Continuing Operations, BRS Acquisition Generate 90% Revenue Growth, 140% EPS
Growth
ANNAPOLIS, Md., Oct. 30 /PRNewswire-FirstCall/ --
FTI Consulting, Inc. (NYSE: FCN), the premier national consulting firm
providing bankruptcy, financial restructuring and litigation-related
consulting services, today reported record results for the third quarter ended
September 30, 2002. The company's continued strong performance included one
month of results from its recent acquisition of the domestic Business Recovery
Services Division (BRS) of PricewaterhouseCoopers.
Third-Quarter Results
Revenues from continuing operations for the third quarter of 2002
increased 91.4 percent to $55.9 million from $29.2 million in the third
quarter of last year. Income from continuing operations grew 260.8 percent to
$8.3 million from $2.3 million in the comparable quarter last year, and
earnings per share from continuing operations grew 200.0 percent to $0.36 on a
fully diluted basis compared with $0.12 last year; the increase in earnings
per share from continuing operations would have been 140.0 percent if the
non-amortization provisions of SFAS 142, Goodwill and Other Intangible Assets,
had been in effect in the third quarter of 2001. Earnings from continuing
operations before interest, taxes, depreciation and amortization (EBITDA) grew
146.3 percent to $16.5 million from $6.7 million in the 2001 period.
Commenting on the company's performance, Jack Dunn, FTI's chairman and
chief executive officer, stated, "While still early, the integration and
performance of our recent acquisition appears to be progressing as well as or
even better than expected. This is a tribute to the leadership and fine
professionals now constituting the combined practice. The strong results from
BRS added to the excellent performances of our original businesses and have
produced a new level of expectation for the company going forward."
Stewart Kahn, president and chief operating officer of FTI, commented, "In
addition to the combination of the excellent BRS practice with our already
very successful Policano & Manzo practice, our non-bankruptcy and turnaround
financial and litigation support practice areas have performed well and
continue their growth. The development of our infrastructure and technical
support has also more than kept pace with the increasing size of our
organization. With respect to the sale of our former Applied Sciences
division, our negotiations with its management to sell the business to them
are ongoing. Given today's financing environment, we cannot predict when we
will be able to sell it or at what price."
Nine-Month Results
For the nine months, revenues from continuing operations increased
45.6 percent to $133.6 million, compared with $91.8 million in the prior year.
Income from continuing operations was $19.4 million, an increase of
122.9 percent over $8.7 million in the prior year. Earnings from continuing
operations per diluted share were $0.88 compared with earnings from continuing
operations per diluted share of $0.45 for the 2001 period, or a 95.6 percent
increase; the increase in earnings per share from continuing operations would
have been 60.0 percent if the non-amortization provisions of SFAS 142,
Goodwill and Other Intangible Assets, had been in effect for the nine months
of 2001.
EBITDA increased by 60.7 percent to $38.4 million for the first nine
months of 2002, compared with $23.9 million in the first nine months of 2001.
Cash flow provided by operations for the nine months was approximately
$28.4 million compared with $19.4 million in the prior year.
Basis of Presentation
Historically, FTI was organized into three operating segments: Financial
Consulting, Litigation Consulting and Applied Sciences. As a result of the
BRS acquisition, the integration of FTI's Litigation Consulting division into
its Financial Consulting segment, and the decision to sell its Applied
Sciences business, the company will manage its operations as one segment.
Beginning in this third quarter of 2002, FTI's financial statements will,
accordingly, be presented without segment information and will present the
operations of its applied sciences business as discontinued operations.
Third-Quarter Conference Call
FTI will hold a conference call to discuss third-quarter results at
11:00 a.m. EST on Thursday, October 31, 2002. The call can be accessed live
and will be available for replay over the Internet via http://www.vcall.com .
About FTI Consulting
FTI Consulting is a multi-disciplined consulting firm with leading
practices in the areas of bankruptcy, financial restructuring and litigation-
related services. Modern corporations, as well as those who advise and invest
in them, face growing challenges on every front. From a proliferation of
"bet-the-company" litigation to increasingly complicated relationships with
lenders and investors in an ever-changing global economy, U.S. companies are
turning more and more to outside experts and consultants to meet these complex
issues. FTI is dedicated to helping corporations, their advisors, lawyers,
lenders and investors meet these challenges by providing a broad array of the
highest quality professional practices from a single source.
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. Other factors that could cause such differences include pace and
timing of additional acquisitions, the company's ability to realize cost
savings and efficiencies, competitive and general economic conditions, and
other risks described in the company's filings with the Securities and
Exchange Commission.
FTI is on the Internet at http://www.fticonsulting.com .
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands of dollars, except share and per-share data)
Three Months Ended
Actual Actual
09/30/2002 09/30/2001
(unaudited)
Revenues $55,859 $29,197
Direct cost of revenues 27,278 14,867
Selling, general and administrative
expenses 13,246 8,406
Amortization of goodwill and other
intangible assets 252 1,052
Total costs and expenses 40,776 24,325
Operating income from continuing operations 15,083 4,872
Interest expense, net 1,251 966
Income from continuing operations
before taxes 13,832 3,906
Income taxes 5,577 1,562
Income from continuing operations 8,255 2,344
Income from discontinued operations,
net of income taxes(B) 638 1,278
Net income $8,893 $3,622
Income from continuing operations per
common share, basic $0.38 $0.12
Income from discontinued operations
per common share, basic 0.03 0.07
Earnings per common share, basic $0.41 $0.19
Weighted average shares for basic(A) 21,623 18,760
Income from continuing operations per
common share, diluted $0.36 $0.12
Income from discontinued operations
per common share, diluted 0.03 0.06
Earnings per common share, diluted $0.39 $0.18
Weighted average shares for diluted(A) 23,010 20,340
EBITDA from continuing operations $16,501 $6,687
(A) Weighted average shares have been adjusted to reflect the
three-for-two stock split effected as a stock dividend paid to
shareholders of record on January 2, 2002.
