<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO THE SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 (IRS Employer Identification No.)
Incorporation or Organization)
2021 Research Drive, Annapolis, Maryland 21401
-----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
410-224-8770
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $.01 par value American Stock Exchange
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 the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at November 10, 2000
-------------------------- --------------------------------
Common Stock, par value
$.01 per share 10,566,347
<PAGE>
FTI CONSULTING, INC.
--------------------
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets - December 31, 1999 and
September 30, 2000 3
Consolidated Statements of Income - Three months ended
September 30, 1999, three months ended September 30, 2000
and Pro Forma Consolidated Statement of Income - Three
months ended September 30, 1999 5
Consolidated Statements of Income - Nine months ended
September 30, 1999, nine months ended September 30, 2000 6
Pro Forma Consolidated Statements of Income -
Nine months ended September 30, 1999,
nine months ended September 30, 2000 7
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1999, nine months ended September 30, 2000 8
Notes to Unaudited Consolidated Financial Statements
September 30, 2000 9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
PART II OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURES 25
</TABLE>
<PAGE>
Part I. Financial Information
FTI Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands of dollars)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
-----------------------------------------
(audited) (unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 5,046 $ 6,967
Accounts receivable, less allowance of $1,065 in 1999 and $1,207
in 2000 14,458 25,149
Unbilled receivables, less allowance of $1,160 in 1999 and $926
in 2000 9,222 13,614
Income taxes recoverable 64 775
Deferred income taxes 641 641
Prepaid expenses and other current assets 1,461 1,240
-------------------------------------
Total current assets 30,892 48,386
Property and equipment:
Furniture, equipment and software 17,205 18,804
Leasehold improvements 1,955 3,652
-------------------------------------
19,160 22,456
Accumulated depreciation and amortization (10,781) (11,682)
-------------------------------------
8,379 10,774
Goodwill, net of accumulated amortization of $3,473 in 1999 and
$6,955 in 2000 43,658 92,489
Other assets 1,363 3,929
-------------------------------------
Total assets $ 84,292 $155,578
=====================================
</TABLE>
See accompanying notes.
3
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands of dollars)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
----------------------------------------
(audited) (unaudited)
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 3,240 $ 2,720
Accrued compensation expense 5,373 8,938
Deferred income taxes 471 471
Current portion of long-term debt 1,718 4,750
Advances from clients 435 6,626
Other current liabilities 422 2,499
------------------------------------
Total current liabilities 11,659 26,004
Long-term debt, less current portion 41,009 81,070
Other long-term liabilities 411 163
Deferred income taxes 961 961
Commitments and contingent liabilities - -
Stockholders' equity:
Preferred stock, $.01 par value; 4,000,000 shares authorized,
none outstanding - -
Common stock, $.01 par value; 16,000,000 shares authorized;
4,913,905 and 6,541,347 shares issued and outstanding in 1999
and 2000, respectively 49 65
Additional paid-in capital 18,197 30,883
Retained earnings 12,006 16,432
------------------------------------
Total stockholders' equity 30,252 47,380
------------------------------------
Total liabilities and stockholders' equity $84,292 $155,578
====================================
</TABLE>
See accompanying notes.
4
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Three months ended September 30,
Actual Pro Forma Actual
1999 1999 2000
------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
Revenues $20,855 $26,164 $33,395
Direct cost of revenues 11,012 12,782 17,132
Selling, general and administrative
expenses 7,114 7,471 9,265
Amortization of goodwill 570 1,229 1,233
------------------------------------------------------
Total costs and expenses 18,696 21,482 27,630
------------------------------------------------------
Income from operations 2,159 4,682 5,765
Other income (expense):
Interest and other income 110 110 83
Interest expense (1,099) (3,069) (3,226)
------------------------------------------------------
(989) (2,959) (3,143)
------------------------------------------------------
Income before income taxes 1,170 1,723 2,622
Income taxes 515 744 1,154
------------------------------------------------------
Net income $ 655 $ 979 $ 1,468
======================================================
Net income per common share, basic $ 0.13 $ 0.15 $ 0.22
======================================================
Net income per common share, diluted $ 0.13 $ 0.15 $ 0.19
======================================================
</TABLE>
See accompanying notes.
