UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 001-14875

 

FTI CONSULTING, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Maryland

52-1261113

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

1101 K Street NW,

Washington, D.C.

20005

(Address of Principal Executive Offices)

(Zip Code)

(202) 312-9100

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

x

Accelerated filer

¨

 

 

 

 

Non-accelerated filer

¨  (Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

Outstanding at April 22, 2016

Common stock, par value $0.01 per share

41,447,033

 

 

 

 


FTI CONSULTING, INC. AND SUBSIDIARIES

INDEX

 

 

 

Page 

PART I—FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Condensed Consolidated Balance Sheets—March 31, 2016 and December 31, 2015

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income—Three Months Ended March 31, 2016 and 2015

4

 

 

 

 

Condensed Consolidated Statement of Stockholders’ Equity—Three Months Ended March 31, 2016

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows—Three Months Ended March 31, 2016 and 2015

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

 

 

 

Item 4.

Controls and Procedures

33

 

 

PART II—OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

34

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

 

 

Item 3.

Defaults Upon Senior Securities

34

 

 

 

Item 4.

Mine Safety Disclosures

34

 

 

 

Item 5.

Other Information

34

 

 

 

Item 6.

Exhibits

35

 

 

SIGNATURE

36

 

 

2


PART I—FINANCIAL INFORMATION

FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(Unaudited)

Item 1.

Financial Statements

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Assets

 

(Unaudited)

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

114,451

 

 

$

149,760

 

Accounts receivable:

 

 

 

 

 

 

 

 

Billed receivables

 

 

420,824

 

 

 

405,000

 

Unbilled receivables

 

 

329,933

 

 

 

280,538

 

Allowance for doubtful accounts and unbilled services

 

 

(197,527

)

 

 

(185,754

)

Accounts receivable, net

 

 

553,230

 

 

 

499,784

 

Current portion of notes receivable

 

 

31,474

 

 

 

36,115

 

Prepaid expenses and other current assets

 

 

45,196

 

 

 

55,966

 

Total current assets

 

 

744,351

 

 

 

741,625

 

Property and equipment, net of accumulated depreciation

 

 

71,263

 

 

 

74,760

 

Goodwill

 

 

1,198,070

 

 

 

1,198,298

 

Other intangible assets, net of amortization

 

 

61,193

 

 

 

63,935

 

Notes receivable, net of current portion

 

 

108,095

 

 

 

106,882

 

Other assets

 

 

42,072

 

 

 

43,518

 

Total assets

 

$

2,225,044

 

 

$

2,229,018

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other

 

$

95,606

 

 

$

89,845

 

Accrued compensation

 

 

157,687

 

 

 

227,783

 

Billings in excess of services provided

 

 

34,226

 

 

 

29,449

 

Total current liabilities

 

 

287,519

 

 

 

347,077

 

Long-term debt, net

 

 

501,961

 

 

 

494,772

 

Deferred income taxes

 

 

150,557

 

 

 

139,787

 

Other liabilities

 

 

103,761

 

 

 

99,779

 

Total liabilities

 

 

1,043,798

 

 

 

1,081,415

 

Commitments and contingent liabilities (note 10)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

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 —  41,385 (2016) and 41,234 (2015)

 

 

414

 

 

 

412

 

Additional paid-in capital

 

 

404,523

 

 

 

400,705

 

Retained earnings

 

 

885,662

 

 

 

855,481

 

Accumulated other comprehensive loss

 

 

(109,353

)

 

 

(108,995

)

Total stockholders' equity

 

 

1,181,246

 

 

 

1,147,603

 

Total liabilities and stockholders' equity

 

$

2,225,044

 

 

$

2,229,018

 

 

See accompanying notes to condensed consolidated financial statements

3


FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Revenues

 

$

470,285

 

 

$

432,338

 

Operating expenses

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

305,636

 

 

 

279,030

 

Selling, general and administrative expenses

 

 

103,609

 

 

 

102,214

 

Special charges

 

 

5,061

 

 

 

—

 

Acquisition-related contingent consideration

 

 

1,134

 

 

 

234

 

Amortization of other intangible assets

 

 

2,606

 

 

 

3,012

 

 

 

 

418,046

 

 

 

384,490

 

Operating income

 

 

52,239

 

 

 

47,848

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest income and other

 

 

2,557

 

 

 

(137

)

Interest expense

 

 

(6,229

)

 

 

(12,368

)

 

 

 

(3,672

)

 

 

(12,505

)

Income before income tax provision

 

 

48,567

 

 

 

35,343

 

Income tax provision

 

 

18,386

 

 

 

11,657

 

Net income

 

$

30,181

 

 

$

23,686

 

Earnings per common share — basic

 

$

0.75

 

 

$

0.59

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax expense of $0

 

$

(358

)

 

$

(20,482

)

Total other comprehensive loss, net of tax

 

 

(358

)

 

 

(20,482

)

Comprehensive income

 

$

29,823

 

 

$

3,204

 

 

See accompanying notes to condensed consolidated financial statements

 

4


FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

(Loss)

 

 

Total

 

Balance at December 31, 2015

 

 

41,234

 

 

$

412

 

 

$

400,705

 

 

$

855,481

 

 

$

(108,995

)

 

$

1,147,603

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

$

30,181

 

 

 

—

 

 

$

30,181

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

(358

)

Issuance of common stock in connection with:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options, net of income tax benefit

   from share-based awards of $107

 

 

53

 

 

 

1

 

 

 

1,312

 

 

 

—

 

 

 

—

 

 

 

1,313

 

Restricted share grants, less net settled shares

   of 69

 

 

183

 

 

 

2

 

 

 

(2,377

)

 

 

—

 

 

 

—

 

 

 

(2,375

)

Stock units issued under incentive

   compensation plan

 

 

—

 

 

 

—

 

 

 

1,842

 

 

 

—

 

 

 

—

 

 

 

1,842

 

Purchase and retirement of common stock

 

 

(85

)

 

 

(1

)

 

 

(2,902

)

 

 

—

 

 

 

—

 

 

 

(2,903

)

Share-based compensation

 

 

—

 

 

 

—

 

 

 

5,943

 

 

 

—

 

 

 

—

 

 

 

5,943

 

Balance at March 31, 2016

 

 

41,385

 

 

$

414

 

 

$

404,523

 

 

$

885,662

 

 

$

(109,353

)

 

$

1,181,246

 

 

See accompanying notes to condensed consolidated financial statements

 

5


FTI Consulting, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

30,181

 

 

$

23,686

 

Adjustments to reconcile net income to net cash used in

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,971

 

 

 

7,808

 

Amortization and impairment of other intangible assets

 

 

2,606

 

 

 

3,012

 

Acquisition-related contingent consideration

 

 

1,134

 

 

 

234

 

Provision for doubtful accounts

 

 

437

 

 

 

2,998

 

Non-cash share-based compensation

 

 

6,158

 

 

 

6,736

 

Non-cash interest expense

 

 

497

 

 

 

671

 

Other

 

 

(81

)

 

 

(132

)

Changes in operating assets and liabilities, net of effects from

   acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, billed and unbilled

 

 

(52,047

)

 

 

(41,330

)

Notes receivable

 

 

3,853

 

 

 

(1,003

)

Prepaid expenses and other assets

 

 

3,824

 

 

 

3,583

 

Accounts payable, accrued expenses and other

 

 

5,619

 

 

 

15,959

 

Income taxes

 

 

17,561

 

 

 

5,524

 

Accrued compensation

 

 

(65,511

)

 

 

(74,987

)

Billings in excess of services provided

 

 

4,699

 

 

 

(4,092

)

Net cash used in operating activities

 

 

(33,099

)

 

 

(51,333

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(6,362

)

 

 

(8,876

)

Other

 

 

34

 

 

 

71

 

Net cash used in investing activities

 

 

(6,328

)

 

 

(8,805

)

Financing activities

 

 

 

 

 

 

 

 

Borrowings under revolving line of credit, net

 

 

7,000

 

 

 

—

 

Deposits

 

 

2,590

 

 

 

1,380

 

Purchase and retirement of common stock

 

 

(2,903

)

 

 

—

 

Net issuance of common stock under equity compensation plans

 

 

(1,371

)

 

 

4,031

 

Other

 

 

(135

)

 

 

(85

)

Net cash provided by financing activities

 

 

5,181

 

 

 

5,326

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(1,063

)

 

 

(3,573

)

Net decrease in cash and cash equivalents

 

 

(35,309

)

 

 

(58,385

)

Cash and cash equivalents, beginning of period

 

 

149,760

 

 

 

283,680

 

Cash and cash equivalents, end of period

 

$

114,451

 

 

$

225,295

 

Supplemental cash flow disclosures

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,255

 

 

$

226

 

Cash paid for income taxes, net of refunds

 

$

824

 

 

$

6,134

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Issuance of stock units under incentive compensation plans

 

$

1,842

 

 

$

2,124

 

 

See accompanying notes to condensed consolidated financial statements

 

 

6


FTI Consulting, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(dollar and share amounts in tables in thousands, except per share data)

(Unaudited)

 

1. Basis of Presentation and Significant Accounting Policies

The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our,” or “FTI Consulting”), presented herein, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC.

 

 

2. Earnings Per Common Share

Basic earnings per common share are calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjust basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and restricted stock, each using the treasury stock method.

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator—basic and diluted

 

 

 

 

 

 

 

 

Net income

 

$

30,181

 

 

$

23,686

 

Denominator

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

   — basic

 

 

40,506

 

 

 

40,384

 

Effect of dilutive stock options

 

 

131

 

 

 

376

 

Effect of dilutive restricted shares

 

 

511

 

 

 

564

 

Weighted average number of common shares outstanding

   — diluted

 

 

41,148

 

 

 

41,324

 

Earnings per common share — basic

 

$

0.75

 

 

$

0.59

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Antidilutive stock options and restricted shares

 

 

2,657

 

 

 

2,173

 

 

 

3. New Accounting Standards

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including the accounting for forfeitures, employer tax withholding on share-based compensation and income tax consequences, which are intended to simplify various aspects of the accounting for share-based compensation. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective beginning January 1, 2017, although early adoption is permitted. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that replaces existing lease guidance. Under this ASU, leases will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.

7


In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenue is recognized at the time when goods or services are transferred to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. This guidance is effective beginning January 1, 2018. We are currently evaluating how the adoption of this accounting standard will impact our consolidated financial statements and related disclosures, including the transition approach.

 

 

4. Special Charges

During the three months ended March 31, 2016, we recorded special charges totaling $5.1 million related to the termination of 53 employees in our Technology segment to address current business demands and to position for future growth.  The special charges consisted of salary continuance and other contractual employee-related costs, including loan forgiveness and accelerated recognition of costs related to share-based compensation.  The total cash outflow associated with the special charges recorded in 2016 is expected to be $4.9 million, of which $2.3 million has been paid as of March 31, 2016.  Approximately $2.3 million is expected to be paid during the remainder of 2016, and the remaining balance of $0.3 million is expected to be paid in 2017.

We have paid approximately $54.3 million of the $65.5 million total expected payments related to special charges previously recorded in 2014, 2013, and 2012. Approximately $2.7 million is expected to be paid during the remainder of 2016, $3.1 million is expected to be paid in 2017, $2.6 million is expected to be paid in 2018, $1.2 million is expected to be paid in 2019, and the remaining balance of $1.6 million will be paid from 2020 to 2026. A liability for the current and noncurrent portions of the amounts to be paid is included in “Accounts payable, accrued expenses and other” and “Other liabilities,” respectively, on the Condensed Consolidated Balance Sheets.

Activity related to the liability for these costs for the three months ended March 31, 2016 is as follows:

 

 

 

Employee

 

 

Lease

 

 

 

 

 

 

 

Termination

 

 

Termination

 

 

 

 

 

 

 

Costs

 

 

Costs

 

 

Total

 

Balance at December 31, 2015

 

$

7,768

 

 

$

4,045

 

 

$

11,813

 

Additions

 

 

4,873

 

 

 

—

 

 

 

4,873

 

Payments

 

 

(2,787

)

 

 

(67

)

 

 

(2,854

)

Foreign currency translation adjustment and other

 

 

(3

)

 

 

—

 

 

 

(3

)

Balance at March 31, 2016

 

$

9,851

 

 

$

3,978

 

 

$

13,829

 

 

 

5. Allowance for Doubtful Accounts and Unbilled Services

We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenue when there are changes in estimates of fee reductions that may be imposed by bankruptcy courts and other regulatory institutions, for both billed and unbilled receivables. The allowance for doubtful accounts and unbilled services is also adjusted after the related work has been billed to the client and we discover that collectability is not reasonably assured. These adjustments are recorded to “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income and totaled $0.4 million and $3.0 million for the three months ended March 31, 2016 and 2015, respectively.

 

 

6. Research and Development Costs

Research and development costs related to software development totaled $4.0 million and $5.9 million for the three months ended March 31, 2016 and 2015, respectively. Research and development costs are included in “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income.

 

 

7. Financial Instruments

Fair Value of Financial Instruments

We consider the recorded value of certain financial assets and liabilities, which consist primarily of cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at March 31, 2016 and December 31, 2015, based on the short-term nature of the assets and liabilities. The fair value of our long-term debt at March 31, 2016 was $522.0 million compared to a carrying value of $507.0 million. At December 31, 2015, the fair value of our long-term debt was $513.5 million compared to a carrying value of $500.0 million. We determine the fair value of our long-term debt primarily based on quoted market

8


prices for our 6% Senior Notes Due 2022 (“2022 Notes”). The fair value of our long-term debt is classified within Level 2 of the fair value hierarchy, because it is traded in less active markets.

For business combinations consummated on or after January 1, 2009, we estimate the fair value of acquisition-related contingent consideration based on the present value of the consideration expected to be paid during the remainder of the earnout period, based on management’s assessment of the acquired operations’ forecasted earnings. This fair value measure is based on significant inputs not observed in the market and thus represents a Level 3 measurement.

The significant unobservable inputs used in the fair value measurements of our acquisition-related contingent consideration include our measures of the future profitability and related cash flows of the acquired business or assets, impacted by appropriate discount rates. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumptions used for the discount rates is accompanied by a directionally opposite change in the fair value measurement and a change in the assumptions used for the future cash flows is accompanied by a directionally similar change in the fair value measurement. The fair value of the contingent consideration is reassessed on a quarterly basis by the Company using additional information as it becomes available.

Any change in the fair value of an acquisition’s contingent consideration liability results in a remeasurement gain or loss that is recorded as income or expense, respectively, and is included within “Acquisition-related contingent consideration” in the Condensed Consolidated Statements of Comprehensive Income. During the three months ended March 31, 2016, we recorded a $1.0 million expense related to the increase in the liability for future expected contingent consideration payments, driven by improved business results in the current period as well as expected results during the remainder of the earn-out period. No remeasurement adjustments were recorded in the three months ended March 31, 2015.

Accretion expense for acquisition-related contingent consideration totaled $0.2 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively.

 

 

8. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amounts of goodwill by operating segment for the three months ended March 31, 2016, are as follows:

 

 

 

Corporate

 

 

Forensic and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance &

 

 

Litigation

 

 

Economic

 

 

 

 

 

 

Strategic

 

 

 

 

 

 

 

Restructuring

 

 

Consulting

 

 

Consulting

 

 

Technology

 

 

Communications

 

 

Total

 

Balance at December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

441,548

 

 

 

235,211

 

 

 

269,341

 

 

 

117,888

 

 

 

328,449

 

 

 

1,392,437

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at December 31, 2015

 

$

441,548

 

 

$

235,211

 

 

$

269,341

 

 

$

117,888

 

 

$

134,310

 

 

$

1,198,298

 

Foreign currency translation adjustment and

   other

 

 

1,640

 

 

 

(415

)

 

 

(102

)

 

 

(48

)

 

 

(1,303

)

 

 

(228

)

Goodwill

 

 

443,188

 

 

 

234,796

 

 

 

269,239

 

 

 

117,840

 

 

 

327,146

 

 

 

1,392,209

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at March 31, 2016

 

$

443,188

 

 

$

234,796

 

 

$

269,239

 

 

$

117,840

 

 

$

133,007

 

 

$

1,198,070

 

 

Other Intangible Assets

Other intangible assets with finite lives are amortized over their estimated useful lives. For intangible assets with finite lives, we recorded amortization expense of $2.6 million and $3.0 million for the three months ended March 31, 2016 and 2015, respectively. Based solely on the amortizable intangible assets recorded as of March 31, 2016, we estimate amortization expense to be $7.8 million during the remainder of 2016, $9.6 million in 2017, $8.0 million in 2018, $7.4 million in 2019, $7.2 million in 2020, $6.7 million in 2021, and $8.9 million in years after 2021. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, finalization of asset valuations for newly acquired assets, changes in useful lives, changes in value due to foreign currency translation, and other factors.

 

 

9


9. Long-Term Debt

The components of debt obligations are presented in the table below:

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

6% senior notes due 2022

 

 

300,000

 

 

 

300,000

 

Senior bank credit facility

 

 

207,000

 

 

 

200,000

 

Total debt

 

 

507,000

 

 

 

500,000

 

Less deferred debt issue costs

 

 

(5,039

)

 

 

(5,228

)

Long-term debt, net

 

$

501,961

 

 

$

494,772

 

 

There were $207.0 million in borrowings outstanding under the Company’s senior secured bank revolving credit facility (“Senior Bank Credit Facility”) as of March 31, 2016. The Company has classified these borrowings as long-term debt in the accompanying Condensed Consolidated Balance Sheets as the Company has the intent and ability, as supported by availability under the credit agreement entered into as of June 26, 2015, to refinance these borrowings for more than one year from the Balance Sheet date. Additionally, $1.4 million of the borrowing limit was utilized (and, therefore, unavailable) as of March 31, 2016 for letters of credit.

 

For further information on our 6% senior notes due 2022 and Senior Bank Credit Facility, see footnote “12. Long-Term Debt” in Part II, Item 8 of our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2015.

 

 

10. Commitments and Contingencies

Contingencies

We are subject to legal actions arising in the ordinary course of business. In management’s opinion, we believe we have adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. We do not believe any settlement or judgment relating to any pending legal action would materially affect our financial position or results of operations.

 

 

11. Share-Based Compensation

Share-based Awards and Share-based Compensation Expense

Our officers, employees, non-employee directors and certain individual service providers are eligible to participate in the Company’s equity compensation plans, subject to the discretion of the administrator of the plans. During the three months ended March 31, 2016, we awarded 225,272 restricted shares, stock options exercisable for up to 118,865 shares, 53,104 restricted stock units, and 83,914 performance stock units. These awards are recorded as equity on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2016, stock options exercisable for up to 31,467 shares and 10 restricted shares were forfeited prior to the completion of the vesting requirements.

Total share-based compensation expense, net of forfeitures, for the three months ended March 31, 2016 and 2015 is detailed in the following table:

 

 

 

Three Months Ended March 31,

 

Income Statement Classification

 

2016

 

 

2015

 

Direct cost of revenues

 

$

3,848

 

 

$

3,899

 

Selling, general and administrative expenses

 

 

2,709

 

 

 

3,043

 

Special charges

 

 

105

 

 

 

—

 

Total share-based compensation expense

 

$

6,662

 

 

$

6,942

 

 

 

12. Segment Reporting

We manage our business in five reportable segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications.

Our Corporate Finance & Restructuring segment focuses on the strategic, operational, financial and capital needs of businesses around the world and provides consulting and advisory services on a wide range of areas, such as restructuring (including bankruptcy), interim management, financings, mergers and acquisitions (“M&A”), M&A integration, valuations and tax issues, as well as financial,

10


operational and performance improvement. Our distressed service offerings generally include corporate restructurings and interim management, and our non-distressed service offerings generally include all other services mentioned above.

