- 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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