5
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 2000
---------------------------------
(unaudited)
<S> <C> <C>
Revenues $62,127 $98,993
Direct cost of revenues 32,362 49,942
Selling, general and administrative expenses 21,559 27,476
Amortization of goodwill 1,709 3,482
---------------------------------
Total costs and expenses 55,630 80,900
---------------------------------
Income from operations 6,497 18,093
Other income (expense):
Interest and other income 253 175
Interest expense (3,061) (8,812)
---------------------------------
(2,808) (8,637)
---------------------------------
Income before income taxes and extraordinary item 3,689 9,456
Income taxes 1,704 4,161
---------------------------------
Income before extraordinary item 1,985 5,295
Extraordinary loss on early extinguishment of debt,
net of income taxes of $660 - 869
---------------------------------
Net income $ 1,985 $ 4,426
=================================
Income before extraordinary item per common share, basic $ 0.41 $ 0.84
=================================
Net income per common share, basic $ 0.41 $ 0.71
=================================
Income before extraordinary item per common share, diluted $ 0.40 $ 0.73
=================================
Net income per common share, diluted $ 0.40 $ 0.61
=================================
</TABLE>
See accompanying notes.
6
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Income
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Nine months ended September 30,
1999 2000
------------------------------------
(unaudited)
<S> <C> <C>
Revenues $78,439 $101,432
Direct cost of revenues 37,550 50,892
Selling, general and administrative expenses 22,684 27,583
Amortization of goodwill 3,687 3,699
------------------------------------
Total costs and expenses 63,921 82,174
------------------------------------
Income from operations 14,518 19,258
Other income (expense):
Interest and other income 253 175
Interest expense (9,210) (9,392)
------------------------------------
(8,957) (9,217)
------------------------------------
Income before income taxes and extraordinary item 5,561 10,041
Income taxes 2,385 4,418
------------------------------------
Income before extraordinary item 3,176 5,623
Extraordinary loss on early extinguishment of debt,
net of income taxes of $660 - 869
------------------------------------
Net income $ 3,176 $ 4,754
====================================
Income before extraordinary item per common share, basic $ 0.51 $ 0.87
====================================
Net income per common share, basic $ 0.51 $ 0.74
====================================
Income before extraordinary item per common share, diluted $ 0.50 $ 0.76
====================================
Net income per common share, diluted $ 0.50 $ 0.64
====================================
</TABLE>
See accompanying notes.
7
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 2000
-----------------------------------
(unaudited)
<S> <C> <C>
Operating activities
Net income $ 1,985 $ 4,426
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary loss on early extinguishment
of debt, before income taxes - 1,529
Amortization of goodwill 1,709 3,482
Depreciation and other amortization 1,773 2,012
Provision for doubtful accounts 782 (91)
Deferred income taxes (132) -
Loss (gain) on disposal of assets (7) (41)
Non-cash interest expense - 1,818
Changes in operating assets and liabilities:
Accounts receivable (160) (5,637)
Unbilled receivables (2,528) (3,773)
Prepaid expenses and other current assets (459) 227
Accounts payable and accrued expenses (1,059) (1,443)
Accrued compensation expense 1,465 3,008
Income taxes recoverable/payable 513 (711)
Advances from clients (86) 3,948
Other current liabilities 947 2,000
-----------------------------------
Net cash provided by operating activities 4,743 10,754
Investing activities
Purchase of property and equipment (1,574) (4,257)
Proceeds from sale of property and equipment 206 47
Contingent payments to former owners of subsidiaries (624) (185)
Costs associated with acquisition of subsidiaries (67) -
Acquisition of P&M, including acquisition costs - (49,404)
Change in other assets (19) (19)
-----------------------------------
Net cash used in investing activities (2,078) (53,818)
Financing activities
Issuance of common shares 377 1,082
Payments of long-term debt (15,663) (40,820)
Retirement of detachable stock warrants - (277)
Payment of financing fees (1,038) (3,950)
Proceeds from senior credit facility, net - 58,875
Proceeds from subordinated notes payable and detachable stock warrants 13,000 30,358
Payments of other long-term liabilities (111) (283)
-----------------------------------
Net cash provided by (used in) financing activities (3,435) 44,985
-----------------------------------
Net increase (decrease) in cash and cash equivalents (770) 1,921
Cash and cash equivalents at beginning of period 3,223 5,046
-----------------------------------
Cash and cash equivalents at end of period $ 2,453 $ 6,967
===================================
</TABLE>
See accompanying notes.
8
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000
(in thousands of dollars, except per share data)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1999.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 2000, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
The accompanying Pro Forma Consolidated Statements of Income for the three
months ended September 30, 1999, and nine months ended September 30, 2000 and
1999, are presented to give effect to the January 31, 2000 acquisition of
Policano & Manzo, L.L.C. and related financing assuming the transactions
occurred on January 1, 1999 (see Notes 5 and 6). These Pro Forma Financial
Statements should be read in conjunction with the Company's current report on
Form 8-K, filed on April 6, 2000. This Form 8-K more fully describes the
assumptions used in preparing the pro forma financial information. The Pro
Forma Consolidated Statements of Income are not necessarily indicative of the
operating results that would have been achieved had the transactions actually
occurred on January 1, 1999, nor are they necessarily indicative of future
operations.
