,702 27.9% 78% $307 389 Corporate Finance/ Restructuring 154,729 36,412 23.5% 76% $402 333 Economic Consulting 108,257 25,877 23.9% 80% $382 202 Technology 86,048 34,270 39.8% N/M N/M 238 $491,092 136,261 27.7% N/M N/M 1,162 Corporate expenses (33,799) ADJUSTED EBITDA (1) $102,462 20.9% Three Months Ended September 30, 2005 Forensic and Litigation Consulting $38,096 $9,564 25.1% 72% $287 326 Corporate Finance/ Restructuring 49,605 14,084 28.4% 79% $388 333 Economic Consulting 28,387 7,211 25.4% 80% $368 171 Technology 17,101 7,222 42.2% N/M N/M 136 $133,189 38,081 28.6% N/M N/M 966 Corporate expenses (6,883) ADJUSTED EBITDA (1) $31,198 23.4% Nine Months Ended September 30, 2005 Forensic and Litigation Consulting $114,740 $33,862 29.5% 76% $289 326 Corporate Finance/ Restructuring 135,441 41,281 30.5% 82% $399 333 Economic Consulting 81,355 19,880 24.4% 84% $375 171 Technology 42,184 16,782 39.8% N/M N/M 136 $373,720 111,805 29.9% N/M N/M 966 Corporate expenses (22,756) ADJUSTED EBITDA (1) $89,049 23.8% (1) We define EBITDA (earnings before net interest, taxes, depreciation and amortization) as net income before income taxes, net interest expense, 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 statements of income. 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 within our industry. For further explanation, see reconciliation of Non-GAAP financial measures. (2) Substantially more than half of Technology revenues are not generated on an hourly basis. Accordingly, utilization and average rate metrics will no longer be presented as they are Not Meaningful. FTI CONSULTING, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005 (in thousands, except per share amounts) September 30, December 31, 2006 2005 Assets Current assets Cash and cash equivalents $22,491 $153,383 Accounts receivable Billed 125,958 87,947 Unbilled 72,981 56,871 Allowance for doubtful accounts and unbilled services (20,827) (17,330) 178,112 127,488 Notes receivable 7,528 2,713 Prepaid expense and other current assets 27,215 8,147 Deferred income taxes 9,816 6,404 Total current assets 245,162 298,135 Property and equipment, net 33,612 29,302 Goodwill, net 647,317 576,612 Other intangible assets, net 33,442 21,454 Cash held in escrow - - Notes receivable, net of current portion 25,687 6,516 Other assets 45,657 27,445 Total assets $1,030,877 $959,464 Liabilities and Stockholders' Equity Current liabilities Accounts payable, accrued expenses and other $38,297 $21,762 Accrued compensation 56,399 72,688 Billings in excess of services provided 10,788 10,477 Total current liabilities 105,484 104,927 Long-term debt, less current portion 348,361 348,431 Deferred income taxes 45,648 33,568 Deferred rent and other liabilities 19,853 18,269 Stockholders' equity Preferred stock, $0.01 par value; 5,000 shares authorized, none outstanding - - Common stock, $0.01 par value; 75,000 shares authorized; 39,878 shares issued and outstanding in 2006 and 39,009 shares issued and outstanding in 2005 403 390 Additional paid-in capital 259,547 238,055 Unearned compensation - (11,089) Retained earnings 251,581 226,913 Total stockholders' equity 511,531 454,269 Total liabilities and stockholders' equity $1,030,877 $959,464 FTI CONSULTING, INC. UPDATED OUTLOOK RANGE FOR 2006 BY BUSINESS SEGMENT ADJUSTED Average Revenue- Revenues EBITDA Margin Utilization Rate Generating (1) (2) (2) Headcount (in thousands) Outlook Range for 2006 From ($1.26 per share) Forensic and Litigation $185,000 $55,000 29.7% 76% $ 296 387 Corporate Finance/ Restructuring 205,000 47,000 22.9% 75% $ 398 343 Economic Consulting 143,000 35,000 24.5% 79% $ 379 220 Technology Consulting (2) 114,000 45,000 39.5% N/M N/M 243 Strategic and Financial Communications (2) 30,000 8,000 26.7% N/M N/M 390 $677,000 190,000 28.1% N/M N/M 1,583 Corporate expenses 44,000 6.5% EBITDA (1) $146,000 21.6% To ($1.35 per share) Forensic and Litigation $190,000 $57,000 30.0% 77% $ 293 397 Corporate Finance/ Restructuring 208,000 49,000 23.6% 77% $ 396 343 Economic Consulting 147,000 36,000 24.5% 80% $ 375 230 Technology Consulting (2) 117,000 47,000 40.2% N/M N/M 247 Strategic and Financial Communications (2) 31,000 9,000 29.0% N/M N/M 390 $693,000 198,000 