Our Forensic and Litigation Consulting segment provides law firms, companies, government clients and other interested parties with dispute advisory, investigations, forensic accounting, business intelligence assessments, data analytics and risk mitigation services and performance improvement services for our health solutions practice clients, as well as interim management services.

Our Economic Consulting segment provides law firms, companies, government entities and other interested parties with analysis of complex economic issues for use in legal, regulatory and international arbitration proceedings, strategic decision making and public policy debates in the U.S. and around the world.

Our Technology segment provides e-discovery and information governance, hosting and consulting services and software to its clients. It provides products, services and consulting to companies, law firms, courts and government agencies worldwide. Its comprehensive suite of software and services help clients locate, review and produce electronically stored information (“ESI”), including e-mail, computer files, voicemail, instant messaging, cloud and social media data, as well as financial and transactional data.

Our Strategic Communications segment provides advice and consulting services relating to financial and corporate communications, investor relations, reputation management, brand communications, public affairs, business consulting, digital design and marketing.

We evaluate the performance of our operating segments based on Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. Although Adjusted Segment EBITDA is not a measure of financial condition or performance determined in accordance with GAAP, we use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Revenues

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

127,156

 

 

$

106,212

 

Forensic and Litigation Consulting

 

 

119,004

 

 

 

123,265

 

Economic Consulting

 

 

130,731

 

 

 

106,081

 

Technology

 

 

48,281

 

 

 

54,654

 

Strategic Communications

 

 

45,113

 

 

 

42,126

 

Total revenues

 

$

470,285

 

 

$

432,338

 

Adjusted Segment EBITDA

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

31,603

 

 

$

22,480

 

Forensic and Litigation Consulting

 

 

19,808

 

 

 

22,071

 

Economic Consulting

 

 

21,319

 

 

 

11,556

 

Technology

 

 

7,823

 

 

 

10,073

 

Strategic Communications

 

 

6,108

 

 

 

5,752

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

 

11


The table below reconciles Total Adjusted Segment EBITDA to income before income tax provision:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

Segment depreciation expense

 

 

(7,029

)

 

 

(6,991

)

Amortization of intangible assets

 

 

(2,606

)

 

 

(3,012

)

Special charges

 

 

(5,061

)

 

 

—

 

Unallocated corporate expenses, excluding special charges

 

 

(18,746

)

 

 

(14,081

)

Interest income and other

 

 

2,557

 

 

 

(137

)

Interest expense

 

 

(6,229

)

 

 

(12,368

)

Remeasurement of acquisition-related contingent

   consideration

 

 

(980

)

 

 

—

 

Income before income tax provision

 

$

48,567

 

 

$

35,343

 

 

 

13. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information

Substantially all of our domestic subsidiaries are guarantors of borrowings under our Senior Bank Credit Facility and 2022 Notes. The guarantees are full and unconditional and joint and several. All of our guarantors are wholly owned, direct or indirect, subsidiaries.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income (loss) and statements of cash flows for FTI Consulting, all the guarantor subsidiaries, all the non-guarantor subsidiaries and the eliminations necessary to arrive at the consolidated information for FTI Consulting and its subsidiaries. For purposes of this presentation, we have accounted for our investments in our subsidiaries using the equity method of accounting. The principal eliminating entries eliminate investment in subsidiary and intercompany balances and transactions

Condensed Consolidating Balance Sheet Information as of March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

—

 

 

$

114,451

 

Accounts receivable, net

 

 

176,302

 

 

 

191,471

 

 

 

185,457

 

 

 

—

 

 

 

553,230

 

Intercompany receivables

 

 

—

 

 

 

921,720

 

 

 

39,450

 

 

 

(961,170

)

 

 

—

 

Other current assets

 

 

33,076

 

 

 

22,789

 

 

 

20,805

 

 

 

—

 

 

 

76,670

 

Total current assets

 

 

223,370

 

 

 

1,136,143

 

 

 

346,008

 

 

 

(961,170

)

 

 

744,351

 

Property and equipment, net

 

 

31,765

 

 

 

12,649

 

 

 

26,849

 

 

 

—

 

 

 

71,263

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,039

 

 

 

—

 

 

 

1,198,070

 

Other intangible assets, net

 

 

24,877

 

 

 

15,013

 

 

 

41,528

 

 

 

(20,225

)

 

 

61,193

 

Investments in subsidiaries

 

 

2,021,892

 

 

 

495,463

 

 

 

—

 

 

 

(2,517,355

)

 

 

—

 

Other assets

 

 

40,855

 

 

 

70,630

 

 

 

38,682

 

 

 

—

 

 

 

150,167

 

Total assets

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

914,711

 

 

$

7,087

 

 

$

39,372

 

 

$

(961,170

)

 

 

—

 

Other current liabilities

 

 

109,576

 

 

 

92,243

 

 

 

85,700

 

 

 

—

 

 

 

287,519

 

Total current liabilities

 

 

1,024,287

 

 

 

99,330

 

 

 

125,072

 

 

 

(961,170

)

 

 

287,519

 

Long-term debt, net

 

 

501,961

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

501,961

 

Other liabilities

 

 

194,243

 

 

 

14,387

 

 

 

45,688

 

 

 

—

 

 

 

254,318

 

Total liabilities

 

 

1,720,491

 

 

 

113,717

 

 

 

170,760

 

 

 

(961,170

)

 

 

1,043,798

 

Stockholders' equity

 

 

1,181,246

 

 

 

2,032,234

 

 

 

505,346

 

 

 

(2,537,580

)

 

 

1,181,246

 

Total liabilities and stockholders' equity

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

 

12


Condensed Consolidating Balance Sheet Information as of December 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,211

 

 

$

165

 

 

$

114,384

 

 

$

—

 

 

$

149,760

 

Accounts receivable, net

 

 

159,121

 

 

 

169,488

 

 

 

171,175

 

 

 

—

 

 

 

499,784

 

Intercompany receivables

 

 

—

 

 

 

936,452

 

 

 

62,651

 

 

 

(999,103

)

 

 

—

 

Other current assets

 

 

44,086

 

 

 

25,627

 

 

 

22,368

 

 

 

—

 

 

 

92,081

 

Total current assets

 

 

238,418

 

 

 

1,131,732

 

 

 

370,578

 

 

 

(999,103

)

 

 

741,625

 

Property and equipment, net

 

 

33,699

 

 

 

13,409

 

 

 

27,652

 

 

 

—

 

 

 

74,760

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,267

 

 

 

—

 

 

 

1,198,298

 

Other intangible assets, net

 

 

25,863

 

 

 

15,571

 

 

 

43,542

 

 

 

(21,041

)

 

 

63,935

 

Investments in subsidiaries

 

 

1,995,409

 

 

 

486,462

 

 

 

—

 

 

 

(2,481,871

)

 

 

—

 

Other assets

 

 

40,359

 

 

 

72,981

 

 

 

37,060

 

 

 

—

 

 

 

150,400

 

Total assets

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

930,066

 

 

$

8,921

 

 

$

60,116

 

 

$

(999,103

)

 

$

—

 

Other current liabilities

 

 

135,421

 

 

 

107,188

 

 

 

104,468

 

 

 

—

 

 

 

347,077

 

Total current liabilities

 

 

1,065,487

 

 

 

116,109

 

 

 

164,584

 

 

 

(999,103

)

 

 

347,077

 

Long-term debt, net

 

 

494,772

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

494,772

 

Other liabilities

 

 

184,864

 

 

 

12,562

 

 

 

42,140

 

 

 

—

 

 

 

239,566

 

Total liabilities

 

 

1,745,123

 

 

 

128,671

 

 

 

206,724

 

 

 

(999,103

)

 

 

1,081,415

 

Stockholders' equity

 

 

1,147,603

 

 

 

2,007,537

 

 

 

495,375

 

 

 

(2,502,912

)

 

 

1,147,603

 

Total liabilities and stockholders' equity

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

 

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

182,994

 

 

$

162,563

 

 

$

127,066

 

 

$

(2,338

)

 

$

470,285

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

114,429

 

 

 

109,190

 

 

 

84,315

 

 

 

(2,298

)

 

 

305,636

 

Selling, general and administrative expenses

 

 

44,667

 

 

 

30,721

 

 

 

28,261

 

 

 

(40

)

 

 

103,609

 

Special charges

 

 

—

 

 

 

4,563

 

 

 

498

 

 

 

—

 

 

 

5,061

 

Acquisition-related contingent consideration

 

 

6

 

 

 

1,128

 

 

 

—

 

 

 

—

 

 

 

1,134

 

Amortization of other intangible assets

 

 

986

 

 

 

558

 

 

 

1,879

 

 

 

(817

)

 

 

2,606

 

 

 

 

160,088

 

 

 

146,160

 

 

 

114,953

 

 

 

(3,155

)

 

 

418,046

 

Operating income

 

 

22,906

 

 

 

16,403

 

 

 

12,113

 

 

 

817

 

 

 

52,239

 

Other (expense) income

 

 

(5,077

)

 

 

(710

)

 

 

2,115

 

 

 

—

 

 

 

(3,672

)

Income before income tax provision

 

 

17,829

 

 

 

15,693

 

 

 

14,228

 

 

 

817

 

 

 

48,567

 

Income tax provision

 

 

8,149

 

 

 

6,859

 

 

 

3,378

 

 

 

—

 

 

 

18,386

 

Equity in net earnings of subsidiaries

 

 

20,501

 

 

 

9,882

 

 

 

—

 

 

 

(30,383

)

 

 

—

 

Net income

 

$

30,181

 

 

$

18,716

 

 

$

10,850

 

 

$

(29,566

)

 

$

30,181

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Comprehensive income

 

$

30,181

 

 

$

18,716

 

 

$

10,492

 

 

$

(29,566

)

 

$

29,823

 

 

13


Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

169,135

 

 

$

144,139

 

 

$

121,852

 

 

$

(2,788

)

 

$

432,338

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

105,063

 

 

 

96,587

 

 

 

80,083

 

 

 

(2,703

)

 

 

279,030

 

Selling, general and administrative expenses

 

 

43,411

 

 

 

29,877

 

 

 

29,011

 

 

 

(85

)

 

 

102,214

 

Special charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Acquisition-related contingent consideration

 

 

65

 

 

 

169

 

 

 

—

 

 

 

—

 

 

 

234

 

Amortization of other intangible assets

 

 

986

 

 

 

715

 

 

 

2,181

 

 

 

(870

)

 

 

3,012

 

 

 

 

149,525

 

 

 

127,348

 

 

 

111,275

 

 

 

(3,658

)

 

 

384,490

 

Operating income

 

 

19,610

 

 

 

16,791

 

 

 

10,577

 

 

 

870

 

 

 

47,848

 

Other (expense) income

 

 

(13,866

)

 

 

(2,010

)

 

 

3,371

 

 

 

—

 

 

 

(12,505

)

Income before income tax provision

 

 

5,744

 

 

 

14,781

 

 

 

13,948

 

 

 

870

 

 

 

35,343

 

Income tax provision

 

 

2,563

 

 

 

5,726

 

 

 

3,368

 

 

 

—

 

 

 

11,657

 

Equity in net earnings of subsidiaries

 

 

20,505

 

 

 

9,825

 

 

 

—

 

 

 

(30,330

)

 

 

—

 

Net income

 

$

23,686

 

 

$

18,880

 

 

$

10,580

 

 

$

(29,460

)

 

$

23,686

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Comprehensive income

 

$

23,686

 

 

$

18,880

 

 

$

(9,902

)

 

$

(29,460

)

 

$

3,204

 

 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(7,700

)

 

$

(8,956

)

 

$

(16,443

)

 

$

(33,099

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(788

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,362

)

Other

 

 

34

 

 

 

—

 

 

 

—

 

 

 

34

 

Net cash used in investing activities

 

 

(754

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,328

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings under revolving line of credit, net

 

 

7,000

 

 

 

—

 

 

 

—

 

 

 

7,000

 

Deposits

 

 

—

 

 

 

—

 

 

 

2,590

 

 

 

2,590

 

Purchase and retirement of common stock

 

 

(2,903

)

 

 

—

 

 

 

—

 

 

 

(2,903

)

Net issuance of common stock under equity compensation

   plans

 

 

(1,371

)

 

 

—

 

 

 

—

 

 

 

(1,371

)

Other

 

 

(135

)

 

 

—

 

 

 

—

 

 

 

(135

)

Intercompany transfers

 

 

(15,356

)

 

 

12,899

 

 

 

2,457

 

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(12,765

)

 

 

12,899

 

 

 

5,047

 

 

 

5,181

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(1,063

)

 

 

(1,063

)

Net decrease in cash and cash equivalents

 

 

(21,219

)

 

 

(2

)

 

 

(14,088

)

 

 

(35,309

)

Cash and cash equivalents, beginning of year

 

 

35,211

 

 

 

165

 

 

 

114,384

 

 

 

149,760

 

Cash and cash equivalents, end of year

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

114,451

 

 

14


Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(27,664

)

 

$

(5,191

)

 

$

(18,478

)

 

$

(51,333

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(3,979

)

 

 

(3,513

)

 

 

(1,384

)

 

 

(8,876

)

Other

 

 

32

 

 

 

—

 

 

 

39

 

 

 

71

 

Net cash used in investing activities

 

 

(3,947

)

 

 

(3,513

)

 

 

(1,345

)

 

 

(8,805

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net issuance of common stock under equity compensation

   plans

 

 

4,031

 

 

 

—

 

 

 

—

 

 

 

4,031

 

Deposits

 

 

—

 

 

 

—

 

 

 

1,380

 

 

 

1,380

 

Other

 

 

(85

)

 

 

—

 

 

 

—

 

 

 

(85

)

Intercompany transfers

 

 

(8,255

)

 

 

8,701

 

 

 

(446

)

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(4,309

)

 

 

8,701

 

 

 

934

 

 

 

5,326

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(3,573

)

 

 

(3,573

)

Net decrease in cash and cash equivalents

 

 

(35,920

)

 

 

(3

)

 

 

(22,462

)

 

 

(58,385

)

Cash and cash equivalents, beginning of year

 

 

171,090

 

 

 

159

 

 

 

112,431

 

 

 

283,680

 

Cash and cash equivalents, end of year

 

$

135,170

 

 

$

156

 

 

$

89,969

 

 

$

225,295

 

 

 

15


Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our consolidated financial condition and results of operations for the three months ended March 31, 2016 and 2015 and significant factors that could affect our prospective financial condition and results of operations. This discussion should be read together with the accompanying unaudited condensed consolidated financial statements and related notes and with our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (“SEC”). In addition to historical information, the following discussion includes forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions.  Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements.  

BUSINESS OVERVIEW

We are a global business advisory firm dedicated to helping organizations protect and enhance their enterprise value. We work closely with our clients to help them anticipate, understand, manage and overcome complex business matters arising from such factors as the economy, financial and credit markets, governmental regulation and legislation and litigation. We assist clients in addressing a broad range of business challenges, such as restructuring (including bankruptcy), capital market issues and indebtedness, interim business management, forensic accounting and litigation matters, international arbitrations, Mergers & Acquisitions (“M&A”), antitrust and competition matters, securities litigation, e-discovery, management and retrieval of electronically stored information ("ESI"), reputation management and strategic communications. We also provide services to help our clients take advantage of economic, regulatory, financial and other business opportunities. Our experienced teams of professionals include many individuals who are widely recognized as experts in their respective fields. We believe clients retain us because of our recognized expertise and capabilities in highly specialized areas as well as our reputation for satisfying client needs.

We report financial results for the following five reportable segments:

Our Corporate Finance & Restructuring (“Corporate Finance”) segment focuses on the strategic, operational, financial and capital needs of businesses around the world and provides consulting and advisory services on a wide range of areas, such as restructuring (including bankruptcy), interim management, financings, M&A, M&A integration, valuations and tax issues, as well as financial, operational and performance improvement. Our distressed service offerings generally include corporate restructurings and interim management, and our non-distressed service offerings generally include all other services mentioned above.

Our Forensic and Litigation Consulting (“FLC”) segment provides law firms, companies, government clients and other interested parties with dispute advisory, investigations, forensic accounting, business intelligence assessments, data analytics and risk mitigation services and performance improvement services for our health solutions practice clients, as well as interim management services.

Our Economic Consulting segment provides law firms, companies, government entities and other interested parties with analysis of complex economic issues for use in legal, regulatory and international arbitration proceedings, strategic decision making and public policy debates in the U.S. and around the world.

Our Technology segment provides e-discovery and information governance, hosting and consulting services and software to its clients. It provides products, services and consulting to companies, law firms, courts and government agencies worldwide. Its comprehensive suite of software and services help clients locate, review and produce ESI, including e-mail, computer files, voicemail, instant messaging, cloud and social media data, as well as financial and transactional data.

Our Strategic Communications segment provides advice and consulting services relating to financial and corporate communications, investor relations, reputation management, brand communications, public affairs, business consulting, digital design and marketing.

We derive substantially all of our revenues from providing professional services to both U.S. and global clients. Most of our services are rendered under time-and-expense arrangements that obligate the client to pay us a fee for the hours that we incur at agreed upon rates. Under this arrangement, we typically bill our clients for reimbursable expenses, which may include the cost of producing our work product and other direct expenses that we incur on behalf of the client, such as travel costs. We also render services for which certain clients may be required to pay us a fixed fee or recurring retainer. These arrangements are generally cancellable at any time. Some of our engagements contain performance-based arrangements in which we earn a success fee when and if certain predefined outcomes occur. This type of success fee may supplement a time-and-expense or fixed-fee arrangement. Success fee revenues may cause variations in our revenues and operating results due to the timing of achieving the performance-based criteria. In our Technology segment, certain clients are also billed based on the amount of data stored on our electronic systems, the volume of

16


information processed or the number of users licensing our Ringtail® software products for use or installation within their own environments. We license certain products directly to end users as well as indirectly through our channel partner relationships. Unit-based revenue is defined as revenue billed on a per-item, per-page, or some other unit-based method and includes revenue from data processing and hosting, software usage and software licensing. Unit-based revenue includes revenue associated with our proprietary software that is made available to customers, either via a web browser (“on-demand”) or installed at our customer or partner locations (“on-premise”). On-demand revenue is charged on a unit or monthly basis and includes, but is not limited to, processing and review related functions. On-premise revenue is comprised of up-front license fees, with recurring support and maintenance. Seasonal factors, such as the timing of our employees’ and clients’ vacations and holidays, impact the timing of our revenues.

Our financial results are primarily driven by:

 

·

the number, size and type of engagements we secure;

 

·

the rate per hour or fixed charges we charge our clients for services;

 

·

the utilization rates of the revenue-generating professionals we employ;

 

·

the number of revenue-generating professionals;

 

·

fees from clients on a retained basis or other;

 

·

licensing of our software products and other technology services;

 

·

the types of assignments we are working on at different times;

 

·

the length of the billing and collection cycles; and

 

·

the geographic locations of our clients or locations in which services are rendered.

We define acquisition growth as revenue of acquired companies in the first twelve months following the effective date of an acquisition. Our definition of organic growth is the change in revenue excluding the impact of all such acquisitions.

When significant, we identify the estimated impact of foreign currency translation driven by our businesses with functional currencies other than the U.S. dollar, on the period-to-period performance results. The estimated impact of foreign currency translation is calculated as the difference between the prior period results multiplied by the average foreign currency exchange rates in the current period and the prior period results multiplied by the average foreign currency rates in the prior period.