(B) Revenues included in discontinued operations were $11,021 and
$11,358 for the three months ended September 30, 2002 and 2001,
respectively.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands of dollars, except share and per-share data)
Nine Months Ended
Actual Actual
09/30/2002 09/30/2001
(unaudited)
Revenues $133,556 $91,826
Direct cost of revenues 65,512 46,704
Selling, general and administrative
expenses 32,796 23,608
Amortization of goodwill and other
intangible assets 252 3,156
Total costs and expenses 98,560 73,468
Operating income from continuing operations 34,996 18,358
Interest expense, net 2,582 3,533
Income from continuing operations
before taxes 32,414 14,825
Income taxes 13,021 6,148
Income from continuing operations 19,393 8,677
Income from discontinued operations,
net of income taxes(B) 2,791 2,956
Net income $22,184 $11,633
Income from continuing operations per
common share, basic $0.94 $0.50
Income from discontinued operations
per common share, basic 0.14 0.17
Earnings per common share, basic $1.08 $0.67
Weighted average shares for basic(A) 20,534 17,318
Income from continuing operations per
common share, diluted $0.88 $0.45
Income from discontinued operations
per common share, diluted 0.13 0.15
Earnings per common share, diluted $1.01 $0.60
Weighted average shares for diluted(A) 22,011 19,229
EBITDA from continuing operations $38,404 $23,850
(A) Weighted average shares have been adjusted to reflect the
three-for-two stock split effected as a stock dividend paid to
shareholders of record on January 2, 2002.
(B) Revenues included in discontinued operations were $35,078 and
$32,358 for the nine months ended September 30, 2002 and 2001,
respectively.
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(in thousands of dollars)
September 30, September 30,
2002 2001
(unaudited) (unaudited)
Operating activities
Net income $22,184 $11,633
Adjustment to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation and other amortization 3,627 2,767
Amortization of goodwill and other
intangible assets 252 3,762
Income tax benefit from stock option exercise 9,090 6,874
Other 1,401 835
Changes in operating assets and liabilities:
Accounts receivable, billed and unbilled (16,159) (6,866)
Income taxes, current and deferred 3,289 (1,521)
Accrued compensation expense 4,580 1,294
Other current assets and liabilities 140 637
Net cash (used in) provided by
operating activities 28,404 19,415
Investing activities
Purchase of property and equipment, net (5,946) (1,575)
Acquisition of subsidiaries and
contingent payments (144,750) (2,760)
Change in other assets (669) 202
Net cash used in investing activities (151,365) (4,133)
Financing activities
Issuance of common shares and
exercise of stock options 6,641 11,068
Borrowings under long-term debt arrangements 119,000 -
Repayments on long-term debt (8,250) (26,750)
Payment of financing fees & other (3,668) (15)
Net cash provided by (used in)
financing activities 113,723 (15,697)
Net decrease in cash and cash equivalents (9,238) (415)
Cash and cash equivalents at beginning of
period 12,856 3,235
Cash and cash equivalents at end of period $3,618 $2,820
FTI CONSULTING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND SEPTEMBER 30, 2002
(in thousands of dollars, except share data)
December 31, September 30,
2001 2002
(audited)(A) (unaudited)
Assets
Current assets:
Cash and cash equivalents $12,856 $3,618
Accounts receivable, less allowances 12,094 28,662
Unbilled receivable, less allowances 8,930 41,091
Other current assets 4,800 3,669
Current assets of discontinued operations 12,241 12,625
Total current assets 50,921 89,665
Property and equipment, net 10,619 13,318
Goodwill, net 75,733 318,228
Other intangible assets, net - 4,738
Other assets 1,023 5,090
Non-current assets of discontinued operations 16,057 15,976
Total Assets $154,353 $447,015
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued expenses $17,692 $26,260
Deferred income taxes 130 130
Current portion of long-term debt 4,333 16,083
Billings in excess of services provided - 32,143
Total current liabilities 22,155 74,616
Long-term debt, less current portion 23,833 122,833
Deferred income taxes and other liabilities 3,229 3,361
Stockholders' equity
Preferred stock, $.01 par value;
5,000,000 shares authorized, none
outstanding - -
Common stock, $.01 par value;
45,000,000 shares authorized; 19,590,938
and 23,713,055 shares issued and
outstanding in 2001 and 2002, respectively 196 237
Additional paid-in capital 75,416 193,997
Unearned compensation (568) (411)
Retained earnings 31,036 53,220
Accumulated other comprehensive income (loss) (944) (838)
Total stockholders' equity 105,136 246,205
Total Liabilities and Stockholders' Equity $154,353 $447,015
(A) Restated to segregate the assets of discontinued operations, as
required by SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets
SOURCE FTI Consulting, Inc.
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Related links:
http://www.fticonsulting.com
CONTACT:
Jack Dunn, Chairman & CEO of FTI Consulting,
Inc., +1-410-224-1483, or General, Marilyn Windsor,
+1-702-515-1260, Analysts, Lisa Fortuna, +1-312-640-6779, or
Media, Tim Grace, +1-312-640-6667, all of FRB Weber Shandwick
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