Effect of Pending Adoption of an Accounting Pronouncement
In December 1999, the SEC staff issued Staff Accounting Bulletin 101, Revenue
Recognition in Financial Statements ("SAB 101"). SAB 101 explains how the SEC
believes existing rules for revenue recognition should be applied to
transactions not specifically addressed by existing rules. In October 2000, the
SEC staff issued a Frequently Asked Questions document ("FAQ") on SAB 101 to
assist with implementation questions. The Company will be required to adopt SAB
101 in the fourth quarter of 2000, and based upon a preliminary review of the
SAB and the FAQ, management believes that the adoption of SAB 101 will not have
an effect on the Company's reported operating results.
9
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
Effect of Pending Adoption of an Accounting Pronouncement (continued)
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. The
Statement, which the Company will be required to adopt in January 2001, provides
a comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. The Company currently conducts hedging
activities to protect itself against market risk from changes in interest rates.
This Statement will require the Company to recognize its derivatives on the
balance sheet at fair value. Additionally, changes in the fair value of these
derivatives will be recognized in other comprehensive income until the hedged
item is recognized in earnings. Any ineffective portion of a derivative's
change in fair value will be immediately recognized in earnings. Based on the
Company's derivative position at September 30, 2000, the Company estimates that
upon adoption it will report a gain from the cumulative effect of adoption and
an increase in other comprehensive income of approximately $340,000. See
Note 6 -- Debt for the details surrounding the Company's interest rate swaps
and cap transactions.
2. Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Total
-----------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 2000 $49 $18,197 $12,006 $30,252
Issuance of warrants to purchase 670,404 shares of
common stock in connection with debt refinancing 3,714 3,714
Retirement of 130,835 warrants to purchase common
stock in connection with early retirement of debt (277) (277)
Issuance of 604,504 shares of common stock in
exchange for debt to sellers of acquired 6 2,677 2,683
businesses
Issuance of 815,000 shares of common stock
for the acquisition of Policano & Manzo, L.L.C. 8 5,493 5,501
Issuance of 118,271 shares of common stock under
Employee Stock Purchase Plan 1 514 515
Issuance of 20,000 shares of restricted common stock - 159 159
Exercise of options and warrants to purchase 69,667 1 406 407
shares of common stock
Net income for nine months ended September 30, 2000 4,426 4,426
-----------------------------------------------------
Balance at September 30, 2000 $65 $30,883 $16,432 $47,380
=====================================================
</TABLE>
10
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
3. Earnings Per Share
The following table summarizes the computations of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Three months ended September 30,
Actual Pro Forma Actual
1999 1999 2000
---------------------------------------
<S> <C> <C> <C>
Numerator used in basic and diluted earnings per
common share:
Net income $ 655 $ 979 $1,468
=======================================
Denominator:
Denominator for basic earnings per common share -
weighted average shares 4,914 6,333 6,536
Effect of dilutive securities:
Warrants 213 142 633
Employee stock options 92 92 567
---------------------------------------
305 234 1,200
---------------------------------------
Denominator for diluted earnings per common share -
weighted average shares and effect of dilutive
securities 5,219 6,567 7,736
=======================================
Net income per common share, basic $ 0.13 $ 0.15 $ 0.22
=======================================
Net income per common share, diluted $ 0.13 $ 0.15 $ 0.19
=======================================
</TABLE>
11
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
3. Earnings Per Share (continued)
<TABLE>
<CAPTION>
Actual Pro Forma
Nine months ended Nine months ended
September 30, September 30,
1999 2000 1999 2000
--------------------------------------------------------
<S> <C> <C> <C> <C>
Numerator used in basic and diluted
earnings per common share:
Income before extraordinary item $1,985 $5,295 $3,176 $5,623
Extraordinary item, net of taxes - 869 - 869
--------------------------------------------------------
Net income $1,985 $4,426 $3,176 $4,754
========================================================
Denominator:
Denominator for basic earnings per common
share - weighted average shares 4,858 6,272 6,277 6,448
Effect of dilutive securities:
Warrants 95 526 52 570
Employee stock options 33 404 33 420
--------------------------------------------------------
128 930 85 990
--------------------------------------------------------
Denominator for diluted earnings per
common share - weighted average shares
and effect of dilutive securities 4,986 7,202 6,362 7,438
========================================================
Income before extraordinary item per
common share, basic $ 0.41 $ 0.84 $ 0.51 $ 0.87
Extraordinary loss per common share, basic - (0.13) - (0.13)
--------------------------------------------------------
Net income per common share, basic $ 0.41 $ 0.71 $ 0.51 $ 0.74
========================================================
Income before extraordinary item per
common share, diluted $ 0.40 $ 0.73 $ 0.50 $ 0.76
Extraordinary loss per common share,
diluted - (0.12) - (0.12)
--------------------------------------------------------
Net income per common share, diluted $ 0.40 $ 0.61 $ 0.50 $ 0.64
========================================================
</TABLE>
12
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
4. Income Taxes
The income tax provisions for interim periods in 2000 and 1999 are based on the
estimated effective tax rates applicable for the full years. The Company's
income tax provision of $4,161 for the nine month period ended September 30,
2000 consists of federal and state income taxes. The effective income tax rate
in 2000 is expected to be approximately 44%. This rate is higher than the
statutory federal income tax rate of 34%, due principally to state and local
taxes and the effects of nondeductible goodwill recorded in certain
acquisitions.