Non-GAAP Measures

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and segment financial information that is not presented in our financial statements and prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain of these measures are considered “non-GAAP financial measures” under the SEC rules. Specifically, we have referred to:

 

·

Segment Operating Income (Loss)

 

·

Total Segment Operating Income (Loss)

 

·

Adjusted EBITDA

 

·

Adjusted Segment EBITDA

 

·

Total Adjusted Segment EBITDA

 

·

Adjusted EBITDA Margin

 

·

Adjusted Segment EBITDA Margin

 

·

Adjusted Net Income

 

·

Adjusted Earnings per Diluted Share

We define Segment Operating Income (Loss) as a segment’s share of consolidated operating income (loss). We define Total Segment Operating Income (Loss) as the total of Segment Operating Income (Loss) for all segments, which excludes unallocated corporate expenses. We use Segment Operating Income (Loss) for the purpose of calculating Adjusted Segment EBITDA. We define Adjusted EBITDA as consolidated net income (loss) before income tax provision, other non-operating income (expense), depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment

17


charges and losses on early extinguishment of debt. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income (loss) before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenues. We define Adjusted Segment EBITDA Margin as Adjusted Segment EBITDA as a percentage of a segment’s share of revenue. We use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash. We also believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our operating results, including underlying trends, by excluding the effects of remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. In addition, EBITDA is a common alternative measure of operating performance used by many of our competitors. It is used by investors, financial analysts, rating agencies and others to value and compare the financial performance of companies in our industry. Therefore, we also believe that these measures, considered along with corresponding GAAP measures, provide management and investors with additional information for comparison of our operating results to the operating results of other companies.

We define Adjusted Net Income and Adjusted Earnings per Diluted Share (“Adjusted EPS”) as net income (loss) and earnings per diluted share, respectively, excluding the impact of remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt. We use Adjusted Net Income for the purpose of calculating Adjusted EPS. Management uses Adjusted EPS to assess total company operating performance on a consistent basis. We believe that this measure, when considered together with our GAAP financial results, provides management and investors with an additional understanding of our business operating results, including underlying trends, by excluding the effects of the remeasurement of acquisition-related contingent consideration, special charges, goodwill impairment charges and losses on early extinguishment of debt.

Non-GAAP financial measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial 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. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included elsewhere in this filing.

EXECUTIVE HIGHLIGHTS

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollar amounts in thousands,

except per share data)

 

Revenues

 

$

470,285

 

 

$

432,338

 

Special charges (1)

 

$

5,061

 

 

$

—

 

Adjusted EBITDA

 

$

68,857

 

 

$

58,668

 

Net income

 

$

30,181

 

 

$

23,686

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Adjusted earnings per common share — diluted

 

$

0.83

 

 

$

0.57

 

Net cash used in operating activities

 

$

(33,099

)

 

$

(51,333

)

Total number of employees

 

 

4,610

 

 

 

4,454

 

 

(1)

Excluded from non-GAAP measures.

First Quarter 2016 Executive Highlights

Revenues

Revenues for the three months ended March 31, 2016 increased $38.0 million, or 8.8%, to $470.3 million, which included a $7.1 million, or 1.6%, estimated negative impact of foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues increased $45.1 million, or 10.4%, primarily driven by higher demand for distressed service offerings in North America in our Corporate Finance segment and higher demand for our M&A related antitrust and financial economics services in our Economic Consulting segment.  

18


Special Charges

During the three months ended March 31, 2016, we recorded special charges of $5.1 million related to the termination of 53 employees in our Technology segment, to address current business demands and position the segment for future growth.  The special charges consisted of salary continuance and other contractual employee-related costs, including loan forgiveness and accelerated recognition of costs related to share-based compensation.

Adjusted EBITDA

Adjusted EBITDA for the three months ended March 31, 2016 increased $10.2 million, or 17.4%, to $68.9 million compared to $58.7 million for the three months ended March 31, 2015.  Adjusted EBITDA was 14.6% of revenues for the three months ended March 31, 2016 compared to 13.6% of revenues for the three months ended March 31, 2015. The increase in Adjusted EBITDA was driven by higher revenues in our Corporate Finance and Economic Consulting segments, partially offset by an increase in unallocated corporate expenses.  

Net Income

Net income for the three months ended March 31, 2016 increased $6.5 million, or 27.4%, to $30.2 million compared to $23.7 million for the three months ended March 31, 2015. This increase was driven by the business results described above, as well as lower interest expense due to the debt restructuring completed in the third quarter of 2015.  Partially offsetting these increases were the special charges in our Technology segment, higher income tax expense due to the favorable discrete tax adjustment recorded in the first quarter of 2015, and a $1.0 million expense related to the increase in the liability for future expected contingent consideration payments. 

Earnings per diluted share and Adjusted EPS

Earnings per diluted share for the three months ended March 31, 2016 increased $0.16 to $0.73 compared to $0.57 for the three months ended March 31, 2015. Earnings per diluted share for the three months ended March 31, 2016 were impacted by the results as outlined above.

Adjusted EPS for the three months ended March 31, 2016 increased $0.26 to $0.83 compared to $0.57 for the three months ended March 31, 2015.  The amount for the three months ended March 31, 2016 excludes the special charges and remeasurement of acquisition-related contingent consideration described above.

Liquidity and Capital Allocation

Cash used in operating activities for the three months ended March 31, 2016 decreased $18.2 million, or 35.5%, to $33.1 million compared to $51.3 million for the three months ended March 31, 2015. The decrease was primarily due to higher cash collections, lower payments for income taxes and lower forgivable loan funding, partially offset by increased payments for compensation and other operating expenses. Days sales outstanding (“DSO”), which is one measure of the collections cycle, was 98 days at March 31, 2016 compared to 101 days at March 31, 2015, reflecting improved collections. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by revenue for the quarter, adjusted for changes in foreign exchange rates. We multiply the result by the number of days in the quarter.

Financing activities in the three months ended March 31, 2016 included $7.0 million of additional borrowings under the Company’s senior secured bank revolving credit facility (“Senior Bank Credit Facility”), as well as the repurchase and retirement of 85,100 shares of our common stock for an average price per share of $34.12, at a total cost of $2.9 million.  Our Board of Directors authorized a stock repurchase program of up to $50.0 million at any time prior to May 5, 2016 (the “2015 Repurchase Program”).  As of March 31, 2016, we have $20.6 million available under this program to repurchase additional shares.

Headcount

As of March 31, 2016, our total headcount of 4,610 increased by 156 from 4,454 as of March 31, 2015.

19


We decreased the number of non-billable employees by 18, from 1,118 as of December 31, 2015 to 1,100 as of March 31, 2016. Net change to billable headcount for the three months ended March 31, 2016 is summarized in the table below.

 

Billable Headcount

 

Corporate

Finance &

Restructuring

 

 

Forensic and Litigation Consulting

 

 

Economic Consulting

 

 

Technology

 

 

Strategic

Communications

 

 

Total

 

December 31, 2015

 

 

838

 

 

 

1,131

 

 

 

599

 

 

 

349

 

 

 

599

 

 

 

3,516

 

Additions (reductions), net

 

 

19

 

 

 

1

 

 

 

8

 

 

 

(36

)

 

 

2

 

 

 

(6

)

March 31, 2016

 

 

857

 

 

 

1,132

 

 

 

607

 

 

 

313

 

 

 

601

 

 

 

3,510

 

Percentage change in headcount from prior year

 

 

2.3

%

 

 

0.1

%

 

 

1.3

%

 

 

-10.3

%

 

 

0.3

%

 

 

-0.2

%

 

CONSOLIDATED RESULTS OF OPERATIONS

Segment and Consolidated Operating Results:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(in thousands, except per share data)

 

Revenues

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

127,156

 

 

$

106,212

 

Forensic and Litigation Consulting

 

 

119,004

 

 

 

123,265

 

Economic Consulting

 

 

130,731

 

 

 

106,081

 

Technology

 

 

48,281

 

 

 

54,654

 

Strategic Communications

 

 

45,113

 

 

 

42,126

 

Total revenues

 

$

470,285

 

 

$

432,338

 

Operating income (loss)

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

30,076

 

 

$

20,764

 

Forensic and Litigation Consulting

 

 

18,213

 

 

 

20,474

 

Economic Consulting

 

 

20,211

 

 

 

10,296

 

Technology

 

 

(1,180

)

 

 

6,198

 

Strategic Communications

 

 

3,665

 

 

 

4,197

 

Segment operating income

 

 

70,985

 

 

 

61,929

 

Unallocated corporate expenses

 

 

(18,746

)

 

 

(14,081

)

Operating income

 

 

52,239

 

 

 

47,848

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest income and other

 

 

2,557

 

 

 

(137

)

Interest expense

 

 

(6,229

)

 

 

(12,368

)

Other income (expense)

 

 

(3,672

)

 

 

(12,505

)

Income before income tax provision

 

 

48,567

 

 

 

35,343

 

Income tax provision

 

 

18,386

 

 

 

11,657

 

Net income

 

$

30,181

 

 

$

23,686

 

Earnings per common share — basic

 

$

0.75

 

 

$

0.59

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

 

20


Reconciliation of Net Income to Adjusted EBITDA:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

Net income

 

$

30,181

 

 

$

23,686

 

Add back:

 

 

 

 

 

 

 

 

Income tax provision

 

 

18,386

 

 

 

11,657

 

Other income (expense), net

 

 

3,672

 

 

 

12,505

 

Depreciation and amortization

 

 

7,971

 

 

 

7,808

 

Amortization of other intangible assets

 

 

2,606

 

 

 

3,012

 

Special charges

 

 

5,061

 

 

 

—

 

Remeasurement of acquisition-related contingent

   consideration

 

 

980

 

 

 

—

 

Adjusted EBITDA

 

$

68,857

 

 

$

58,668

 

 

Reconciliation of Net Income to Adjusted Net Income and Earnings Per Share to Adjusted Earnings Per Share:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(in thousands, except per share data)

 

Net income

 

$

30,181

 

 

$

23,686

 

Add back:

 

 

 

 

 

 

 

 

Special charges, net of tax (1)

 

 

3,269

 

 

 

—

 

Remeasurement of acquisition-related contingent

   consideration, net of tax (1)

 

 

600

 

 

 

—

 

Adjusted Net Income

 

$

34,050

 

 

$

23,686

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Add back:

 

 

 

 

 

 

 

 

Special charges, net of tax (1)

 

 

0.08

 

 

 

—

 

Remeasurement of acquisition-related contingent

   consideration, net of tax (1)

 

 

0.02

 

 

 

—

 

Adjusted earnings per common share — diluted

 

$

0.83

 

 

$

0.57

 

Weighted average number of common shares

   outstanding — diluted

 

 

41,148

 

 

 

41,324

 

 

(1)

The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rates for the adjustments related to special charges for the three months ended March 31, 2016 was 35.4%. The tax expense related to the adjustments for special charges for the three months ended March 31, 2016 was $1.8 million or $0.04 impact on adjusted earnings per diluted share. There were no special charges for 2015.

 

(2)

The tax effect takes into account the tax treatment and related tax rates that apply to each adjustment in the applicable tax jurisdiction. As a result, the effective tax rate for the adjustments related to the remeasurement of acquisition-related contingent consideration for the three months ended March 31, 2016 was 38.8%.  The tax expense related to the adjustment for the remeasurement of acquisition-related contingent consideration for the three months ended March 31, 2016 was $0.4 million or $0.01 impact on adjusted earnings per diluted share. There were no adjustments related to the remeasurement of acquisition-related contingent consideration in 2015.

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues and operating income

See “Segment Results” for an expanded discussion of segment revenues and operating income.

Unallocated corporate expenses

Unallocated corporate expenses for the three months ended March 31, 2016 increased $4.7 million, or 33.1%, to $18.7 million compared to $14.1 million for the three months ended March 31, 2015. The increase was primarily due to higher costs related to our

21


U.S. health and welfare plans, an increase in infrastructure department costs to support growth in the business and to support strategic initiatives, and higher legal expenses.

Interest income and other

Interest income and other, which includes foreign currency transaction gains and losses, increased $2.7 million to income of $2.6 million for the three months ended March 31, 2016 compared to a $0.1 million loss for the three months ended March 31, 2015. The increase was primarily due to an increase in net foreign currency transaction gains, which were $1.4 million for the three months ended March 31, 2016 compared to a $1.4 million loss for the three months ended March 31, 2015. Transaction gains and losses, both realized and unrealized, relate to the remeasurement or settlement of monetary assets and liabilities that are denominated in a currency other than an entity’s functional currency. These monetary assets and liabilities include both client and current intercompany receivables and payables.

Interest expense

Interest expense for the three months ended March 31, 2016 decreased $6.2 million, or 49.6%, to $6.2 million compared to $12.4 million for three months ended March 31, 2015. Interest expense in for the three months ended March 31, 2016 was favorably impacted by the debt restructuring completed in the third quarter of 2015.  

Income tax provision

Our provision for income taxes in interim periods is computed by applying our estimated annual effective tax rate against income before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur or become known. The effective tax rate for the three months ended March 31, 2016 was 37.9% compared to 33.0% for the three months ended March 31, 2015. The effective tax rate for the three months ended March 31, 2015 was favorably impacted by a $1.4 million discrete item related to the impact of 2015 state tax law changes on our deferred state tax liabilities as of December 31, 2014.  Excluding the impact of this discrete item, the effective tax rate for the three months ended March 31, 2015 would have been 36.9%.

 

 

SEGMENT RESULTS

Total Adjusted Segment EBITDA

We evaluate the performance of our operating segments based on Adjusted Segment EBITDA, which is a non-GAAP measure. The following table reconciles Net Income to Total Adjusted Segment EBITDA for the three months ended March 31, 2016 and 2015.

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

Net income

 

$

30,181

 

 

$

23,686

 

Add back:

 

 

 

 

 

 

 

 

Income tax provision

 

 

18,386

 

 

 

11,657

 

Other income (expense), net

 

 

3,672

 

 

 

12,505

 

Unallocated corporate expenses

 

 

18,746

 

 

 

14,081

 

Total segment operating income

 

 

70,985

 

 

 

61,929

 

Add back:

 

 

 

 

 

 

 

 

Segment depreciation expense

 

 

7,029

 

 

 

6,991

 

Amortization of other intangible assets

 

 

2,606

 

 

 

3,012

 

Segment special charges

 

 

5,061

 

 

 

—

 

Remeasurement of acquisition-related contingent

   consideration

 

 

980

 

 

 

—

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

 

22


 Other Segment Operating Data

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Number of revenue-generating professionals:

   (at period end)

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

 

857

 

 

 

735

 

Forensic and Litigation Consulting (1)

 

 

1,132

 

 

 

1,145

 

Economic Consulting

 

 

607

 

 

 

566

 

Technology (2)

 

 

313

 

 

 

360

 

Strategic Communications

 

 

601

 

 

 

556

 

Total revenue-generating professionals

 

 

3,510

 

 

 

3,362

 

Utilization rates of billable professionals: (3)

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

 

74

%

 

 

74

%

Forensic and Litigation Consulting

 

 

64

%

 

 

68

%

Economic Consulting

 

 

79

%

 

 

73

%

Average billable rate per hour: (4)

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

384

 

 

$

374

 

Forensic and Litigation Consulting

 

$

333

 

 

$

318

 

Economic Consulting

 

$

531

 

 

$

501

 

 

(1)

There were 85 revenue-generating professionals as of March 31, 2015 related to a business in Latin America that was disposed during 2015.  Excluding these professionals, the total number of revenue-generating professionals of our Forensic and Litigation Consulting segment would be 1,060 as of March 31, 2015.  

 

(2)

The number of revenue-generating professionals for the Technology segment excludes as-needed professionals, who we employ based on demand for the segment’s services. We employed an average of 353 as-needed employees during the three-months ended March 31, 2016.

(3)

We calculate the utilization rate for our billable professionals by dividing the number of hours that all of our billable professionals worked on client assignments during a period by the total available working hours for all of our billable professionals during the same period. Available hours are determined by the standard hours worked by each employee, adjusted for part-time hours, local country standard work weeks and local country holidays. Available working hours include vacation and professional training days, but exclude holidays. Utilization rates are presented for our segments that primarily bill clients on an hourly basis. We have not presented a utilization rate for our Technology and Strategic Communications segments as most of the revenues of these segments are not generated on an hourly basis.

(4)

For engagements where revenues are based on number of hours worked by our billable professionals, average billable rate per hour is calculated by dividing revenues (excluding revenues from success fees, pass-through and outside consultants) for a period by the number of hours worked on client assignments during the same period. We have not presented an average billable rate per hour for our Technology and Strategic Communications segments as most of the revenues of these segments are not based on billable hours.

23


 CORPORATE FINANCE & RESTRUCTURING

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollars in thousands,

except rate per hour)

 

Revenues

 

$

127,156

 

 

$

106,212

 

Percentage change in revenues from prior year

 

 

19.7

%

 

 

13.0

%

Operating expenses:

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

75,452

 

 

 

63,933

 

Selling, general and administrative expenses

 

 

20,823

 

 

 

20,528

 

Acquisition-related contingent consideration

 

 

—

 

 

 

53

 

Amortization of other intangible assets

 

 

805

 

 

 

934

 

 

 

 

97,080

 

 

 

85,448

 

Segment operating income

 

 

30,076

 

 

 

20,764

 

Percentage change in segment operating income from

   prior year

 

 

44.8

%

 

 

141.2

%

Add back:

 

 

 

 

 

 

 

 

Depreciation and amortization of intangible assets

 

 

1,527

 

 

 

1,716

 

Adjusted Segment EBITDA

 

$

31,603

 

 

$

22,480

 

Gross profit (1)

 

$

51,704

 

 

$

42,279

 

Percentage change in gross profit from prior year

 

 

22.3

%

 

 

40.9

%

Gross profit margin (2)

 

 

40.7

%

 

 

39.8

%

Adjusted Segment EBITDA as a percent of revenues

 

 

24.9

%

 

 

21.2

%

Number of revenue-generating professionals (at period end)

 

 

857

 

 

 

735

 

Percentage change in number of revenue-generating

   professionals from prior year

 

 

16.6

%

 

 

1.2

%

Utilization rates of billable professionals

 

 

74

%

 

 

74

%

Average billable rate per hour

 

$

384

 

 

$

374

 

 

(1)

Revenues less direct cost of revenues

(2)

Gross profit as a percent of revenues

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues increased $20.9 million, or 19.7%, to $127.2 million for the three months ended March 31, 2016, which included a 1.9% estimated negative impact from foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues increased by $23.0 million, or 21.6%. This increase was primarily driven by higher demand and realized rates for the segment’s distressed service offerings in North America.  

Gross profit increased $9.4 million, or 22.3%, to $51.7 million for the three months ended March 31, 2016. Gross profit margin increased 0.9 percentage points for the three months ended March 31, 2016. Stronger demand, higher realized rates and success fees in North America distressed service offerings drove a majority of the increase.

SG&A expense increased $0.3 million, or 1.4%, to $20.8 million for the three months ended March 31, 2016. SG&A expense was 16.4% of revenue for the three months ended March 31, 2016 compared to 19.3% for the three months ended March 31, 2015. The increase is SG&A expense was due to higher infrastructure charges and recruiting expense to support additional headcount.  These expenses were partially offset due to the collections of prior period bad debts.  