28.6% N/M N/M 1,607 Corporate expenses 46,000 6.6% EBITDA (1) $152,000 21.9% (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 within our industry. (2) Substantially more than half of Technology revenues are not generated on an hourly basis. Accordingly, utilization and average rate metrics will no longer be presented as they are Not Meaningful. FTI CONSULTING, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) Three months ended Nine months ended September 30, September 30, 2006 2005 2006 2005 Net income $(286) $11,203 $24,668 $38,067 Earnings per common share-diluted $(0.01) $0.27 $0.61 $0.90 Add back: Special Termination charge 22,972 - 22,972 - Tax effect 10,039 - 10,293 - Adjusted net income before Special Termination charge (1) $12,647 $11,203 $37,347 $38,067 Adjusted earnings per common share-diluted before Special Termination charge (1) $0.32 $0.27 $0.93 $0.90 Add back: FASB 123 (Revised) share-based compensation 2,810 - 8,255 - Tax effect 844 - 2,080 - Adjusted net income before share-based compensation and Special Termination charge $14,613 $11,203 $43,522 $38,067 Adjusted earnings per common share-diluted before share-based compensation and Special Termination charge $0.37 $0.27 $1.09 $0.90 Add back: Amortization of intangible assets 2,551 1,952 8,310 4,309 Tax effect 1,163 820 3,789 1,810 Adjusted net income before share-based compensation, Special Termination charge and amortization of intangible assets $16,001 $12,335 $48,043 $40,566 Adjusted earnings per common share-diluted before Special Termination charge and amortization of intangible assets (1) $0.41 $0.31 $1.20 $0.96 (1) Management defines and uses earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA and adjusted net income, which are non-GAAP measures, in evaluating the Company's financial performance. These measures may not be similar to non-GAAP measures of other companies. Management believes that the use of such measures, as supplements to operating income, net income and other GAAP measures, are useful indicators of the Company's financial performance and its ability to generate cash flow from operations that are available to fund capital expenditures and service debt. Further, these measures exclude certain items to provide better comparability from period to period. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. RECONCILIATION OF OPERATING INCOME AND NET INCOME TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AMORTIZATION AND SPECIAL TERMINATION CHARGE Three months ended Nine months ended September 30, September 30, 2006 2005 2006 2005 Net income $(286) $11,203 $24,668 $38,067 Add: Litigation settlements 688 21 419 (991) Interest expense, net 5,692 4,327 16,105 8,192 Loss on early extinguishment of term loans - 1,687 - 1,687 Income tax provision 562 8,113 21,013 27,566 Operating income 6,656 25,351 62,205 74,521 Add: Litigation settlements (688) (21) (419) 991 Depreciation and amortization 3,220 2,996 9,394 8,308 Amortization of other intangible assets 2,551 1,952 8,310 4,309 EBITDA (1) 11,739 30,278 79,490 88,129 Special termination charge 22,972 - 22,972 - Loss from subleased facilities - 920 - 920 ADJUSTED EBITDA (1) $34,711 $31,198 $102,462 $89,049 (1) Management defines and uses earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA and adjusted net income, which are non-GAAP measures, in evaluating the Company's financial performance. These measures may not be similar to non-GAAP measures of other companies. Management believes that the use of such measures, as supplements to operating income, net income and other GAAP measures, are useful indicators of the Company's financial performance and its ability to generate cash flow from operations that are available to fund capital expenditures and service debt. Further, these measures exclude certain items to provide better comparability from period to period. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. DATASOURCE: FTI Consulting, Inc. CONTACT: Investor - Jack Dunn, President & CEO of FTI Consulting, Inc., +1-410-224-1483, or Gordon McCoun, Financial Dynamics, +1-212-850-5681, Media - Evan Goetz, Financial Dynamics, +1-212-850-5639

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