5. Acquisition of Policano & Manzo, L.L.C.
Effective on January 31, 2000, the Company acquired the membership interests of
Policano & Manzo, L.L.C. ("P&M"). P&M, based in Saddle Brook, New Jersey, is a
leader in providing bankruptcy and turnaround consulting services to large
corporations, money center banks and secured lenders throughout the U.S. The
purchase price totaled approximately $54.9 million, consisting of $48.3 million
in cash, 815,000 shares of common stock valued at $5.5 million, and acquisition
related expense of $1.1 million. The acquisition was accounted for using the
purchase method of accounting and approximately $52.2 million of goodwill was
recorded and is being amortized over its estimated useful life of twenty years.
The accompanying unaudited Pro Forma Consolidated Statements of Income give
effect to the acquisition of P&M and the related refinancing discussed in Note
6, assuming that these transactions occurred as of January 1, 1999, and should
be read in conjunction with the Company's current report on Form 8-K, filed on
April 6, 2000.
13
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
6. Debt
In connection with the acquisition of P&M, the Company entered into a $68.5
million senior credit facility to provide the cash needed to consummate the
acquisition, partially refinance existing long-term debt arrangements and to
provide working capital for expansion. The senior credit facility consists of
(i) a $61.0 million amortizing term loan maturing through January 31, 2006, that
initially bears interest at LIBOR plus specified margins ranging from 3.25% to
3.75%, and (ii) a $7.5 million revolving credit facility, initially bearing
interest at prime plus 1.75%. The interest rates on these borrowings will
decline if the Company's leverage ratios improve.
The Company also issued $30.0 million of subordinated notes to lenders that
mature on January 31, 2007, and bear interest at 17% per annum, payable semi-
annually. The interest rate of 17% consists of a cash component equal to 12% per
annum of principal and a component payable in additional notes equal to 5% per
annum of principal. These lenders also received warrants to purchase 670,404
shares of the Company's common stock at the exercise price of $4.44 per share
that expire on January 31, 2010.
The fair value of these warrants was estimated at the date of grant using the
Black-Scholes pricing model with the following assumptions: risk-free interest
rate of 5.5%; expected dividend yield of 0%; expected warrant life of 10 years;
and expected stock price volatility of 0.647. Using these assumptions, the fair
value of the warrants was computed to be $5.44 per share, and the total value
assigned was $3.7 million. This amount was recorded as additional paid-in
capital and a corresponding debt discount was recorded that is recognized as
additional interest expense over the term of the debt instruments.
The proceeds from these borrowings of $91.0 million, in tandem with $2.0 million
of cash, were used to finance the $47.5 million cash purchase price of P&M,
refinance $41.2 million of the $44.0 million of existing long-term debt, and
fund acquisition and finance related expenses of $4.3 million. The remaining
$2.7 million of long-term debt was exchanged for 604,504 shares of common stock.
In connection with the early extinguishment of the $44.0 million of debt,
warrants to purchase 130,835 shares of common stock for $3.21 per share, were
retired. In addition, an extraordinary loss of $869,000 net of income taxes was
incurred related to unamortized debt discount and deferred financing costs
attributable to the retired debt.
See Note 8 - Subsequent Events for a description of the partial retirement of
the $30.0 million senior subordinated debt, in connection with an equity
offering of 4,025,000 shares of common stock of the Company in October and
November 2000.