24


 FORENSIC AND LITIGATION CONSULTING

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollars in thousands,

except rate per hour)

 

Revenues

 

$

119,004

 

 

$

123,265

 

Percentage change in revenues from prior year

 

 

-3.5

%

 

 

1.5

%

Operating expenses:

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

80,077

 

 

 

78,563

 

Selling, general and administrative expenses

 

 

20,192

 

 

 

23,634

 

Acquisition-related contingent consideration

 

 

6

 

 

 

12

 

Amortization of other intangible assets

 

 

516

 

 

 

582

 

 

 

 

100,791

 

 

 

102,791

 

Segment operating income

 

 

18,213

 

 

 

20,474

 

Percentage change in segment operating income from

   prior year

 

 

-11.0

%

 

 

-19.4

%

Add back:

 

 

 

 

 

 

 

 

Depreciation and amortization of intangible assets

 

 

1,595

 

 

 

1,597

 

Adjusted Segment EBITDA

 

$

19,808

 

 

$

22,071

 

Gross profit (1)

 

$

38,927

 

 

$

44,702

 

Percentage change in gross profit from prior year

 

 

-12.9

%

 

 

-6.1

%

Gross profit margin (2)

 

 

32.7

%

 

 

36.3

%

Adjusted Segment EBITDA as a percent of revenues

 

 

16.6

%

 

 

17.9

%

Number of revenue-generating professionals (at period end)

 

 

1,132

 

 

 

1,145

 

Percentage change in number of revenue-generating

   professionals from prior year

 

 

-1.1

%

 

 

6.4

%

Utilization rates of billable professionals

 

 

64

%

 

 

68

%

Average billable rate per hour

 

$

333

 

 

$

318

 

 

(1)

Revenues less direct cost of revenues.

(2)

Gross profit as a percent of revenues.

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues decreased $4.3 million, or 3.5%, to $119.0 million for the three months ended March 31, 2016, which included a 1.4% estimated negative impact from foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues decreased by $2.6 million, or 2.1%, due to lower demand and success fees in our health solutions practice, lower demand in both our construction solutions practice and our global dispute advisory services practice. These decreases were partially offset by increased demand in our global financial and enterprise data analytics practice and our global risk and investigations practice.

Gross profit decreased $5.8 million, or 12.9%, to $38.9 million for the three months ended March 31, 2016. Gross profit margin decreased 3.6 percentage points for the three months ended March 31, 2016. This was driven by a decrease in demand and success fees in our health solution practice, and lower demand in our construction solutions practice. This decline was partially offset by higher utilization in our global financial and enterprise data analytics practice.

SG&A expense decreased $3.4 million, or 14.6%, to $20.2 million for the three months ended March 31, 2016. SG&A expense was 17.0% of revenue for the three months ended March 31, 2016 compared to 19.2% for the three months ended March 31, 2015. The decrease in SG&A expense was driven by lower bad debt expense, lower compensation costs related to the departure of certain senior personnel in 2015, and lower recruiting expenses.

25


 ECONOMIC CONSULTING

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollars in thousands,

except rate per hour)

 

Revenues

 

$

130,731

 

 

$

106,081

 

Percentage change in revenues from prior year

 

 

23.2

%

 

 

-0.7

%

Operating expenses:

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

93,895

 

 

 

79,939

 

Selling, general and administrative expenses

 

 

16,426

 

 

 

15,501

 

Acquisition-related contingent consideration

 

 

16

 

 

 

37

 

Amortization of other intangible assets

 

 

183

 

 

 

308

 

 

 

 

110,520

 

 

 

95,785

 

Segment operating income

 

 

20,211

 

 

 

10,296

 

Percentage change in segment operating income from

   prior year

 

 

96.3

%

 

 

-17.2

%

Add back:

 

 

 

 

 

 

 

 

Depreciation and amortization of intangible assets

 

 

1,108

 

 

 

1,260

 

Adjusted Segment EBITDA

 

$

21,319

 

 

$

11,556

 

Gross profit (1)

 

$

36,836

 

 

$

26,142

 

Percentage change in gross profit from prior year

 

 

40.9

%

 

 

-9.5

%

Gross profit margin (2)

 

 

28.2

%

 

 

24.6

%

Adjusted Segment EBITDA as a percent of revenues

 

 

16.3

%

 

 

10.9

%

Number of revenue-generating professionals (at period end)

 

 

607

 

 

 

566

 

Percentage change in number of revenue-generating

   professionals from prior year

 

 

7.2

%

 

 

5.2

%

Utilization rates of billable professionals

 

 

79

%

 

 

73

%

Average billable rate per hour

 

$

531

 

 

$

501

 

 

(1)

Revenues less direct cost of revenues

(2)

Gross profit as a percent of revenues

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues increased $24.7 million, or 23.2%, to $130.7 million for the three months ended March 31, 2016, which included a 1.2% estimated negative impact from foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues increased by $25.9 million, or 24.4%, primarily due to higher demand for our M&A related antitrust services, financial economics services and other litigation services in Europe, Middle East and Africa (“EMEA”).

Gross profit increased $10.7 million, or 40.9%, to $36.8 million for the three months ended March 31, 2016. Gross profit margin increased 3.5 percentage points for the three months ended March 31, 2016. This increase was primarily driven by higher utilization in North America and higher realized bill rates in EMEA and North America.

SG&A expense increased $0.9 million, or 6.0%, to $16.4 million for the three months ended March 31, 2016. SG&A expense was 12.6% of revenue for the three months ended March 31, 2016 compared to 14.6% for the three months ended March 31, 2015. The increase in SG&A expense was driven primarily by higher outside services for legal expenses and general overhead expense, which was partially offset by lower bad debt expense.

26


 TECHNOLOGY

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollars in thousands)

 

Revenues

 

$

48,281

 

 

$

54,654

 

Percentage change in revenues from prior year

 

 

-11.7

%

 

 

-9.0

%

Operating expenses:

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

28,228

 

 

 

30,232

 

Selling, general and administrative expenses

 

 

16,014

 

 

 

18,026

 

Special charges

 

 

5,061

 

 

 

—

 

Amortization of other intangible assets

 

 

158

 

 

 

198

 

 

 

 

49,461

 

 

 

48,456

 

Segment operating loss (income)

 

 

(1,180

)

 

 

6,198

 

Percentage change in segment operating income from

   prior year

 

 

-119.0

%

 

 

-52.6

%

Add back:

 

 

 

 

 

 

 

 

Depreciation and amortization of intangible assets

 

 

3,942

 

 

 

3,875

 

Special charges

 

 

5,061

 

 

 

—

 

Adjusted Segment EBITDA

 

$

7,823

 

 

$

10,073

 

Gross profit (1)

 

$

20,053

 

 

$

24,422

 

Percentage change in gross profit from prior year

 

 

-17.9

%

 

 

-16.8

%

Gross profit margin (2)

 

 

41.5

%

 

 

44.7

%

Adjusted Segment EBITDA as a percent of revenues

 

 

16.2

%

 

 

18.4

%

Number of revenue-generating professionals (at period end) (3)

 

 

313

 

 

 

360

 

Percentage change in number of revenue-generating

   professionals from prior year

 

 

-13.1

%

 

 

12.1

%

 

(1)

Revenues less direct cost of revenues

(2)

Gross profit as a percent of revenues

(3)

Includes personnel involved in direct client assistance and revenue generating consultants

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues decreased $6.4 million, or 11.7%, to $48.3 million for the three months ended March 31, 2016, which included a 1.3% estimated negative impact from foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues decreased by $5.7 million, or 10.4%, largely due to reduced demand for cross-border investigations and financial services litigations, partially offset by an increase in M&A related second request activity.

Gross profit decreased $4.4 million, or 17.9%, to $20.1 million for the three months ended March 31, 2016. Gross profit margin decreased 3.2 percentage points for the three months ended March 31, 2016. The decrease in gross profit margin was due to lower demand for managed review services and lower realized pricing for consulting based on our mix of clients.

SG&A expense decreased $2.0 million, or 11.2%, to $16.0 million for the three months ended March 31, 2016. SG&A expense was 33.2% of revenue for the three months ended March 31, 2016 compared to 33.0% for the three months ended March 31, 2015. The decrease in SG&A expense was due to lower compensation as a result of headcount reduction and lower occupancy costs, partially offset by higher bad debt. Research and development expense related to software development was $4.0 million for the three months ended March 31, 2016 compared to $5.9 million for the three months ended March 31, 2015.

 

27


STRATEGIC COMMUNICATIONS

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

(dollars in thousands)

 

Revenues

 

$

45,113

 

 

$

42,126

 

Percentage change in revenues from prior year

 

 

7.1

%

 

 

-2.5

%

Operating expenses:

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

27,984

 

 

 

26,363

 

Selling, general and administrative expenses

 

 

11,408

 

 

 

10,444

 

Remeasurement of acquisition-related contingent consideration

 

 

980

 

 

 

—

 

Acquisition-related contingent consideration

 

 

132

 

 

 

132

 

Amortization of other intangible assets

 

 

944

 

 

 

990

 

 

 

 

41,448

 

 

 

37,929

 

Segment operating income

 

 

3,665

 

 

 

4,197

 

Percentage change in segment operating income from

   prior year

 

 

-12.7

%

 

 

317.6

%

Add back:

 

 

 

 

 

 

 

 

Depreciation and amortization of intangible assets

 

 

1,463

 

 

 

1,555

 

Remeasurement of acquisition-related contingent consideration

 

 

980

 

 

 

—

 

Adjusted Segment EBITDA

 

$

6,108

 

 

$

5,752

 

Gross profit (1)

 

$

17,129

 

 

$

15,763

 

Percentage change in gross profit from prior year

 

 

8.7

%

 

 

2.4

%

Gross profit margin (2)

 

 

38.0

%

 

 

37.4

%

Adjusted Segment EBITDA as a percent of revenues

 

 

13.5

%

 

 

13.7

%

Number of revenue-generating professionals (at period end)

 

 

601

 

 

 

556

 

Percentage change in number of revenue-generating

   professionals from prior year

 

 

8.1

%

 

 

-4.8

%

 

(1)

Revenues less direct cost of revenues

(2)

Gross profit as a percent of revenues

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Revenues increased $3.0 million, or 7.1%, to $45.1 million for the three months ended March 31, 2016, which included a 3.3% estimated negative impact from foreign currency translation. Excluding the estimated impact of foreign currency translation, revenues increased by $4.4 million, or 10.4%, primarily driven by increased project-based revenues in North America and EMEA, predominantly in public affairs and financial communications-related engagements, and increased pass-through income, which was partially offset by a decrease in revenue from crisis mandates.

Gross profit increased $1.4 million, or 8.7%, to $17.1 million for the three months ended March 31, 2016. Gross profit margin increased 0.6 percentage points for the three months ended March 31, 2016. The increase in gross profit margin was primarily due to improved staff leverage, which was partially offset by a higher proportion of revenues from lower margin pass-through income.

SG&A expense increased $1.0 million, or 9.2%, to $11.4 million for the three months ended March 31, 2016. SG&A expense was 25.3% of revenue for the three months ended March 31, 2016 compared to 24.8% for the three months ended March 31, 2015. The increase in SG&A expense was primarily due to higher occupancy and support costs.

 

 

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Note 1 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC describes the significant accounting policies and methods used in preparation of the Consolidated Financial Statements. We evaluate our estimates, including those related to bad debts, goodwill, income taxes and

28


contingencies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

 

·

Revenue recognition

 

·

Allowance for doubtful accounts and unbilled services

 

·

Goodwill and other intangible assets

 

·

Share-based compensation

 

·

Income taxes

There have been no material changes to our critical accounting policies and estimates from the information provided in “Critical Accounting Policies” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC.

Goodwill and Other Intangible Assets

On a quarterly basis, we monitor the key drivers of fair value to detect events or other changes that would warrant an interim impairment test of our goodwill and intangible assets. Factors we consider important that could trigger an interim impairment review include, but are not limited to the following: significant underperformance relative to historical or projected future operating results; a significant change in the manner of our use of the acquired asset or strategy for our overall business; a significant negative industry or economic trend; and our market capitalization relative to net book value. When we evaluate these factors and determine that a triggering event has occurred, we perform an interim impairment analysis.

As of October 1, 2015, the date of our last annual goodwill impairment test, the estimated fair value of each of our reporting units significantly exceeded their respective carrying values and no further testing was required. Through our quarterly assessment, we determined that there were no events or circumstances that more likely than not would reduce the fair value of any of our reporting units below their carrying value.

There can be no assurance that the estimates and assumptions used in our goodwill impairment testing will prove to be accurate predictions of the future. If our assumptions regarding forecasted cash flows are not achieved, we may be required to perform the two-step quantitative goodwill impairment analysis prior to our next annual impairment test. In addition, if the aforementioned factors have the effect of changing one of the critical assumptions or estimates we use to calculate the value of our goodwill or intangible assets, we may be required to record goodwill and/or intangible asset impairment charges in future periods, whether in connection with our next annual impairment test or if a triggering event occurs outside of the quarter during which the annual goodwill impairment test is performed. It is not possible at this time to determine if any future impairment charge would result or, if it does, whether such charge would be material.

SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS

See “Note 3 – New Accounting Standards” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

 

 

 

Three Months Ended March 31,

 

Cash flows

 

2016

 

 

2015

 

 

 

(dollars in thousands)

 

Net cash used in operating activities

 

$

(33,099

)

 

$

(51,333

)

Net cash used in investing activities

 

$

(6,328

)

 

$

(8,805

)

Net cash provided by financing activities

 

$

5,181

 

 

$

5,326

 

DSO

 

 

98

 

 

 

101

 

 

We have generally financed our day-to-day operations, capital expenditures and acquisition-related contingent payments through cash flows from operations. Generally, during our first quarter of each fiscal year, our cash needs exceed our cash flows from operations due to the payments of annual incentive compensation and acquisition-related contingent payments. Our operating cash flows generally exceed our cash needs subsequent to the second quarter of each year.

29


Our operating assets and liabilities consist primarily of billed and unbilled accounts receivable, notes receivable from employees, accounts payable, accrued expenses and accrued compensation expense. The timing of billings and collections of receivables as well as payments for compensation arrangements affect the changes in these balances.

DSO is a performance measure used to assess how quickly revenues are collected by the Company. We calculate DSO at the end of each reporting period by dividing net accounts receivable reduced by billings in excess of services provided, by revenue for the quarter, adjusted for changes in foreign exchange rates. We multiply the result by the number of days in the quarter. Our DSO typically reaches its lowest point at December 31st each year and has consistently increased during the following quarters.

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Cash used in operating activities decreased $18.2 million, or 35.5%, to $33.1 million for the three months ended March 31, 2016 compared to $51.3 million for the three months ended March 31, 2015. The decrease was primarily due to higher cash collections, lower payments for income taxes and lower net funding of notes receivable, which were partially offset by increased payments for compensation and other operating expenses. DSO was 98 days at March 31, 2016 compared to 101 days at March 31, 2015 reflecting improved collections.

Net cash used in investing activities for the three months ended March 31, 2016 was $6.3 million compared to net cash used in investing activities of $8.8 million for the three months ended March 31, 2015. Capital expenditures were $6.4 million for the three months ended March 31, 2016 compared to $8.9 million for the three months ended March 31, 2015.

Net cash provided by financing activities for the three months ended March 31, 2016 was $5.2 million compared to $5.3 million for the three months ended March 31, 2015. Cash provided by financing activities in the three months ended March 31, 2016 included net borrowings of $7.0 million under our Senior Bank Credit Facility, payments of $2.9 million to settle repurchases of our common stock and $1.4 million related to cash paid from the issuance of common stock under our equity compensation plan.  Our financing activities for the three months ended March 31, 2015 primarily related to cash received from the issuance of common stock under our equity compensation plan.

Capital Resources

As of March 31, 2016, our capital resources included $114.5 million of cash and cash equivalents and available borrowing capacity of $341.6 million under our five-year $550.0 million Senior Bank Credit Facility. As of March 31, 2016, we had $207.0 million of borrowing outstanding under our Senior Bank Credit Facility and $1.4 million of outstanding letters of credit, which reduced the availability of borrowings. We use letters of credit primarily in lieu of security deposits for our leased office facilities.

Future Capital Needs

We anticipate that our future capital needs will principally consist of funds required for:

 

·

operating and general corporate expenses relating to the operation of our businesses;

 

·

capital expenditures, primarily for information technology equipment, office furniture and leasehold improvements;

 

·

debt service requirements, including interest payments on our long-term debt;

 

·

compensating designated executive management and senior managing directors under our various long-term incentive compensation programs;

 

·

discretionary funding of our stock repurchase program;

 

·

contingent obligations related to our acquisitions;

 

·

potential acquisitions of businesses that would allow us to diversify or expand our service offerings; and

 

·

other known future contractual obligations.

We currently anticipate capital expenditures of $35 million to $45 million to support our organization during 2016, including direct support for specific client engagements. Our estimate takes into consideration the needs of our existing businesses but does not include the impact of any purchases that we make as a result of future acquisitions or specific client engagements that are not currently contemplated. Our capital expenditure requirements may change if our staffing levels or technology needs change significantly from what we currently anticipate, if we are required to purchase additional equipment specifically to support a client engagement, or if we pursue and complete additional acquisitions.

30


For business combinations consummated on or after January 1, 2009, contingent consideration obligations are recorded as liabilities on our Condensed Consolidated Balance Sheets and remeasured to fair value at each subsequent reporting date with an offset to current period earnings. During the three months ended March 31, 2016, we recorded a $1.0 million expense related to the increase in the liability for future expected contingent consideration payments, driven by improved business results in the current period as well as expected results during the remainder of the earn-out period. The fair value of future expected contingent purchase price obligations for these business combinations was $5.3 million at March 31, 2016 with payment dates extending through 2018.

For the last several years, our cash flows from operations have exceeded our cash needs for capital expenditures and debt service requirements. We believe that our cash flows from operations, supplemented by short-term borrowings under our Senior Bank Credit Facility, as necessary, will provide adequate cash to fund our long-term cash needs from normal operations for at least the next twelve months.

Our conclusion that we will be able to fund our cash requirements by using existing capital resources and cash generated from operations does not take into account the impact of any future acquisition transactions or any unexpected significant changes in the number of employees or other expenditures that are currently not contemplated. The anticipated cash needs of our businesses could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, if our business does not perform at expected levels or is less profitable than expected, or if other unexpected circumstances arise that have a material effect on the cash flow or profitability of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs. Our ability to raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:

 

·

our future profitability;

 

·

the quality of our accounts receivable;

 

·

our relative levels of debt and equity;

 

·

the volatility and overall condition of the capital markets; and

 

·

the market prices of our securities.

Any new debt funding, if available, may be on terms less favorable to us than our Senior Bank Credit Facility or the indenture that governs our 6% Senior Notes Due 2022. See “Forward-Looking Statements” of this Quarterly Report on Form 10-Q and “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, other than operating leases, and we have not entered into any transactions involving unconsolidated subsidiaries or special purpose entities.

Future Contractual Obligations

There have been no significant changes in our future contractual obligations information as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC.

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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, or the Exchange Act, that involve uncertainties and risks. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues, future results and performance, future capital expenditures, expectations, plans or intentions relating to acquisitions and other matters, business trends and other information that is not historical. Forward-looking statements often contain words such as “estimates”, “expects”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts” and variations of such words or similar expressions. All forward-looking statements, including, without limitation, management’s examination of operating trends, are based upon our historical performance and our current plans, estimates and expectations at the time we make them and various assumptions. There can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Our actual financial results, performance or achievements could differ materially from those expressed in, or implied by, any forward-looking statements. The inclusion of any forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Given these risks, uncertainties and other factors, you should not place undue reliance on any forward-looking statements.

31


There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in, or implied by, this Quarterly Report on Form 10-Q. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q are set forth under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include, but not limited to the following:

 

·

changes in demand for our services;

 

·

our ability to attract and retain qualified professionals and senior management;

 

·

conflicts resulting in our inability to represent certain clients;

 

·

our former employees joining or forming competing businesses;

 

·

our ability to manage our professionals’ utilization and billing rates and maintain or increase the pricing of our services and products;

 

·

our ability to identify suitable acquisition candidates, negotiate favorable terms, take advantage of opportunistic acquisition situations and integrate the operations of acquisitions as well as the costs of integration;

 

·

our ability to adapt to and manage the risks associated with operating in non-U.S. markets;

 

·

our ability to replace key personnel, including former executives, officers, senior managers and practice and regional leaders who have highly specialized skills and experience;

 

·

our ability to protect the confidentiality of internal and client data and proprietary and confidential information;

 

·

legislation or judicial rulings, including rulings regarding data privacy and the discovery process;

 

·

periodic fluctuations in revenues, operating income and cash flows;

 

·

damage to our reputation as a result of claims involving the quality of our services;

 

·

fee discounting or renegotiation, lower pricing, less advantageous contract terms and unexpected terminations of client engagements;

 

·

competition for clients and key personnel;

 

·

general economic factors, industry trends, restructuring and bankruptcy rates, legal or regulatory requirements, capital market conditions, merger and acquisition activity, major litigation activity and other events outside of our control;

 

·

our ability to manage growth;

 

·

risk of non-payment of receivables;

 

·

the amount and terms of our outstanding indebtedness;

 

·

risks relating to the obsolescence of, changes to, or the protection of, our proprietary software products and intellectual property rights; and

 

·

fluctuations in the mix of our services and the geographic locations in which our clients are located or our services are rendered.

There may be other factors that may cause our actual results to differ materially from our forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances and do not intend to do so.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

For information regarding our exposure to certain market risks see “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. There have been no significant changes in our market risk exposure during the period covered by this Quarterly Report on Form 10-Q.

32


Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures. An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures (a) were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) included, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting that occurred during the three months ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

33


PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time in the ordinary course of business, we are subject to claims, asserted or unasserted, or named as a party to lawsuits or investigations. Litigation, in general, and intellectual property and securities litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings cannot be predicted with any certainty and in the case of more complex legal proceedings such as intellectual property and securities litigation, the results are difficult to predict at all. We are not aware of any asserted or unasserted legal proceedings or claims that we believe would have a material adverse effect on our financial condition or results of our operations.

Item 1A.

Risk Factors

There has been no material change in any risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC. We may disclose changes to risk factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered sales of equity securities.

None

Repurchases of our common stock.

The following table provides information with respect to purchases we made of our common stock during the three months ended March 31, 2016.

 

 

 

Total

Number of

Shares

Purchased(1)

 

 

 

Average

Price

Paid per

Share

 

 

Total Number of

Shares

Purchased as

Part of Publicly

Announced

Program

 

 

Approximate

Dollar Value

that May Yet Be

Purchased

Under the

Program(3)

 

 

 

(in thousands, except per share data)

 

January 1 through January 31, 2016

 

 

19

 

(1)

 

$

32.50

 

 

 

—

 

 

$

—

 

February 1 through February 29, 2016

 

 

1

 

(1)

 

$

33.00

 

 

 

—

 

 

$

—

 

March 1 through March 31, 2016

 

 

49

 

(1)

 

$

34.91

 

 

 

85

 

(2)

$

20,565

 

Total

 

 

69

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

(1)

Represents shares of common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on restricted stock.

(2)

In November 2015, our Board of Directors authorized a six-month stock repurchase program of up to $50.0 million under the 2015 Repurchase Program. During the month ended March 31, 2016, we repurchased and retired 85,100 shares of common stock, at an average per share price of $34.12, for an aggregate cost of $2.9 million, under the 2015 Repurchase Program.

(3)

At March 31, 2016, a balance of approximately $20.6 million remained available for share repurchases under the 2015 Repurchase Program.

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Mine Safety Disclosures.

Not Applicable

Item 5.

Other Information.

None

34


Item 6.

Exhibits

(a) Exhibits.

 

Exhibit

Number

 

Exhibit Description 

 

 

 

3.1

 

Articles of Incorporation of FTI Consulting, Inc., as amended and restated. (Filed with the SEC on May 23, 2003 as an exhibit to FTI Consulting, Inc.’s Current Report on Form 8-K dated May 21, 2003 and incorporated herein by reference.)

 

 

 

3.2

 

Articles of Amendment of FTI Consulting, Inc. (Filed with the SEC on June 2, 2011 as exhibit 3.1 to FTI Consulting, Inc.’s Current Report on Form 8-K dated June 1, 2011 and incorporated herein by reference.)

 

 

 

3.3

 

Bylaws of FTI Consulting, Inc., as amended and restated, adopted on June 1, 2011 (Filed with the SEC on June 2, 2011 as exhibit 3.2 to FTI Consulting, Inc.’s Current Report on Form 8-K dated June 1, 2011 and incorporated herein by reference.)

 

 

 

3.4

 

Amendment No. 1 to Amended and Restated Bylaws of FTI Consulting, Inc. (Filed with the Securities and Exchange Commission on December 16, 2013 as exhibit 3.2 to FTI Consulting, Inc.’s Current Report on Form 8-K dated December 13, 2013 and incorporated herein by reference.)

 

 

 

3.5

 

Amendment No. 2 to Amended and Restated Bylaws of FTI Consulting, Inc. (Filed with the Securities and Exchange Commission on September 22, 2014 as exhibit 3.2 to FTI Consulting, Inc.’s Current Report on Form 8-K dated September 17, 2014 and incorporated herein by reference.)

 

 

 

31.1†

 

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of 2002).

 

 

 

31.2†

 

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended (Section 302 of the Sarbanes-Oxley Act of 2002).

 

 

 

32.1†*

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

 

 

 

32.2†*

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

 

 

 

101

 

The following financial information from the Quarterly Report on Form 10-Q of FTI Consulting, Inc., included herewith, and formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015; (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015; (iii) Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2016; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015; and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

 

†

Filed herewith

*

This certification is deemed not filed for purposes of section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

 

35


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: April 28, 2016

 

FTI CONSULTING, INC.

 

 

By

/s/ Catherine M. Freeman

 

Catherine M. Freeman

 

Senior Vice President, Controller,

Chief Accounting Officer and Interim Chief Financial Officer

 

(principal financial officer and principal accounting officer)

 

 

36


fcn-ex311_9.htm

 

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Rule 13a-14(a) and 15d-14(a)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Steven H. Gunby, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of FTI Consulting, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2016

 

By:

 

/S/ STEVEN H. GUNBY

 

 

Steven H. Gunby

 

 

President and Chief Executive Officer

 

 

(principal executive officer)

 

 


fcn-ex312_61.htm

 

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Rule 13a-14(a) and 15d-14(a)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Catherine M. Freeman, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of FTI Consulting, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2016

 

By:

 

/S/ CATHERINE M. FREEMAN

 

 

Catherine M. Freeman

 

 

Senior Vice President, Controller,

Chief Accounting Officer and Interim Chief Financial Officer

 

 

(principal financial officer and principal accounting officer)

 

 


fcn-ex321_7.htm

 

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report of FTI Consulting, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven H. Gunby, President and Chief Executive Officer (principal executive officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1.

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2016

 

By:

 

/S/ STEVEN H. GUNBY

 

 

Steven H. Gunby

 

 

President and Chief Executive Officer

 

 

(principal executive officer)

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 


fcn-ex322_6.htm

 

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report of FTI Consulting, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Catherine M. Freeman, Senior Vice President, Controller, Chief Accounting Officer and Interim Chief Financial Officer (principal financial officer and principal accounting officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1.

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2016

 

By:

 

/S/ CATHERINE M. FREEMAN

 

 

Catherine M. Freeman

 

 

Senior Vice President, Controller,

Chief Accounting Officer and Interim Chief Financial Officer

 

 

(principal financial officer and principal accounting officer)

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 


fcn-20160331.xml
Attachment: XBRL INSTANCE DOCUMENT


fcn-20160331.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA


fcn-20160331_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE


fcn-20160331_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE


fcn-20160331_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE


fcn-20160331_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE


v3.4.0.3
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
Apr. 22, 2016
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Trading Symbol FCN  
Entity Registrant Name FTI CONSULTING INC  
Entity Central Index Key 0000887936  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   41,447,033

v3.4.0.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Current assets    
Cash and cash equivalents $ 114,451 $ 149,760
Accounts receivable:    
Billed receivables 420,824 405,000
Unbilled receivables 329,933 280,538
Allowance for doubtful accounts and unbilled services (197,527) (185,754)
Accounts receivable, net 553,230 499,784
Current portion of notes receivable 31,474 36,115
Prepaid expenses and other current assets 45,196 55,966
Total current assets 744,351 741,625
Property and equipment, net of accumulated depreciation 71,263 74,760
Goodwill 1,198,070 1,198,298
Other intangible assets, net of amortization 61,193 63,935
Notes receivable, net of current portion 108,095 106,882
Other assets 42,072 43,518
Total assets 2,225,044 2,229,018
Current liabilities    
Accounts payable, accrued expenses and other 95,606 89,845
Accrued compensation 157,687 227,783
Billings in excess of services provided 34,226 29,449
Total current liabilities 287,519 347,077
Long-term debt, net 501,961 494,772
Deferred income taxes 150,557 139,787
Other liabilities 103,761 99,779
Total liabilities $ 1,043,798 $ 1,081,415
Commitments and contingent liabilities (note 10)
Stockholders' equity    
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 — 41,385 (2016) and 41,234 (2015) $ 414 $ 412
Additional paid-in capital 404,523 400,705
Retained earnings 885,662 855,481
Accumulated other comprehensive loss (109,353) (108,995)
Total stockholders' equity 1,181,246 1,147,603
Total liabilities and stockholders' equity $ 2,225,044 $ 2,229,018

v3.4.0.3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2016
Dec. 31, 2015
Statement Of Financial Position [Abstract]    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 75,000,000 75,000,000
Common stock, shares issued 41,385,000 41,234,000
Common stock, shares outstanding 41,385,000 41,234,000

v3.4.0.3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Revenues $ 470,285 $ 432,338
Operating expenses    
Direct cost of revenues 305,636 279,030
Selling, general and administrative expenses 103,609 102,214
Special charges 5,061  
Acquisition-related contingent consideration 1,134 234
Amortization of other intangible assets 2,606 3,012
Costs and Expenses, Total 418,046 384,490
Operating income 52,239 47,848
Other income (expense)    
Interest income and other 2,557 (137)
Interest expense (6,229) (12,368)
Other (expense) income (3,672) (12,505)
Income before income tax provision 48,567 35,343
Income tax provision 18,386 11,657
Net income $ 30,181 $ 23,686
Earnings per common share — basic $ 0.75 $ 0.59
Earnings per common share — diluted $ 0.73 $ 0.57
Other comprehensive loss, net of tax    
Foreign currency translation adjustments, net of tax expense of $0 $ (358) $ (20,482)
Total other comprehensive loss, net of tax (358) (20,482)
Comprehensive income $ 29,823 $ 3,204

v3.4.0.3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Foreign currency translation adjustments, tax expense $ 0 $ 0

v3.4.0.3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss)
Beginning Balance at Dec. 31, 2015 $ 1,147,603 $ 412 $ 400,705 $ 855,481 $ (108,995)
Beginning Balance (in shares) at Dec. 31, 2015 41,234 41,234      
Net income (loss) $ 30,181     30,181  
Other comprehensive income (loss):          
Foreign currency translation adjustment (358)       (358)
Issuance of common stock in connection with:          
Exercise of options, net of income tax benefit from share-based awards of $107 (in Shares)   53      
Exercise of options, net of income tax benefit from share-based awards of $107 1,313 $ 1 1,312    
Restricted share grants, less net settled shares of 69 (in Shares)   183      
Restricted share grants, less net settled shares of 69 (2,375) $ 2 (2,377)    
Stock units issued under incentive compensation plan 1,842   1,842    
Purchase and retirement of common stock (in shares)   (85)      
Purchase and retirement of common stock (2,903) $ (1) (2,902)    
Share-based compensation 5,943   5,943    
Ending Balance at Mar. 31, 2016 $ 1,181,246 $ 414 $ 404,523 $ 885,662 $ (109,353)
Ending Balance (in shares) at Mar. 31, 2016 41,385 41,385      

v3.4.0.3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2016
USD ($)
shares
Statement Of Stockholders Equity [Abstract]  
Exercise of options, income tax expense | $ $ 107
Restricted share grants, settled shares | shares 69

v3.4.0.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Operating activities    
Net income (loss) $ 30,181 $ 23,686
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation and amortization 7,971 7,808
Amortization and impairment of other intangible assets 2,606 3,012
Acquisition-related contingent consideration 1,134 234
Provision for doubtful accounts 437 2,998
Non-cash share-based compensation 6,158 6,736
Non-cash interest expense 497 671
Other (81) (132)
Changes in operating assets and liabilities, net of effects from acquisitions:    
Accounts receivable, billed and unbilled (52,047) (41,330)
Notes receivable 3,853 (1,003)
Prepaid expenses and other assets 3,824 3,583
Accounts payable, accrued expenses and other 5,619 15,959
Income taxes 17,561 5,524
Accrued compensation (65,511) (74,987)
Billings in excess of services provided 4,699 (4,092)
Net cash used in operating activities (33,099) (51,333)
Investing activities    
Purchases of property and equipment (6,362) (8,876)
Other 34 71
Net cash used in investing activities (6,328) (8,805)
Financing activities    
Borrowings under revolving line of credit, net 7,000  
Deposits 2,590 1,380
Purchase and retirement of common stock (2,903)  
Net issuance of common stock under equity compensation plans (1,371) 4,031
Other (135) (85)
Net cash provided by financing activities 5,181 5,326
Effect of exchange rate changes on cash and cash equivalents (1,063) (3,573)
Net decrease in cash and cash equivalents (35,309) (58,385)
Cash and cash equivalents, beginning of period 149,760 283,680
Cash and cash equivalents, end of period 114,451 225,295
Supplemental cash flow disclosures    
Cash paid for interest 1,255 226
Cash paid for income taxes, net of refunds 824 6,134
Non-cash investing and financing activities:    
Issuance of stock units under incentive compensation plans $ 1,842 $ 2,124

v3.4.0.3
Basis of Presentation and Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies

1. Basis of Presentation and Significant Accounting Policies

The unaudited condensed consolidated financial statements of FTI Consulting, Inc., including its consolidated subsidiaries (collectively, the “Company,” “we,” “our,” or “FTI Consulting”), presented herein, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Some of the information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In management’s opinion, the interim financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim periods presented. All adjustments made were normal recurring accruals. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC.


v3.4.0.3
Earnings Per Common Share
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Earnings Per Common Share

2. Earnings Per Common Share

Basic earnings per common share are calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share adjust basic earnings per common share for the effects of potentially dilutive common shares. Potentially dilutive common shares include the dilutive effects of shares issuable under our equity compensation plans, including stock options and restricted stock, each using the treasury stock method.

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator—basic and diluted

 

 

 

 

 

 

 

 

Net income

 

$

30,181

 

 

$

23,686

 

Denominator

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

   — basic

 

 

40,506

 

 

 

40,384

 

Effect of dilutive stock options

 

 

131

 

 

 

376

 

Effect of dilutive restricted shares

 

 

511

 

 

 

564

 

Weighted average number of common shares outstanding

   — diluted

 

 

41,148

 

 

 

41,324

 

Earnings per common share — basic

 

$

0.75

 

 

$

0.59

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Antidilutive stock options and restricted shares

 

 

2,657

 

 

 

2,173

 

 


v3.4.0.3
New Accounting Standards
3 Months Ended
Mar. 31, 2016
Accounting Changes And Error Corrections [Abstract]  
New Accounting Standards

3. New Accounting Standards

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including the accounting for forfeitures, employer tax withholding on share-based compensation and income tax consequences, which are intended to simplify various aspects of the accounting for share-based compensation. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective beginning January 1, 2017, although early adoption is permitted. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that replaces existing lease guidance. Under this ASU, leases will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenue is recognized at the time when goods or services are transferred to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. This guidance is effective beginning January 1, 2018. We are currently evaluating how the adoption of this accounting standard will impact our consolidated financial statements and related disclosures, including the transition approach.


v3.4.0.3
Special Charges
3 Months Ended
Mar. 31, 2016
Text Block [Abstract]  
Special Charges

4. Special Charges

During the three months ended March 31, 2016, we recorded special charges totaling $5.1 million related to the termination of 53 employees in our Technology segment to address current business demands and to position for future growth.  The special charges consisted of salary continuance and other contractual employee-related costs, including loan forgiveness and accelerated recognition of costs related to share-based compensation.  The total cash outflow associated with the special charges recorded in 2016 is expected to be $4.9 million, of which $2.3 million has been paid as of March 31, 2016.  Approximately $2.3 million is expected to be paid during the remainder of 2016, and the remaining balance of $0.3 million is expected to be paid in 2017.

We have paid approximately $54.3 million of the $65.5 million total expected payments related to special charges previously recorded in 2014, 2013, and 2012. Approximately $2.7 million is expected to be paid during the remainder of 2016, $3.1 million is expected to be paid in 2017, $2.6 million is expected to be paid in 2018, $1.2 million is expected to be paid in 2019, and the remaining balance of $1.6 million will be paid from 2020 to 2026. A liability for the current and noncurrent portions of the amounts to be paid is included in “Accounts payable, accrued expenses and other” and “Other liabilities,” respectively, on the Condensed Consolidated Balance Sheets.

Activity related to the liability for these costs for the three months ended March 31, 2016 is as follows:

 

 

 

Employee

 

 

Lease

 

 

 

 

 

 

 

Termination

 

 

Termination

 

 

 

 

 

 

 

Costs

 

 

Costs

 

 

Total

 

Balance at December 31, 2015

 

$

7,768

 

 

$

4,045

 

 

$

11,813

 

Additions

 

 

4,873

 

 

 

—

 

 

 

4,873

 

Payments

 

 

(2,787

)

 

 

(67

)

 

 

(2,854

)

Foreign currency translation adjustment and other

 

 

(3

)

 

 

—

 

 

 

(3

)

Balance at March 31, 2016

 

$

9,851

 

 

$

3,978

 

 

$

13,829

 

 


v3.4.0.3
Allowance for Doubtful Accounts and Unbilled Services
3 Months Ended
Mar. 31, 2016
Text Block [Abstract]  
Allowance for Doubtful Accounts and Unbilled Services

5. Allowance for Doubtful Accounts and Unbilled Services

We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenue when there are changes in estimates of fee reductions that may be imposed by bankruptcy courts and other regulatory institutions, for both billed and unbilled receivables. The allowance for doubtful accounts and unbilled services is also adjusted after the related work has been billed to the client and we discover that collectability is not reasonably assured. These adjustments are recorded to “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income and totaled $0.4 million and $3.0 million for the three months ended March 31, 2016 and 2015, respectively.


v3.4.0.3
Research and Development Costs
3 Months Ended
Mar. 31, 2016
Research And Development [Abstract]  
Research and Development Costs

6. Research and Development Costs

Research and development costs related to software development totaled $4.0 million and $5.9 million for the three months ended March 31, 2016 and 2015, respectively. Research and development costs are included in “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Comprehensive Income.


v3.4.0.3
Financial Instruments
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Financial Instruments

7. Financial Instruments

Fair Value of Financial Instruments

We consider the recorded value of certain financial assets and liabilities, which consist primarily of cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at March 31, 2016 and December 31, 2015, based on the short-term nature of the assets and liabilities. The fair value of our long-term debt at March 31, 2016 was $522.0 million compared to a carrying value of $507.0 million. At December 31, 2015, the fair value of our long-term debt was $513.5 million compared to a carrying value of $500.0 million. We determine the fair value of our long-term debt primarily based on quoted market prices for our 6% Senior Notes Due 2022 (“2022 Notes”). The fair value of our long-term debt is classified within Level 2 of the fair value hierarchy, because it is traded in less active markets.