14
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
6. Debt (continued)
Debt consists of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
--------------------------------
<S> <C> <C>
Amounts due under the $61.0 million amortizing term loans $ - $ 58,875
Amounts due under $30.0 million subordinated notes (net of discount
of $3.4 million and PIK interest of $358,000) - 26,945
Amounts due under a $27.0 million long-term credit facility (net of
discount of $36,000 in 1999), bearing interest at LIBOR plus
variable percentages 19,964 -
Notes payable to former shareholders of acquired businesses (net of
discount of $169,000) 10,611 -
Subordinated debentures (net of discount of $848,000) bearing
interest at 9.25% 12,152 -
-------------------------------
Total debt 42,727 85,820
Less current portion (1,718) (4,750)
--------------------------------
Total long-term debt $ 41,009 $ 81,070
================================
</TABLE>
The aggregate maturities of long-term debt outstanding at September 30, 2000,
prior to amortization of debt discount are as follows:
October 1 through
December 31, 2000 $ 1,063
December 31, 2001 5,750
December 31, 2002 7,750
December 31, 2003 11,250
December 31, 2004 14,500
December 31, 2005 14,875
Thereafter 33,687
-------
$88,875
=======
15
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
6. Debt (continued)
In March 2000, the Company entered into interest rate swap and cap transactions
on $41.0 million of the outstanding amortizing term loans, in accordance with
provisions of the credit facility. The $20.5 million swap transactions resulted
in exchanging floating LIBOR rates for fixed rates. The $20.5 million cap
transactions limited the Company's exposure to substantial increases in the
LIBOR rate by establishing the maximum rate over the life of the cap to be
7.75%. These interest rate hedge transactions expire in three years. The premium
associated with the cap transactions have been incorporated into the swap
transactions and resulted in the fixed rates of 7.41% on $10.0 million and 7.43%
on $10.5 million. The fair value of swap and cap agreements and changes in the
fair value as a result of changes in market interest rates are not recognized in
the consolidated financial statements.
7. Segment Reporting
The Company provides litigation and claims management consulting services
through three distinct operating segments. The Financial Consulting division
offers a range of financial consulting services, such as forensic accounting,
bankruptcy and restructuring analysis, expert testimony, damage assessment, cost
benefit analysis and business valuations. The Litigation Consulting division
provides advice and services in connection with all phases of the litigation
process. The Applied Sciences division offers engineering and scientific
consulting services, accident reconstruction, fire investigation, equipment
procurement and expert testimony regarding intellectual property rights.
The Company evaluates performance and allocates resources based on operating
income before depreciation and amortization, corporate general and
administrative expenses and income taxes. The Company does not allocate assets
to its reportable segments as assets generally are not specifically attributable
to any particular segment. Accordingly, asset information by reportable segment
is not presented. The accounting policies used by the reportable segments are
the same as those used by the Company. There are no significant intercompany
sales or transfers.
The company's reportable segments are business units that offer distinct
services. The segments are managed separately by division presidents who are
most familiar with the segment operations. The following table sets forth
information on the Company's reportable segments:
16
<PAGE>
FTI Consulting, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2000 (continued)
(in thousands of dollars, except per share data)
7. Segment Reporting (continued)
<TABLE>
<CAPTION>
Three months ended September 30, 1999
-------------------------------------------------------
Financial Applied Litigation
Consulting Sciences Consulting Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 4,355 $ 9,547 $ 6,953 $20,855
Operating expenses 3,508 7,746 5,186 16,440
--------- -------- ---------- -------
Segment profit $ 847 $ 1,801 $ 1,767 $ 4,415
========= ======== ========== =======
<CAPTION>
Three months ended September 30, 2000
-------------------------------------------------------
Financial Applied Litigation
Consulting Sciences Consulting Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 17,063 $ 9,786 $ 6,546 $33,395
Operating expenses 10,385 7,838 5,517 23,740
--------- -------- ---------- -------
Segment profit $ 6,678 $ 1,948 $ 1,029 $ 9,655
========= ======== ========== =======
</TABLE>
A reconciliation of segment profit for all segments to income before income
taxes is as follows:
Three months ended September 30,
1999 2000
-------------------------------------------------------------------------
Operating Profit:
Total segment profit $ 4,415 $ 9,655
Corporate general and administrative
expenses (1,081) (1,925)
Depreciation and amortization (1,175) (1,965)
Interest and other expense (989) (3,143)
--------- ---------
Income before income taxes $ 1,170 $ 2,622
========= =========
The following table sets forth information on the Company's reportable segments
for the nine months ended September 30, 1999 and nine months ended September 30,
2000:
<TABLE>
<CAPTION>
Nine months ended September 30, 1999
-------------------------------------------------------
Financial Applied Litigation
Consulting Sciences Consulting Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 14,259 $ 27,316 $ 20,552 $62,127
Operating expenses 10,755 22,644 14,889 48,288
--------- -------- ---------- -------
Segment profit $ 3,504 $ 4,672 $ 5,663 $13,839
========= ======== ========== =======
<CAPTION>
Nine months ended September 30, 2000
-------------------------------------------------------
Financial Applied Litigation
Consulting Sciences Consulting Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 45,913 $ 29,454 $ 23,626 $98,993
Operating expenses 27,250 23,901 18,224 69,375
--------- -------- ---------- -------
Segment profit $ 18,663 $ 5,553 $ 5,402 $29,618
========= ======== ========== =======
</TABLE>
17
<PAGE>
A reconciliation of segment profit for all segments to income before income
taxes and extraordinary item is as follows:
Nine months ended September 30,
1999 2000
------------------------------------------------------------------------
Operating Profit:
Total segment profit $ 13,839 $ 29,618
Corporate general and administrative
expenses (3,860) (6,031)
Depreciation and amortization (3,481) (5,494)
Interest and other expense (2,809) (8,637)
---------- ----------
Income before income taxes and
extraordinary item $ 3,689 $ 9,456
========== ==========
Substantially all of the revenue and assets of the Company's reportable segments
are attributed to or located in the United States. Additionally, the Company
does not have a single customer which represents ten percent or more of its
consolidated revenues.
8. Subsequent Event
In October and November 2000, the Company completed an equity offering of
4,025,000 shares of common stock, which resulted in net proceeds of $24 million,
after deducting underwriting discounts, commissions and offering expenses. The
proceeds from this offering plus other financial resources of the Company were
used to retire approximately $28.5 million of the principal on the senior
subordinated debt, plus accrued interest and a prepayment penalty. As a result
of retiring a portion of the senior subordinated debt, the Company incurred an
extraordinary loss of $3 million, net of related income taxes, for the
prepayment penalty, waivers and the write-off of unamortized deferred financing
costs and debt discount.
18
<PAGE>
FTI Consulting, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
FTI is a multi-disciplined consulting firm with leading practices in the areas
of financial restructuring, litigation support, and engineering and scientific
investigation. Our Financial Consulting division, which accounted for 46% of our
revenues for the nine-months ended September 30, 2000, offers a range of
financial consulting services, such as forensic accounting, bankruptcy and
restructuring analysis, expert testimony, damage assessment, cost benefit
analysis and business valuations. Our Litigation Consulting division, which
accounted for 24% of our revenues for the nine months ended September 30, 2000,
provides advice and services in connection with all phases of the litigation
process. Our Applied Sciences division, which accounted for 30% of our revenues
for the nine months ended September 30, 2000, offers forensic engineering and
scientific investigation services, accident reconstruction, fire investigation
and expert testimony regarding intellectual property rights.
Revenues generated by our business divisions consist primarily of fees for our
professional services. We charge our professionals' time at hourly rates, which
vary from professional to professional, based on the professional's position,
experience and expertise. We also directly bill our clients for services
provided by our independent consultants. We recognize revenues for the
production of our work product, including static graph boards, color copies and
digital video production, and fees for use of our equipment and facilities. We
also pass through our out-of-pocket expenses, such as our cost of recruiting
subjects and participants for research surveys, mock trial activities and our
travel. We recognize revenues in the period when the service is provided.
Our direct cost of revenues consists primarily of employee compensation and
related payroll benefits, the cost of outside consultants assigned to revenue-
generating activities and other related expenses billable to clients.
Selling, general and administrative expenses consist primarily of salaries and
benefits paid to office and corporate staff, as well as rent, marketing and
corporate overhead expenses. For the nine months ended September 30, 2000,
selling, general and administrative expenses accounted for about 27.8% of our
revenues. Our corporate overhead costs, excluding depreciation and amortization,
which are included in selling, general and administrative expenses, represented
about 6.1% of revenues for the nine months ended September 30, 2000.
We are organized into three distinct operating segments that contribute to the
overall performance of our company. As such, we evaluate segment performance and
allocate resources based on the operating income before depreciation and
amortization, corporate general and administrative expenses, interest and income
taxes for each division. For the nine months ended September 30, 2000, our
Financial Consulting division accounted for 63.0% of this operating income, our
Litigation Consulting division accounted for 18.2% and our Applied Sciences
division accounted for 18.8%.
On September 30, 2000, we had about $92.5 million of unamortized goodwill, which
we are amortizing over periods from 15 to 25 years. Annual goodwill
amortization, including goodwill associated with the acquisition of P&M, is
approximately $5.1 million. Approximately $14.7 million of this goodwill is not
deductible for tax purposes. Consequently, we estimate that our effective tax
rate for 2000 will be about 42% before amortization of goodwill and 44% after
amortization of goodwill.
Recent Acquisitions
Since September 1997, we made nine major acquisitions, all of which were
accounted for as purchases.