For business combinations consummated on or after January 1, 2009, we estimate the fair value of acquisition-related contingent consideration based on the present value of the consideration expected to be paid during the remainder of the earnout period, based on management’s assessment of the acquired operations’ forecasted earnings. This fair value measure is based on significant inputs not observed in the market and thus represents a Level 3 measurement.

The significant unobservable inputs used in the fair value measurements of our acquisition-related contingent consideration include our measures of the future profitability and related cash flows of the acquired business or assets, impacted by appropriate discount rates. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumptions used for the discount rates is accompanied by a directionally opposite change in the fair value measurement and a change in the assumptions used for the future cash flows is accompanied by a directionally similar change in the fair value measurement. The fair value of the contingent consideration is reassessed on a quarterly basis by the Company using additional information as it becomes available.

Any change in the fair value of an acquisition’s contingent consideration liability results in a remeasurement gain or loss that is recorded as income or expense, respectively, and is included within “Acquisition-related contingent consideration” in the Condensed Consolidated Statements of Comprehensive Income. During the three months ended March 31, 2016, we recorded a $1.0 million expense related to the increase in the liability for future expected contingent consideration payments, driven by improved business results in the current period as well as expected results during the remainder of the earn-out period. No remeasurement adjustments were recorded in the three months ended March 31, 2015.

Accretion expense for acquisition-related contingent consideration totaled $0.2 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively.

 


v3.4.0.3
Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

8. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amounts of goodwill by operating segment for the three months ended March 31, 2016, are as follows:

 

 

 

Corporate

 

 

Forensic and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance &

 

 

Litigation

 

 

Economic

 

 

 

 

 

 

Strategic

 

 

 

 

 

 

 

Restructuring

 

 

Consulting

 

 

Consulting

 

 

Technology

 

 

Communications

 

 

Total

 

Balance at December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

441,548

 

 

 

235,211

 

 

 

269,341

 

 

 

117,888

 

 

 

328,449

 

 

 

1,392,437

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at December 31, 2015

 

$

441,548

 

 

$

235,211

 

 

$

269,341

 

 

$

117,888

 

 

$

134,310

 

 

$

1,198,298

 

Foreign currency translation adjustment and

   other

 

 

1,640

 

 

 

(415

)

 

 

(102

)

 

 

(48

)

 

 

(1,303

)

 

 

(228

)

Goodwill

 

 

443,188

 

 

 

234,796

 

 

 

269,239

 

 

 

117,840

 

 

 

327,146

 

 

 

1,392,209

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at March 31, 2016

 

$

443,188

 

 

$

234,796

 

 

$

269,239

 

 

$

117,840

 

 

$

133,007

 

 

$

1,198,070

 

 

Other Intangible Assets

Other intangible assets with finite lives are amortized over their estimated useful lives. For intangible assets with finite lives, we recorded amortization expense of $2.6 million and $3.0 million for the three months ended March 31, 2016 and 2015, respectively. Based solely on the amortizable intangible assets recorded as of March 31, 2016, we estimate amortization expense to be $7.8 million during the remainder of 2016, $9.6 million in 2017, $8.0 million in 2018, $7.4 million in 2019, $7.2 million in 2020, $6.7 million in 2021, and $8.9 million in years after 2021. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, finalization of asset valuations for newly acquired assets, changes in useful lives, changes in value due to foreign currency translation, and other factors.

 


v3.4.0.3
Long-Term Debt
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Debt

9. Long-Term Debt

The components of debt obligations are presented in the table below:

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

6% senior notes due 2022

 

 

300,000

 

 

 

300,000

 

Senior bank credit facility

 

 

207,000

 

 

 

200,000

 

Total debt

 

 

507,000

 

 

 

500,000

 

Less deferred debt issue costs

 

 

(5,039

)

 

 

(5,228

)

Long-term debt, net

 

$

501,961

 

 

$

494,772

 

 

There were $207.0 million in borrowings outstanding under the Company’s senior secured bank revolving credit facility (“Senior Bank Credit Facility”) as of March 31, 2016. The Company has classified these borrowings as long-term debt in the accompanying Condensed Consolidated Balance Sheets as the Company has the intent and ability, as supported by availability under the credit agreement entered into as of June 26, 2015, to refinance these borrowings for more than one year from the Balance Sheet date. Additionally, $1.4 million of the borrowing limit was utilized (and, therefore, unavailable) as of March 31, 2016 for letters of credit.

 

For further information on our 6% senior notes due 2022 and Senior Bank Credit Facility, see footnote “12. Long-Term Debt” in Part II, Item 8 of our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2015.

 


v3.4.0.3
Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

Contingencies

We are subject to legal actions arising in the ordinary course of business. In management’s opinion, we believe we have adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. We do not believe any settlement or judgment relating to any pending legal action would materially affect our financial position or results of operations.


v3.4.0.3
Share-Based Compensation
3 Months Ended
Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Share-Based Compensation

11. Share-Based Compensation

Share-based Awards and Share-based Compensation Expense

Our officers, employees, non-employee directors and certain individual service providers are eligible to participate in the Company’s equity compensation plans, subject to the discretion of the administrator of the plans. During the three months ended March 31, 2016, we awarded 225,272 restricted shares, stock options exercisable for up to 118,865 shares, 53,104 restricted stock units, and 83,914 performance stock units. These awards are recorded as equity on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2016, stock options exercisable for up to 31,467 shares and 10 restricted shares were forfeited prior to the completion of the vesting requirements.

Total share-based compensation expense, net of forfeitures, for the three months ended March 31, 2016 and 2015 is detailed in the following table:

 

 

 

Three Months Ended March 31,

 

Income Statement Classification

 

2016

 

 

2015

 

Direct cost of revenues

 

$

3,848

 

 

$

3,899

 

Selling, general and administrative expenses

 

 

2,709

 

 

 

3,043

 

Special charges

 

 

105

 

 

 

—

 

Total share-based compensation expense

 

$

6,662

 

 

$

6,942

 

 


v3.4.0.3
Segment Reporting
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment Reporting

12. Segment Reporting

We manage our business in five reportable segments: Corporate Finance & Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology and Strategic Communications.

Our Corporate Finance & Restructuring segment focuses on the strategic, operational, financial and capital needs of businesses around the world and provides consulting and advisory services on a wide range of areas, such as restructuring (including bankruptcy), interim management, financings, mergers and acquisitions (“M&A”), M&A integration, valuations and tax issues, as well as financial, operational and performance improvement. Our distressed service offerings generally include corporate restructurings and interim management, and our non-distressed service offerings generally include all other services mentioned above.

Our Forensic and Litigation Consulting segment provides law firms, companies, government clients and other interested parties with dispute advisory, investigations, forensic accounting, business intelligence assessments, data analytics and risk mitigation services and performance improvement services for our health solutions practice clients, as well as interim management services.

Our Economic Consulting segment provides law firms, companies, government entities and other interested parties with analysis of complex economic issues for use in legal, regulatory and international arbitration proceedings, strategic decision making and public policy debates in the U.S. and around the world.

Our Technology segment provides e-discovery and information governance, hosting and consulting services and software to its clients. It provides products, services and consulting to companies, law firms, courts and government agencies worldwide. Its comprehensive suite of software and services help clients locate, review and produce electronically stored information (“ESI”), including e-mail, computer files, voicemail, instant messaging, cloud and social media data, as well as financial and transactional data.

Our Strategic Communications segment provides advice and consulting services relating to financial and corporate communications, investor relations, reputation management, brand communications, public affairs, business consulting, digital design and marketing.

We evaluate the performance of our operating segments based on Adjusted Segment EBITDA. We define Adjusted Segment EBITDA as a segment’s share of consolidated operating income before depreciation, amortization of intangible assets, remeasurement of acquisition-related contingent consideration, special charges and goodwill impairment charges. We define Total Adjusted Segment EBITDA as the total of Adjusted Segment EBITDA for all segments, which excludes unallocated corporate expenses. Although Adjusted Segment EBITDA is not a measure of financial condition or performance determined in accordance with GAAP, we use Adjusted Segment EBITDA to internally evaluate the financial performance of our segments because we believe it is a useful supplemental measure which reflects current core operating performance and provides an indicator of the segment’s ability to generate cash.

The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Revenues

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

127,156

 

 

$

106,212

 

Forensic and Litigation Consulting

 

 

119,004

 

 

 

123,265

 

Economic Consulting

 

 

130,731

 

 

 

106,081

 

Technology

 

 

48,281

 

 

 

54,654

 

Strategic Communications

 

 

45,113

 

 

 

42,126

 

Total revenues

 

$

470,285

 

 

$

432,338

 

Adjusted Segment EBITDA

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

31,603

 

 

$

22,480

 

Forensic and Litigation Consulting

 

 

19,808

 

 

 

22,071

 

Economic Consulting

 

 

21,319

 

 

 

11,556

 

Technology

 

 

7,823

 

 

 

10,073

 

Strategic Communications

 

 

6,108

 

 

 

5,752

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

 

The table below reconciles Total Adjusted Segment EBITDA to income before income tax provision:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

Segment depreciation expense

 

 

(7,029

)

 

 

(6,991

)

Amortization of intangible assets

 

 

(2,606

)

 

 

(3,012

)

Special charges

 

 

(5,061

)

 

 

—

 

Unallocated corporate expenses, excluding special charges

 

 

(18,746

)

 

 

(14,081

)

Interest income and other

 

 

2,557

 

 

 

(137

)

Interest expense

 

 

(6,229

)

 

 

(12,368

)

Remeasurement of acquisition-related contingent

   consideration

 

 

(980

)

 

 

—

 

Income before income tax provision

 

$

48,567

 

 

$

35,343

 

 


v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information
3 Months Ended
Mar. 31, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information

13. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information

Substantially all of our domestic subsidiaries are guarantors of borrowings under our Senior Bank Credit Facility and 2022 Notes. The guarantees are full and unconditional and joint and several. All of our guarantors are wholly owned, direct or indirect, subsidiaries.

The following financial information presents condensed consolidating balance sheets, statements of comprehensive income (loss) and statements of cash flows for FTI Consulting, all the guarantor subsidiaries, all the non-guarantor subsidiaries and the eliminations necessary to arrive at the consolidated information for FTI Consulting and its subsidiaries. For purposes of this presentation, we have accounted for our investments in our subsidiaries using the equity method of accounting. The principal eliminating entries eliminate investment in subsidiary and intercompany balances and transactions

Condensed Consolidating Balance Sheet Information as of March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

—

 

 

$

114,451

 

Accounts receivable, net

 

 

176,302

 

 

 

191,471

 

 

 

185,457

 

 

 

—

 

 

 

553,230

 

Intercompany receivables

 

 

—

 

 

 

921,720

 

 

 

39,450

 

 

 

(961,170

)

 

 

—

 

Other current assets

 

 

33,076

 

 

 

22,789

 

 

 

20,805

 

 

 

—

 

 

 

76,670

 

Total current assets

 

 

223,370

 

 

 

1,136,143

 

 

 

346,008

 

 

 

(961,170

)

 

 

744,351

 

Property and equipment, net

 

 

31,765

 

 

 

12,649

 

 

 

26,849

 

 

 

—

 

 

 

71,263

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,039

 

 

 

—

 

 

 

1,198,070

 

Other intangible assets, net

 

 

24,877

 

 

 

15,013

 

 

 

41,528

 

 

 

(20,225

)

 

 

61,193

 

Investments in subsidiaries

 

 

2,021,892

 

 

 

495,463

 

 

 

—

 

 

 

(2,517,355

)

 

 

—

 

Other assets

 

 

40,855

 

 

 

70,630

 

 

 

38,682

 

 

 

—

 

 

 

150,167

 

Total assets

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

914,711

 

 

$

7,087

 

 

$

39,372

 

 

$

(961,170

)

 

 

—

 

Other current liabilities

 

 

109,576

 

 

 

92,243

 

 

 

85,700

 

 

 

—

 

 

 

287,519

 

Total current liabilities

 

 

1,024,287

 

 

 

99,330

 

 

 

125,072

 

 

 

(961,170

)

 

 

287,519

 

Long-term debt, net

 

 

501,961

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

501,961

 

Other liabilities

 

 

194,243

 

 

 

14,387

 

 

 

45,688

 

 

 

—

 

 

 

254,318

 

Total liabilities

 

 

1,720,491

 

 

 

113,717

 

 

 

170,760

 

 

 

(961,170

)

 

 

1,043,798

 

Stockholders' equity

 

 

1,181,246

 

 

 

2,032,234

 

 

 

505,346

 

 

 

(2,537,580

)

 

 

1,181,246

 

Total liabilities and stockholders' equity

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

 

Condensed Consolidating Balance Sheet Information as of December 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,211

 

 

$

165

 

 

$

114,384

 

 

$

—

 

 

$

149,760

 

Accounts receivable, net

 

 

159,121

 

 

 

169,488

 

 

 

171,175

 

 

 

—

 

 

 

499,784

 

Intercompany receivables

 

 

—

 

 

 

936,452

 

 

 

62,651

 

 

 

(999,103

)

 

 

—

 

Other current assets

 

 

44,086

 

 

 

25,627

 

 

 

22,368

 

 

 

—

 

 

 

92,081

 

Total current assets

 

 

238,418

 

 

 

1,131,732

 

 

 

370,578

 

 

 

(999,103

)

 

 

741,625

 

Property and equipment, net

 

 

33,699

 

 

 

13,409

 

 

 

27,652

 

 

 

—

 

 

 

74,760

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,267

 

 

 

—

 

 

 

1,198,298

 

Other intangible assets, net

 

 

25,863

 

 

 

15,571

 

 

 

43,542

 

 

 

(21,041

)

 

 

63,935

 

Investments in subsidiaries

 

 

1,995,409

 

 

 

486,462

 

 

 

—

 

 

 

(2,481,871

)

 

 

—

 

Other assets

 

 

40,359

 

 

 

72,981

 

 

 

37,060

 

 

 

—

 

 

 

150,400

 

Total assets

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

930,066

 

 

$

8,921

 

 

$

60,116

 

 

$

(999,103

)

 

$

—

 

Other current liabilities

 

 

135,421

 

 

 

107,188

 

 

 

104,468

 

 

 

—

 

 

 

347,077

 

Total current liabilities

 

 

1,065,487

 

 

 

116,109

 

 

 

164,584

 

 

 

(999,103

)

 

 

347,077

 

Long-term debt, net

 

 

494,772

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

494,772

 

Other liabilities

 

 

184,864

 

 

 

12,562

 

 

 

42,140

 

 

 

—

 

 

 

239,566

 

Total liabilities

 

 

1,745,123

 

 

 

128,671

 

 

 

206,724

 

 

 

(999,103

)

 

 

1,081,415

 

Stockholders' equity

 

 

1,147,603

 

 

 

2,007,537

 

 

 

495,375

 

 

 

(2,502,912

)

 

 

1,147,603

 

Total liabilities and stockholders' equity

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

 

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

182,994

 

 

$

162,563

 

 

$

127,066

 

 

$

(2,338

)

 

$

470,285

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

114,429

 

 

 

109,190

 

 

 

84,315

 

 

 

(2,298

)

 

 

305,636

 

Selling, general and administrative expenses

 

 

44,667

 

 

 

30,721

 

 

 

28,261

 

 

 

(40

)

 

 

103,609

 

Special charges

 

 

—

 

 

 

4,563

 

 

 

498

 

 

 

—

 

 

 

5,061

 

Acquisition-related contingent consideration

 

 

6

 

 

 

1,128

 

 

 

—

 

 

 

—

 

 

 

1,134

 

Amortization of other intangible assets

 

 

986

 

 

 

558

 

 

 

1,879

 

 

 

(817

)

 

 

2,606

 

 

 

 

160,088

 

 

 

146,160

 

 

 

114,953

 

 

 

(3,155

)

 

 

418,046

 

Operating income

 

 

22,906

 

 

 

16,403

 

 

 

12,113

 

 

 

817

 

 

 

52,239

 

Other (expense) income

 

 

(5,077

)

 

 

(710

)

 

 

2,115

 

 

 

—

 

 

 

(3,672

)

Income before income tax provision

 

 

17,829

 

 

 

15,693

 

 

 

14,228

 

 

 

817

 

 

 

48,567

 

Income tax provision

 

 

8,149

 

 

 

6,859

 

 

 

3,378

 

 

 

—

 

 

 

18,386

 

Equity in net earnings of subsidiaries

 

 

20,501

 

 

 

9,882

 

 

 

—

 

 

 

(30,383

)

 

 

—

 

Net income

 

$

30,181

 

 

$

18,716

 

 

$

10,850

 

 

$

(29,566

)

 

$

30,181

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Comprehensive income

 

$

30,181

 

 

$

18,716

 

 

$

10,492

 

 

$

(29,566

)

 

$

29,823

 

 

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

169,135

 

 

$

144,139

 

 

$

121,852

 

 

$

(2,788

)

 

$

432,338

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

105,063

 

 

 

96,587

 

 

 

80,083

 

 

 

(2,703

)

 

 

279,030

 

Selling, general and administrative expenses

 

 

43,411

 

 

 

29,877

 

 

 

29,011

 

 

 

(85

)

 

 

102,214

 

Special charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Acquisition-related contingent consideration

 

 

65

 

 

 

169

 

 

 

—

 

 

 

—

 

 

 

234

 

Amortization of other intangible assets

 

 

986

 

 

 

715

 

 

 

2,181

 

 

 

(870

)

 

 

3,012

 

 

 

 

149,525

 

 

 

127,348

 

 

 

111,275

 

 

 

(3,658

)

 

 

384,490

 

Operating income

 

 

19,610

 

 

 

16,791

 

 

 

10,577

 

 

 

870

 

 

 

47,848

 

Other (expense) income

 

 

(13,866

)

 

 

(2,010

)

 

 

3,371

 

 

 

—

 

 

 

(12,505

)

Income before income tax provision

 

 

5,744

 

 

 

14,781

 

 

 

13,948

 

 

 

870

 

 

 

35,343

 

Income tax provision

 

 

2,563

 

 

 

5,726

 

 

 

3,368

 

 

 

—

 

 

 

11,657

 

Equity in net earnings of subsidiaries

 

 

20,505

 

 

 

9,825

 

 

 

—

 

 

 

(30,330

)

 

 

—

 

Net income

 

$

23,686

 

 

$

18,880

 

 

$

10,580

 

 

$

(29,460

)

 

$

23,686

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Comprehensive income

 

$

23,686

 

 

$

18,880

 

 

$

(9,902

)

 

$

(29,460

)

 

$

3,204

 

 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(7,700

)

 

$

(8,956

)

 

$

(16,443

)

 

$

(33,099

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(788

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,362

)

Other

 

 

34

 

 

 

—

 

 

 

—

 

 

 

34

 

Net cash used in investing activities

 

 

(754

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,328

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings under revolving line of credit, net

 

 

7,000

 

 

 

—

 

 

 

—

 

 

 

7,000

 

Deposits

 

 

—

 

 

 

—

 

 

 

2,590

 

 

 

2,590

 

Purchase and retirement of common stock

 

 

(2,903

)

 

 

—

 

 

 

—

 

 

 

(2,903

)

Net issuance of common stock under equity compensation

   plans

 

 

(1,371

)

 

 

—

 

 

 

—

 

 

 

(1,371

)

Other

 

 

(135

)

 

 

—

 

 

 

—

 

 

 

(135

)

Intercompany transfers

 

 

(15,356

)

 

 

12,899

 

 

 

2,457

 

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(12,765

)

 

 

12,899

 

 

 

5,047

 

 

 

5,181

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(1,063

)

 

 

(1,063

)

Net decrease in cash and cash equivalents

 

 

(21,219

)

 

 

(2

)

 

 

(14,088

)

 

 

(35,309

)

Cash and cash equivalents, beginning of year

 

 

35,211

 

 

 

165

 

 

 

114,384

 

 

 

149,760

 

Cash and cash equivalents, end of year

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

114,451

 

 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(27,664

)

 

$

(5,191

)

 

$

(18,478

)

 

$

(51,333

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(3,979

)

 

 

(3,513

)

 

 

(1,384

)

 

 

(8,876

)

Other

 

 

32

 

 

 

—

 

 

 

39

 

 

 

71

 

Net cash used in investing activities

 

 

(3,947

)

 

 

(3,513

)

 

 

(1,345

)

 

 

(8,805

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net issuance of common stock under equity compensation

   plans

 

 

4,031

 

 

 

—

 

 

 

—

 

 

 

4,031

 

Deposits

 

 

—

 

 

 

—

 

 

 

1,380

 

 

 

1,380

 

Other

 

 

(85

)

 

 

—

 

 

 

—

 

 

 

(85

)

Intercompany transfers

 

 

(8,255

)

 

 

8,701

 

 

 

(446

)

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(4,309

)

 

 

8,701

 

 

 

934

 

 

 

5,326

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(3,573

)

 

 

(3,573

)

Net decrease in cash and cash equivalents

 

 

(35,920

)

 

 

(3

)

 

 

(22,462

)

 

 

(58,385

)

Cash and cash equivalents, beginning of year

 

 

171,090

 

 

 

159

 

 

 

112,431

 

 

 

283,680

 

Cash and cash equivalents, end of year

 

$

135,170

 

 

$

156

 

 

$

89,969

 

 

$

225,295

 

 


v3.4.0.3
Earnings Per Common Share (Tables)
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share Basic and Diluted

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator—basic and diluted

 

 

 

 

 

 

 

 

Net income

 

$

30,181

 

 

$

23,686

 

Denominator

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

   — basic

 

 

40,506

 

 

 

40,384

 

Effect of dilutive stock options

 

 

131

 

 

 

376

 

Effect of dilutive restricted shares

 

 

511

 

 

 

564

 

Weighted average number of common shares outstanding

   — diluted

 

 

41,148

 

 

 

41,324

 

Earnings per common share — basic

 

$

0.75

 

 

$

0.59

 

Earnings per common share — diluted

 

$

0.73

 

 

$

0.57

 

Antidilutive stock options and restricted shares

 

 

2,657

 

 

 

2,173

 

 


v3.4.0.3
Special Charges (Tables)
3 Months Ended
Mar. 31, 2016
Text Block [Abstract]  
Schedule of Special Charges Reserve by Type of Cost

Activity related to the liability for these costs for the three months ended March 31, 2016 is as follows:

 

 

 

Employee

 

 

Lease

 

 

 

 

 

 

 

Termination

 

 

Termination

 

 

 

 

 

 

 

Costs

 

 

Costs

 

 

Total

 

Balance at December 31, 2015

 

$

7,768

 

 

$

4,045

 

 

$

11,813

 

Additions

 

 

4,873

 

 

 

—

 

 

 

4,873

 

Payments

 

 

(2,787

)

 

 

(67

)

 

 

(2,854

)

Foreign currency translation adjustment and other

 

 

(3

)

 

 

—

 

 

 

(3

)

Balance at March 31, 2016

 

$

9,851

 

 

$

3,978

 

 

$

13,829

 

 


v3.4.0.3
Goodwill and Other Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]  
Schedule of Changes in Carrying Amounts of Goodwill by Operating Segment

Goodwill

The changes in the carrying amounts of goodwill by operating segment for the three months ended March 31, 2016, are as follows:

 

 

 

Corporate

 

 

Forensic and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance &

 

 

Litigation

 

 

Economic

 

 

 

 

 

 

Strategic

 

 

 

 

 

 

 

Restructuring

 

 

Consulting

 

 

Consulting

 

 

Technology

 

 

Communications

 

 

Total

 

Balance at December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

441,548

 

 

 

235,211

 

 

 

269,341

 

 

 

117,888

 

 

 

328,449

 

 

 

1,392,437

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at December 31, 2015

 

$

441,548

 

 

$

235,211

 

 

$

269,341

 

 

$

117,888

 

 

$

134,310

 

 

$

1,198,298

 

Foreign currency translation adjustment and

   other

 

 

1,640

 

 

 

(415

)

 

 

(102

)

 

 

(48

)

 

 

(1,303

)

 

 

(228

)

Goodwill

 

 

443,188

 

 

 

234,796

 

 

 

269,239

 

 

 

117,840

 

 

 

327,146

 

 

 

1,392,209

 

Accumulated goodwill impairment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194,139

)

 

 

(194,139

)

Goodwill, net at March 31, 2016

 

$

443,188

 

 

$

234,796

 

 

$

269,239

 

 

$

117,840

 

 

$

133,007

 

 

$

1,198,070

 

 


v3.4.0.3
Long-Term Debt (Tables)
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Components of Debt Obligations

The components of debt obligations are presented in the table below:

 

 

 

March 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

6% senior notes due 2022

 

 

300,000

 

 

 

300,000

 

Senior bank credit facility

 

 

207,000

 

 

 

200,000

 

Total debt

 

 

507,000

 

 

 

500,000

 

Less deferred debt issue costs

 

 

(5,039

)

 

 

(5,228

)

Long-term debt, net

 

$

501,961

 

 

$

494,772

 

 


v3.4.0.3
Share-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Schedule of Share-Based Compensation Expense

Total share-based compensation expense, net of forfeitures, for the three months ended March 31, 2016 and 2015 is detailed in the following table:

 

 

 

Three Months Ended March 31,

 

Income Statement Classification

 

2016

 

 

2015

 

Direct cost of revenues

 

$

3,848

 

 

$

3,899

 

Selling, general and administrative expenses

 

 

2,709

 

 

 

3,043

 

Special charges

 

 

105

 

 

 

—

 

Total share-based compensation expense

 

$

6,662

 

 

$

6,942

 

 


v3.4.0.3
Segment Reporting (Tables)
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Revenues and Adjusted Segment Earnings before Interest, Taxes, Depreciation and Amortization for Reportable Segments

The table below presents revenues and Adjusted Segment EBITDA for our reportable segments:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Revenues

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

127,156

 

 

$

106,212

 

Forensic and Litigation Consulting

 

 

119,004

 

 

 

123,265

 

Economic Consulting

 

 

130,731

 

 

 

106,081

 

Technology

 

 

48,281

 

 

 

54,654

 

Strategic Communications

 

 

45,113

 

 

 

42,126

 

Total revenues

 

$

470,285

 

 

$

432,338

 

Adjusted Segment EBITDA

 

 

 

 

 

 

 

 

Corporate Finance & Restructuring

 

$

31,603

 

 

$

22,480

 

Forensic and Litigation Consulting

 

 

19,808

 

 

 

22,071

 

Economic Consulting

 

 

21,319

 

 

 

11,556

 

Technology

 

 

7,823

 

 

 

10,073

 

Strategic Communications

 

 

6,108

 

 

 

5,752

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

 

Reconciliation of Adjusted Segment Earnings before Interest, Taxes, Depreciation and Amortization

The table below reconciles Total Adjusted Segment EBITDA to income before income tax provision:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total Adjusted Segment EBITDA

 

$

86,661

 

 

$

71,932

 

Segment depreciation expense

 

 

(7,029

)

 

 

(6,991

)

Amortization of intangible assets

 

 

(2,606

)

 

 

(3,012

)

Special charges

 

 

(5,061

)

 

 

—

 

Unallocated corporate expenses, excluding special charges

 

 

(18,746

)

 

 

(14,081

)

Interest income and other

 

 

2,557

 

 

 

(137

)

Interest expense

 

 

(6,229

)

 

 

(12,368

)

Remeasurement of acquisition-related contingent

   consideration

 

 

(980

)

 

 

—

 

Income before income tax provision

 

$

48,567

 

 

$

35,343

 

 


v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Tables)
3 Months Ended
Mar. 31, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Condensed Consolidating Balance Sheet Information

Condensed Consolidating Balance Sheet Information as of March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

—

 

 

$

114,451

 

Accounts receivable, net

 

 

176,302

 

 

 

191,471

 

 

 

185,457

 

 

 

—

 

 

 

553,230

 

Intercompany receivables

 

 

—

 

 

 

921,720

 

 

 

39,450

 

 

 

(961,170

)

 

 

—

 

Other current assets

 

 

33,076

 

 

 

22,789

 

 

 

20,805

 

 

 

—

 

 

 

76,670

 

Total current assets

 

 

223,370

 

 

 

1,136,143

 

 

 

346,008

 

 

 

(961,170

)

 

 

744,351

 

Property and equipment, net

 

 

31,765

 

 

 

12,649

 

 

 

26,849

 

 

 

—

 

 

 

71,263

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,039

 

 

 

—

 

 

 

1,198,070

 

Other intangible assets, net

 

 

24,877

 

 

 

15,013

 

 

 

41,528

 

 

 

(20,225

)

 

 

61,193

 

Investments in subsidiaries

 

 

2,021,892

 

 

 

495,463

 

 

 

—

 

 

 

(2,517,355

)

 

 

—

 

Other assets

 

 

40,855

 

 

 

70,630

 

 

 

38,682

 

 

 

—

 

 

 

150,167

 

Total assets

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

914,711

 

 

$

7,087

 

 

$

39,372

 

 

$

(961,170

)

 

 

—

 

Other current liabilities

 

 

109,576

 

 

 

92,243

 

 

 

85,700

 

 

 

—

 

 

 

287,519

 

Total current liabilities

 

 

1,024,287

 

 

 

99,330

 

 

 

125,072

 

 

 

(961,170

)

 

 

287,519

 

Long-term debt, net

 

 

501,961

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

501,961

 

Other liabilities

 

 

194,243

 

 

 

14,387

 

 

 

45,688

 

 

 

—

 

 

 

254,318

 

Total liabilities

 

 

1,720,491

 

 

 

113,717

 

 

 

170,760

 

 

 

(961,170

)

 

 

1,043,798

 

Stockholders' equity

 

 

1,181,246

 

 

 

2,032,234

 

 

 

505,346

 

 

 

(2,537,580

)

 

 

1,181,246

 

Total liabilities and stockholders' equity

 

$

2,901,737

 

 

$

2,145,951

 

 

$

676,106

 

 

$

(3,498,750

)

 

$

2,225,044

 

Condensed Consolidating Balance Sheet Information as of December 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,211

 

 

$

165

 

 

$

114,384

 

 

$

—

 

 

$

149,760

 

Accounts receivable, net

 

 

159,121

 

 

 

169,488

 

 

 

171,175

 

 

 

—

 

 

 

499,784

 

Intercompany receivables

 

 

—

 

 

 

936,452

 

 

 

62,651

 

 

 

(999,103

)

 

 

—

 

Other current assets

 

 

44,086

 

 

 

25,627

 

 

 

22,368

 

 

 

—

 

 

 

92,081

 

Total current assets

 

 

238,418

 

 

 

1,131,732

 

 

 

370,578

 

 

 

(999,103

)

 

 

741,625

 

Property and equipment, net

 

 

33,699

 

 

 

13,409

 

 

 

27,652

 

 

 

—

 

 

 

74,760

 

Goodwill

 

 

558,978

 

 

 

416,053

 

 

 

223,267

 

 

 

—

 

 

 

1,198,298

 

Other intangible assets, net

 

 

25,863

 

 

 

15,571

 

 

 

43,542

 

 

 

(21,041

)

 

 

63,935

 

Investments in subsidiaries

 

 

1,995,409

 

 

 

486,462

 

 

 

—

 

 

 

(2,481,871

)

 

 

—

 

Other assets

 

 

40,359

 

 

 

72,981

 

 

 

37,060

 

 

 

—

 

 

 

150,400

 

Total assets

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany payables

 

$

930,066

 

 

$

8,921

 

 

$

60,116

 

 

$

(999,103

)

 

$

—

 

Other current liabilities

 

 

135,421

 

 

 

107,188

 

 

 

104,468

 

 

 

—

 

 

 

347,077

 

Total current liabilities

 

 

1,065,487

 

 

 

116,109

 

 

 

164,584

 

 

 

(999,103

)

 

 

347,077

 

Long-term debt, net

 

 

494,772

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

494,772

 

Other liabilities

 

 

184,864

 

 

 

12,562

 

 

 

42,140

 

 

 

—

 

 

 

239,566

 

Total liabilities

 

 

1,745,123

 

 

 

128,671

 

 

 

206,724

 

 

 

(999,103

)

 

 

1,081,415

 

Stockholders' equity

 

 

1,147,603

 

 

 

2,007,537

 

 

 

495,375

 

 

 

(2,502,912

)

 

 

1,147,603

 

Total liabilities and stockholders' equity

 

$

2,892,726

 

 

$

2,136,208

 

 

$

702,099

 

 

$

(3,502,015

)

 

$

2,229,018

 

 

Condensed Consolidating Statement of Comprehensive Income

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

182,994

 

 

$

162,563

 

 

$

127,066

 

 

$

(2,338

)

 

$

470,285

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

114,429

 

 

 

109,190

 

 

 

84,315

 

 

 

(2,298

)

 

 

305,636

 

Selling, general and administrative expenses

 

 

44,667

 

 

 

30,721

 

 

 

28,261

 

 

 

(40

)

 

 

103,609

 

Special charges

 

 

—

 

 

 

4,563

 

 

 

498

 

 

 

—

 

 

 

5,061

 

Acquisition-related contingent consideration

 

 

6

 

 

 

1,128

 

 

 

—

 

 

 

—

 

 

 

1,134

 

Amortization of other intangible assets

 

 

986

 

 

 

558

 

 

 

1,879

 

 

 

(817

)

 

 

2,606

 

 

 

 

160,088

 

 

 

146,160

 

 

 

114,953

 

 

 

(3,155

)

 

 

418,046

 

Operating income

 

 

22,906

 

 

 

16,403

 

 

 

12,113

 

 

 

817

 

 

 

52,239

 

Other (expense) income

 

 

(5,077

)

 

 

(710

)

 

 

2,115

 

 

 

—

 

 

 

(3,672

)

Income before income tax provision

 

 

17,829

 

 

 

15,693

 

 

 

14,228

 

 

 

817

 

 

 

48,567

 

Income tax provision

 

 

8,149

 

 

 

6,859

 

 

 

3,378

 

 

 

—

 

 

 

18,386

 

Equity in net earnings of subsidiaries

 

 

20,501

 

 

 

9,882

 

 

 

—

 

 

 

(30,383

)

 

 

—

 

Net income

 

$

30,181

 

 

$

18,716

 

 

$

10,850

 

 

$

(29,566

)

 

$

30,181

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(358

)

 

 

—

 

 

 

(358

)

Comprehensive income

 

$

30,181

 

 

$

18,716

 

 

$

10,492

 

 

$

(29,566

)

 

$

29,823

 

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended

March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Eliminations

 

 

Consolidated

 

Revenues

 

$

169,135

 

 

$

144,139

 

 

$

121,852

 

 

$

(2,788

)

 

$

432,338

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct cost of revenues

 

 

105,063

 

 

 

96,587

 

 

 

80,083

 

 

 

(2,703

)

 

 

279,030

 

Selling, general and administrative expenses

 

 

43,411

 

 

 

29,877

 

 

 

29,011

 

 

 

(85

)

 

 

102,214

 

Special charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Acquisition-related contingent consideration

 

 

65

 

 

 

169

 

 

 

—

 

 

 

—

 

 

 

234

 

Amortization of other intangible assets

 

 

986

 

 

 

715

 

 

 

2,181

 

 

 

(870

)

 

 

3,012

 

 

 

 

149,525

 

 

 

127,348

 

 

 

111,275

 

 

 

(3,658

)

 

 

384,490

 

Operating income

 

 

19,610

 

 

 

16,791

 

 

 

10,577

 

 

 

870

 

 

 

47,848

 

Other (expense) income

 

 

(13,866

)

 

 

(2,010

)

 

 

3,371

 

 

 

—

 

 

 

(12,505

)

Income before income tax provision

 

 

5,744

 

 

 

14,781

 

 

 

13,948

 

 

 

870

 

 

 

35,343

 

Income tax provision

 

 

2,563

 

 

 

5,726

 

 

 

3,368

 

 

 

—

 

 

 

11,657

 

Equity in net earnings of subsidiaries

 

 

20,505

 

 

 

9,825

 

 

 

—

 

 

 

(30,330

)

 

 

—

 

Net income

 

$

23,686

 

 

$

18,880

 

 

$

10,580

 

 

$

(29,460

)

 

$

23,686

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of

   tax expense of $0

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Other comprehensive loss, net of tax:

 

 

—

 

 

 

—

 

 

 

(20,482

)

 

 

—

 

 

 

(20,482

)

Comprehensive income

 

$

23,686

 

 

$

18,880

 

 

$

(9,902

)

 

$

(29,460

)

 

$

3,204

 

 

Condensed Consolidating Statement of Cash Flow

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2016

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(7,700

)

 

$

(8,956

)

 

$

(16,443

)

 

$

(33,099

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(788

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,362

)

Other

 

 

34

 

 

 

—

 

 

 

—

 

 

 

34

 

Net cash used in investing activities

 

 

(754

)

 

 

(3,945

)

 

 

(1,629

)

 

 

(6,328

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings under revolving line of credit, net

 

 

7,000

 

 

 

—

 

 

 

—

 

 

 

7,000

 

Deposits

 

 

—

 

 

 

—

 

 

 

2,590

 

 

 

2,590

 

Purchase and retirement of common stock

 

 

(2,903

)

 

 

—

 

 

 

—

 

 

 

(2,903

)

Net issuance of common stock under equity compensation

   plans

 

 

(1,371

)

 

 

—

 

 

 

—

 

 

 

(1,371

)

Other

 

 

(135

)

 

 

—

 

 

 

—

 

 

 

(135

)

Intercompany transfers

 

 

(15,356

)

 

 

12,899

 

 

 

2,457

 

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(12,765

)

 

 

12,899

 

 

 

5,047

 

 

 

5,181

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(1,063

)

 

 

(1,063

)

Net decrease in cash and cash equivalents

 

 

(21,219

)

 

 

(2

)

 

 

(14,088

)

 

 

(35,309

)

Cash and cash equivalents, beginning of year

 

 

35,211

 

 

 

165

 

 

 

114,384

 

 

 

149,760

 

Cash and cash equivalents, end of year

 

$

13,992

 

 

$

163

 

 

$

100,296

 

 

$

114,451

 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2015

 

 

 

FTI

 

 

Guarantor

 

 

Non-Guarantor

 

 

 

 

 

 

 

Consulting, Inc.