On February 4, 2000, we acquired Policano & Manzo as further described in Note 5
of "Notes to Consolidated Financial Statements." P&M, based in Saddle Brook, New
Jersey, specializes in providing financial restructuring, advisory and forensic
accounting services to the work-out and bankruptcy community. These services are
provided on a nationwide basis to financially distressed businesses,
19
<PAGE>
creditors, investors and other interested parties. The purchase price consisted
of $48.3 million in cash and 815,000 shares of our common stock.
In September 1998, we acquired both S.E.A., Inc. ("SEA") and Kahn Consulting,
Inc. ("KCI"). SEA, headquartered in Columbus, Ohio, provides investigation,
research, analysis and quality control services in areas such as distress,
product failure, fire and explosion, and vehicle and workplace accidents. The
SEA acquisition has allowed us to significantly expand our scientific consulting
offerings, in addition to providing geographic expansion into the southeast and
mid-west markets. KCI, headquartered in New York City, provides expert testimony
on accounting and financial issues; forensic accounting and fraud investigation
services; strategic advisory, turnaround, bankruptcy and trustee services; and
government contract consulting.
In June 1998, we acquired Klick, Kent & Allen ("KK&A"). KK&A provides strategic
and economic consulting to various regulated businesses, advising on such
matters as industry deregulation, mergers and acquisitions, rate and cost
structures, economic and financial modeling and litigation risk analysis. The
acquisitions of KCI and KK&A provided the foundation for our expansion of
financial consulting services into cities where we already had a presence.
In September 1997, we acquired L.W.G., Inc. ("LWG") and Bodaken & Associates.
LWG broadened our offerings to the insurance market by adding capabilities in
claims management consulting and restoration services. Bodaken enhanced our jury
and trial consulting capabilities, particularly in the western region of the
U.S.
Results of Operations
Three Months Ended September 30, 2000 and September 30, 1999
Revenues. Total revenues for the three months ended September 30, 2000,
increased 59.8% to $33.4 million compared to $20.9 million for the three months
ended September 30, 1999. For the three months ended September 30, 2000,
revenues in our Financial Consulting division grew by $12.7 million, or 288.6%,
to $17.1 million, compared to the third quarter of 1999. Our acquisition of P&M,
as of January 31, 2000, accounted for $7.8 million of this growth, with $4.9
million generated by internal growth. Litigation Consulting division revenues
decreased 5.7% from $7.0 million in the third quarter of 1999 to $6.6 million in
the third quarter of 2000. The Applied Sciences division had 3.2% growth to $9.8
million in revenues in the three months ended September 30, 2000, compared to
$9.5 million in the third quarter of 1999.
Direct Cost of Revenues. Direct cost of revenues consists primarily of billable
employee compensation and related payroll benefits, the cost of outside
consultants assigned to revenue-generating activities and other related expenses
billable to clients. Direct cost of revenues improved to 51.3% of total revenues
for the three months ended September 30, 2000, compared to 52.8% of total
revenues for the three months ended September 30, 1999. We attribute this
improvement primarily to the acquisition of P&M and productivity increases in
the Applied Sciences and Financial Consulting divisions that exceeded a
productivity decrease in the Litigation Consulting division.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of salaries and benefits paid to our
office and corporate staff, as well as rent, marketing and corporate overhead
expenses. These expenses were 27.7% of total revenues for the three months ended
September 30, 2000, compared to 34.1% for the three months ended September 30,
1999. This improvement resulted primarily from the fact that P&M's selling,
general and administrative expenses are a lower percentage of revenues and our
significant revenue increases that exceeded the rate of increase of our selling,
general and administrative expenses.
Amortization of Goodwill. Amortization of goodwill increased from $570,000 in
the third quarter of 1999 to $1.2 million in the third quarter of 2000 as a
result of our acquisition of P&M as of January 31, 2000.
Interest Expense, net. Net interest expense increased to $3.1 million for the
three months ended September 30, 2000, from $1.0 million for the three months
ended September 30, 1999. Interest expense consisted primarily of net interest
expense associated with the purchased businesses referred to above, including
P&M, and the refinancing of our debt on February 4, 2000. We discuss this
refinancing below in "Liquidity and Capital Resources."
20
<PAGE>
Income Taxes. Our effective income tax rates remained at 44.0% in the third
quarters of 2000 and 1999.
Nine Months ended September 30, 2000 and September 30, 1999
Revenues. Total revenues for the nine months ended September 30, 2000 increased
59.4% to $99.0 million compared to $62.1 million for the nine months ended
September 30, 1999. For the nine months ended September 30, 2000, revenues in
our Financial Consulting division grew by $31.6 million, or 221.0%, to $45.9
million, compared to the first nine months of 1999. Our acquisition of P&M as of
January 31, 2000 accounted for $21.1 million of this growth, with $10.5 million
generated by internal growth. Litigation Consulting division revenues increased
14.6% from $20.6 million in the first nine months of 1999 to $23.6 million in
the first nine months of 2000. The Applied Sciences division increased 8.1% to
$29.5 million in revenues in the nine months ended September 30, 2000, compared
to $27.3 million in the first nine months of 1999.