 

 

Subsidiaries

 

 

Subsidiaries

 

 

Consolidated

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(27,664

)

 

$

(5,191

)

 

$

(18,478

)

 

$

(51,333

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment and other

 

 

(3,979

)

 

 

(3,513

)

 

 

(1,384

)

 

 

(8,876

)

Other

 

 

32

 

 

 

—

 

 

 

39

 

 

 

71

 

Net cash used in investing activities

 

 

(3,947

)

 

 

(3,513

)

 

 

(1,345

)

 

 

(8,805

)

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net issuance of common stock under equity compensation

   plans

 

 

4,031

 

 

 

—

 

 

 

—

 

 

 

4,031

 

Deposits

 

 

—

 

 

 

—

 

 

 

1,380

 

 

 

1,380

 

Other

 

 

(85

)

 

 

—

 

 

 

—

 

 

 

(85

)

Intercompany transfers

 

 

(8,255

)

 

 

8,701

 

 

 

(446

)

 

 

—

 

Net cash (used in) provided by financing activities

 

 

(4,309

)

 

 

8,701

 

 

 

934

 

 

 

5,326

 

Effects of exchange rate changes on cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

(3,573

)

 

 

(3,573

)

Net decrease in cash and cash equivalents

 

 

(35,920

)

 

 

(3

)

 

 

(22,462

)

 

 

(58,385

)

Cash and cash equivalents, beginning of year

 

 

171,090

 

 

 

159

 

 

 

112,431

 

 

 

283,680

 

Cash and cash equivalents, end of year

 

$

135,170

 

 

$

156

 

 

$

89,969

 

 

$

225,295

 

 


v3.4.0.3
Earnings Per Common Share Basic and Diluted (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Numerator—basic and diluted    
Net income $ 30,181 $ 23,686
Denominator    
Weighted average number of common shares outstanding — basic 40,506 40,384
Effect of dilutive stock options 131 376
Effect of dilutive restricted shares 511 564
Weighted average number of common shares outstanding — diluted 41,148 41,324
Earnings per common share — basic $ 0.75 $ 0.59
Earnings per common share — diluted $ 0.73 $ 0.57
Stock Options And Restricted Shares    
Denominator    
Anti-dilutive securities excluded from computation of earnings per share 2,657 2,173

v3.4.0.3
Special Charges - Additional Information (Detail)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
USD ($)
Employee
Dec. 31, 2015
USD ($)
Dec. 31, 2014
USD ($)
Dec. 31, 2013
USD ($)
Dec. 31, 2012
USD ($)
Other Income And Expenses [Abstract]          
Special charges $ 5,061        
Number of employees terminated for future growth | Employee 53        
Total cash outflow associated with special charges, amount expected to be paid $ 4,900   $ 65,500 $ 65,500 $ 65,500
Cash outflow associated with special charges, amount paid 2,300 $ 54,300      
Cash outflow associated with special charges, amount expected to be paid in remainder of 2016 2,300        
Cash outflow associated with special charges, amount expected to be paid in 2017 300        
Total expected payments to special charges, amount expected to be paid in 2016 2,700        
Total expected payments to special charges, amount expected to be paid in 2017 3,100        
Total expected payments to special charges, amount expected to be paid in 2018 2,600        
Total expected payments to special charges, amount expected to be paid in 2019 1,200        
Total expected payments to special charges, amount expected to be paid from 2020 to 2026 $ 1,600        

v3.4.0.3
Activity Related to Liability for Special Charges (Detail)
$ in Thousands
3 Months Ended
Mar. 31, 2016
USD ($)
Special Charges [Line Items]  
Beginning Balance $ 11,813
Additions 4,873
Payments (2,854)
Foreign currency translation adjustment and other (3)
Ending Balance 13,829
Employee Termination Costs  
Special Charges [Line Items]  
Beginning Balance 7,768
Additions 4,873
Payments (2,787)
Foreign currency translation adjustment and other (3)
Ending Balance 9,851
Lease Termination Costs  
Special Charges [Line Items]  
Beginning Balance 4,045
Payments (67)
Ending Balance $ 3,978

v3.4.0.3
Allowance for Doubtful Accounts and Unbilled Services - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Receivables [Abstract]    
Provision for doubtful accounts $ 437 $ 2,998

v3.4.0.3
Research and Development Costs - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Research And Development [Abstract]    
Research and development costs related to software development $ 4.0 $ 5.9

v3.4.0.3
Financial Instruments - Additional Information (Detail) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Assets Sold Under Agreements To Repurchase [Line Items]      
Long-term debt, fair value $ 522,000,000   $ 513,500,000
Long-term debt, carrying value $ 507,000,000   $ 500,000,000
Interest percentage 6.00%    
Debt maturity period 2022    
Gain/Loss on remeasurement of contingent consideration $ (1,000,000) $ 0  
Accretion expenses for acquisition-related contingent consideration $ 200,000 $ 200,000  
6.0% Senior Notes Due 2022      
Assets Sold Under Agreements To Repurchase [Line Items]      
Interest percentage 6.00%    
Debt maturity period 2022   2022

v3.4.0.3
Changes in Carrying Amounts of Goodwill by Operating Segment (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Goodwill [Line Items]    
Goodwill, Gross $ 1,392,209 $ 1,392,437
Accumulated goodwill impairment (194,139) (194,139)
Goodwill, net 1,198,070 1,198,298
Foreign currency translation adjustment and other (228)  
Corporate Finance / Restructuring    
Goodwill [Line Items]    
Goodwill, Gross 443,188 441,548
Goodwill, net 443,188 441,548
Foreign currency translation adjustment and other 1,640  
Forensic and Litigation Consulting    
Goodwill [Line Items]    
Goodwill, Gross 234,796 235,211
Goodwill, net 234,796 235,211
Foreign currency translation adjustment and other (415)  
Economic Consulting    
Goodwill [Line Items]    
Goodwill, Gross 269,239 269,341
Goodwill, net 269,239 269,341
Foreign currency translation adjustment and other (102)  
Technology    
Goodwill [Line Items]    
Goodwill, Gross 117,840 117,888
Goodwill, net 117,840 117,888
Foreign currency translation adjustment and other (48)  
Strategic Communications    
Goodwill [Line Items]    
Goodwill, Gross 327,146 328,449
Accumulated goodwill impairment (194,139) (194,139)
Goodwill, net 133,007 $ 134,310
Foreign currency translation adjustment and other $ (1,303)  

v3.4.0.3
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]    
Amortization of other intangible assets $ 2,606 $ 3,012
Estimated amortization expense during the remainder of 2016 7,800  
Estimated amortization expense for the year 2017 9,600  
Estimated amortization expense for the year 2018 8,000  
Estimated amortization expense for the year 2019 7,400  
Estimated amortization expense for the year 2020 7,200  
Estimated amortization expense for the year 2021 6,700  
Estimated amortization expense after the year 2021 $ 8,900  

v3.4.0.3
Components of Long-Term Debt Obligations (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Total debt $ 507,000 $ 500,000
Less deferred debt issue costs (5,039) (5,228)
Long-term debt, net 501,961 494,772
Senior Bank Credit Facility    
Debt Instrument [Line Items]    
Credit facility 207,000 200,000
6.0% Senior Notes Due 2022    
Debt Instrument [Line Items]    
Senior notes $ 300,000 $ 300,000

v3.4.0.3
Long-Term Debt and Capital Lease Obligations - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Interest percentage 6.00%  
Debt maturity period 2022  
Senior Bank Credit Facility    
Debt Instrument [Line Items]    
Credit facility $ 207,000 $ 200,000
Letters of Credit Outstanding, Amount $ 1,400  

v3.4.0.3
Share-Based Compensation - Additional Information (Detail)
3 Months Ended
Mar. 31, 2016
shares
Stock Options | Maximum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based awards exercisable 118,865
Share based awards forfeited 31,467
Restricted Stock  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based awards 225,272
Share based awards forfeited 10
Restricted Stock Units (RSUs)  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based awards 53,104
Performance Unit  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-based awards 83,914

v3.4.0.3
Schedule of Share-based Compensation Expense (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total share-based compensation expense $ 6,662 $ 6,942
Direct Cost Of Revenues    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total share-based compensation expense 3,848 3,899
Selling, General And Administrative Expenses    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total share-based compensation expense 2,709 $ 3,043
Special Charges    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total share-based compensation expense $ 105  

v3.4.0.3
Segment Reporting - Additional Information (Detail)
3 Months Ended
Mar. 31, 2016
Segment
Segment Reporting [Abstract]  
Number of operating segments 5

v3.4.0.3
Revenues and Adjusted Segment Earnings before Interest, Taxes, Depreciation and Amortization for Reportable Segments (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Segment Reporting Information [Line Items]    
Revenues $ 470,285 $ 432,338
Adjusted Segment EBITDA 86,661 71,932
Corporate Finance & Restructuring    
Segment Reporting Information [Line Items]    
Revenues 127,156 106,212
Adjusted Segment EBITDA 31,603 22,480
Forensic and Litigation Consulting    
Segment Reporting Information [Line Items]    
Revenues 119,004 123,265
Adjusted Segment EBITDA 19,808 22,071
Economic Consulting    
Segment Reporting Information [Line Items]    
Revenues 130,731 106,081
Adjusted Segment EBITDA 21,319 11,556
Technology    
Segment Reporting Information [Line Items]    
Revenues 48,281 54,654
Adjusted Segment EBITDA 7,823 10,073
Strategic Communications    
Segment Reporting Information [Line Items]    
Revenues 45,113 42,126
Adjusted Segment EBITDA $ 6,108 $ 5,752

v3.4.0.3
Reconciliation of Adjusted Segment Earnings before Interest, Taxes, Depreciation and Amortization (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Segment Reporting [Abstract]    
Total Adjusted Segment EBITDA $ 86,661 $ 71,932
Segment depreciation expense (7,029) (6,991)
Amortization of intangible assets (2,606) (3,012)
Special charges (5,061)  
Unallocated corporate expenses, excluding special charges (18,746) (14,081)
Interest income and other 2,557 (137)
Interest expense (6,229) (12,368)
Remeasurement of acquisition-related contingent consideration (980)  
Income before income tax provision $ 48,567 $ 35,343

v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information Condensed Consolidating Balance Sheet Information (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Assets        
Cash and cash equivalents $ 114,451 $ 149,760 $ 225,295 $ 283,680
Accounts receivable, net 553,230 499,784    
Other current assets 76,670 92,081    
Total current assets 744,351 741,625    
Property and equipment, net 71,263 74,760    
Goodwill 1,198,070 1,198,298    
Other intangible assets, net 61,193 63,935    
Other assets 150,167 150,400    
Total assets 2,225,044 2,229,018    
Liabilities        
Other current liabilities 287,519 347,077    
Total current liabilities 287,519 347,077    
Long-term debt, net 501,961 494,772    
Other liabilities 254,318 239,566    
Total liabilities 1,043,798 1,081,415    
Stockholders' equity 1,181,246 1,147,603    
Total liabilities and stockholders' equity 2,225,044 2,229,018    
FTI Consulting, Inc.        
Assets        
Cash and cash equivalents 13,992 35,211 135,170 171,090
Accounts receivable, net 176,302 159,121    
Other current assets 33,076 44,086    
Total current assets 223,370 238,418    
Property and equipment, net 31,765 33,699    
Goodwill 558,978 558,978    
Other intangible assets, net 24,877 25,863    
Investments in subsidiaries 2,021,892 1,995,409    
Other assets 40,855 40,359    
Total assets 2,901,737 2,892,726    
Liabilities        
Intercompany payables 914,711 930,066    
Other current liabilities 109,576 135,421    
Total current liabilities 1,024,287 1,065,487    
Long-term debt, net 501,961 494,772    
Other liabilities 194,243 184,864    
Total liabilities 1,720,491 1,745,123    
Stockholders' equity 1,181,246 1,147,603    
Total liabilities and stockholders' equity 2,901,737 2,892,726    
Guarantor Subsidiaries        
Assets        
Cash and cash equivalents 163 165 156 159
Accounts receivable, net 191,471 169,488    
Intercompany receivables 921,720 936,452    
Other current assets 22,789 25,627    
Total current assets 1,136,143 1,131,732    
Property and equipment, net 12,649 13,409    
Goodwill 416,053 416,053    
Other intangible assets, net 15,013 15,571    
Investments in subsidiaries 495,463 486,462    
Other assets 70,630 72,981    
Total assets 2,145,951 2,136,208    
Liabilities        
Intercompany payables 7,087 8,921    
Other current liabilities 92,243 107,188    
Total current liabilities 99,330 116,109    
Other liabilities 14,387 12,562    
Total liabilities 113,717 128,671    
Stockholders' equity 2,032,234 2,007,537    
Total liabilities and stockholders' equity 2,145,951 2,136,208    
Non-Guarantor Subsidiaries        
Assets        
Cash and cash equivalents 100,296 114,384 $ 89,969 $ 112,431
Accounts receivable, net 185,457 171,175    
Intercompany receivables 39,450 62,651    
Other current assets 20,805 22,368    
Total current assets 346,008 370,578    
Property and equipment, net 26,849 27,652    
Goodwill 223,039 223,267    
Other intangible assets, net 41,528 43,542    
Other assets 38,682 37,060    
Total assets 676,106 702,099    
Liabilities        
Intercompany payables 39,372 60,116    
Other current liabilities 85,700 104,468    
Total current liabilities 125,072 164,584    
Other liabilities 45,688 42,140    
Total liabilities 170,760 206,724    
Stockholders' equity 505,346 495,375    
Total liabilities and stockholders' equity 676,106 702,099    
Eliminations        
Assets        
Intercompany receivables (961,170) (999,103)    
Total current assets (961,170) (999,103)    
Other intangible assets, net (20,225) (21,041)    
Investments in subsidiaries (2,517,355) (2,481,871)    
Total assets (3,498,750) (3,502,015)    
Liabilities        
Intercompany payables (961,170) (999,103)    
Total current liabilities (961,170) (999,103)    
Total liabilities (961,170) (999,103)    
Stockholders' equity (2,537,580) (2,502,912)    
Total liabilities and stockholders' equity $ (3,498,750) $ (3,502,015)    

v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Condensed Consolidating Statement Of Comprehensive Income) (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenues $ 470,285 $ 432,338
Operating expenses    
Direct cost of revenues 305,636 279,030
Selling, general and administrative expenses 103,609 102,214
Special charges 5,061  
Acquisition-related contingent consideration 1,134 234
Amortization of other intangible assets 2,606 3,012
Costs and Expenses, Total 418,046 384,490
Operating income 52,239 47,848
Other (expense) income (3,672) (12,505)
Income before income tax provision 48,567 35,343
Income tax provision 18,386 11,657
Net income 30,181 23,686
Other comprehensive loss, net of tax:    
Foreign currency translation adjustments, net of tax expense of $0 (358) (20,482)
Total other comprehensive loss, net of tax (358) (20,482)
Comprehensive income 29,823 3,204
FTI Consulting, Inc.    
Revenues 182,994 169,135
Operating expenses    
Direct cost of revenues 114,429 105,063
Selling, general and administrative expenses 44,667 43,411
Acquisition-related contingent consideration 6 65
Amortization of other intangible assets 986 986
Costs and Expenses, Total 160,088 149,525
Operating income 22,906 19,610
Other (expense) income (5,077) (13,866)
Income before income tax provision 17,829 5,744
Income tax provision 8,149 2,563
Equity in net earnings of subsidiaries 20,501 20,505
Net income 30,181 23,686
Other comprehensive loss, net of tax:    
Comprehensive income 30,181 23,686
Guarantor Subsidiaries    
Revenues 162,563 144,139
Operating expenses    
Direct cost of revenues 109,190 96,587
Selling, general and administrative expenses 30,721 29,877
Special charges 4,563  
Acquisition-related contingent consideration 1,128 169
Amortization of other intangible assets 558 715
Costs and Expenses, Total 146,160 127,348
Operating income 16,403 16,791
Other (expense) income (710) (2,010)
Income before income tax provision 15,693 14,781
Income tax provision 6,859 5,726
Equity in net earnings of subsidiaries 9,882 9,825
Net income 18,716 18,880
Other comprehensive loss, net of tax:    
Comprehensive income 18,716 18,880
Non-Guarantor Subsidiaries    
Revenues 127,066 121,852
Operating expenses    
Direct cost of revenues 84,315 80,083
Selling, general and administrative expenses 28,261 29,011
Special charges 498  
Amortization of other intangible assets 1,879 2,181
Costs and Expenses, Total 114,953 111,275
Operating income 12,113 10,577
Other (expense) income 2,115 3,371
Income before income tax provision 14,228 13,948
Income tax provision 3,378 3,368
Net income 10,850 10,580
Other comprehensive loss, net of tax:    
Foreign currency translation adjustments, net of tax expense of $0 (358) (20,482)
Total other comprehensive loss, net of tax (358) (20,482)
Comprehensive income 10,492 (9,902)
Eliminations    
Revenues (2,338) (2,788)
Operating expenses    
Direct cost of revenues (2,298) (2,703)
Selling, general and administrative expenses (40) (85)
Amortization of other intangible assets (817) (870)
Costs and Expenses, Total (3,155) (3,658)
Operating income 817 870
Income before income tax provision 817 870
Equity in net earnings of subsidiaries (30,383) (30,330)
Net income (29,566) (29,460)
Other comprehensive loss, net of tax:    
Comprehensive income $ (29,566) $ (29,460)

v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Condensed Consolidating Statement Of Comprehensive Income) (Parenthetical) (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Foreign currency translation adjustments, tax expense $ 0 $ 0

v3.4.0.3
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information Condensed Consolidating Statement Of Cash Flow (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Operating activities    
Net cash used in operating activities $ (33,099) $ (51,333)
Investing activities    
Purchases of property and equipment (6,362) (8,876)
Other 34 71
Net cash used in investing activities (6,328) (8,805)
Financing activities    
Borrowings under revolving line of credit, net 7,000  
Deposits 2,590 1,380
Purchase and retirement of common stock (2,903)  
Net issuance of common stock under equity compensation plans (1,371) 4,031
Other (135) (85)
Net cash provided by financing activities 5,181 5,326
Effect of exchange rate changes on cash and cash equivalents (1,063) (3,573)
Net decrease in cash and cash equivalents (35,309) (58,385)
Cash and cash equivalents, beginning of period 149,760 283,680
Cash and cash equivalents, end of period 114,451 225,295
FTI Consulting, Inc.    
Operating activities    
Net cash used in operating activities (7,700) (27,664)
Investing activities    
Purchases of property and equipment (788) (3,979)
Other 34 32
Net cash used in investing activities (754) (3,947)
Financing activities    
Borrowings under revolving line of credit, net 7,000  
Purchase and retirement of common stock (2,903)  
Net issuance of common stock under equity compensation plans (1,371) 4,031
Other (135) (85)
Intercompany transfers (15,356) (8,255)
Net cash provided by financing activities (12,765) (4,309)
Net decrease in cash and cash equivalents (21,219) (35,920)
Cash and cash equivalents, beginning of period 35,211 171,090
Cash and cash equivalents, end of period 13,992 135,170
Guarantor Subsidiaries    
Operating activities    
Net cash used in operating activities (8,956) (5,191)
Investing activities    
Purchases of property and equipment (3,945) (3,513)
Net cash used in investing activities (3,945) (3,513)
Financing activities    
Intercompany transfers 12,899 8,701
Net cash provided by financing activities 12,899 8,701
Net decrease in cash and cash equivalents (2) (3)
Cash and cash equivalents, beginning of period 165 159
Cash and cash equivalents, end of period 163 156
Non-Guarantor Subsidiaries    
Operating activities    
Net cash used in operating activities (16,443) (18,478)
Investing activities    
Purchases of property and equipment (1,629) (1,384)
Other   39
Net cash used in investing activities (1,629) (1,345)
Financing activities    
Deposits 2,590 1,380
Intercompany transfers 2,457 (446)
Net cash provided by financing activities 5,047 934
Effect of exchange rate changes on cash and cash equivalents (1,063) (3,573)
Net decrease in cash and cash equivalents (14,088) (22,462)
Cash and cash equivalents, beginning of period 114,384 112,431
Cash and cash equivalents, end of period $ 100,296 $ 89,969

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