Direct Cost of Revenues. Direct cost of revenues consists primarily of billable
employee compensation and related payroll benefits, the cost of outside
consultants assigned to revenue-generating activities and other related expenses
billable to clients. Direct cost of revenues improved to 50.5% of total revenues
for the nine months ended September 30, 2000, compared to 52.1% of total
revenues for the nine months ended September 30, 1999. We attribute this
improvement primarily to the acquisition of P&M and productivity increases in
the Applied Sciences and Financial Consulting divisions that exceeded a
productivity decrease in the Litigation Consulting division.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of salaries and benefits paid to our
office and corporate staff, as well as rent, marketing and corporate overhead
expenses. These expenses were 27.8% of total revenues for the nine months ended
September 30, 2000, compared to 34.7% for the nine months ended September 30,
1999. This improvement resulted primarily from the fact that P&M's selling,
general and administrative expenses are a lower percentage of revenues and our
significant revenue increases that exceeded the rate of increase of our selling,
general and administrative expenses.
Amortization of Goodwill. Amortization of goodwill increased from $1.7 million
in the first nine months of 1999 to $3.5 million in the first nine months of
2000 as a result of our acquisition of P&M as of January 31, 2000.
Interest Expense, net. Net interest expense increased to $8.6 million for the
nine months ended September 30, 2000, from $3.0 million for the nine months
ended September 30, 1999. Interest expense consisted primarily of net interest
expense associated with the purchased businesses referred to above, including
P&M, and the refinancing of our debt on February 4, 2000. We discuss this
refinancing below in "Liquidity and Capital Resources."
Income Taxes. In the first nine months of 2000, our effective income tax rate
decreased to 44.0% from 46.2% in the first nine months of 1999. This decrease
was primarily the result of the proportionately lower non-deductible goodwill
amortization resulting from our acquisitions in 1997 and 1998.
Extraordinary Item, net of taxes. As a result of the write-off of unamortized
debt discount and deferred financing costs associated with the debt that we
refinanced on February 4, 2000, we had an $869,000 loss on early extinguishment
of debt, net of taxes in the first nine months of 2000.
Future Assessment of Recoverability and Impairment of Goodwill
In connection with our various acquisitions, including P&M, we recorded
goodwill, which we are amortizing on a straight-line basis over periods of 15 to
25 years. These are the periods during which we estimate we will benefit from
this goodwill. At September 30, 2000, unamortized goodwill was $92.5 million, or
59.4% of our total assets and 195.1% of our stockholders' equity. Goodwill
arises when an acquirer pays more for a business than the fair value of the
tangible and separately measurable intangible net assets. For financial
reporting purposes, goodwill and all other intangible assets are amortized over
the estimated period benefited. We have determined the period for amortizing
goodwill based upon several factors, the most significant of which are the
relative size, historical financial viability, growth trends of the acquired
companies and the relative lengths of time these companies have been in
existence.
21
<PAGE>
Our management periodically reviews the carrying value and recoverability of our
unamortized goodwill. If the facts and circumstances suggest that the goodwill
may be impaired, we would adjust the carrying value of the goodwill. This would
result in an immediate charge against income during the period of the adjustment
and/or a shortening of the length of the remaining amortization period, which
would result in an increase in the amount of goodwill amortization during the
period of adjustment and each period thereafter until fully amortized. If we
adjust goodwill, we cannot assure you that we will not have to make further
adjustments for impairment and recoverability in future periods. The most
significant of the factors we will consider in determining whether goodwill is
impaired will be losses from operations, loss of customers and industry
developments, including our inability to maintain market share, development of
competitive products or services and imposition of additional regulatory
requirements.
Liquidity and Capital Resources
In the first nine months of 2000, we generated $10.8 million of cash flow in our
operations, compared to $4.7 million in the first nine months of 1999. This
greater generation of cash was attributable to the significant increase in net
income excluding non-cash charges for depreciation and amortization and the
extraordinary item of $1.5 million before taxes, reduced by increases in net
working capital balances, including the working capital needs of P&M. We
anticipate that our cash flow from operations for the rest of 2000 will increase
over 1999 in part by an increase in net income before non-cash charges.
To finance the P&M acquisition, we entered into a senior credit facility,
consisting of a $61.0 million amortizing term loan maturing through January 31,
2006, initially bearing interest at LIBOR plus specified margins ranging from
3.25% to 3.75%, which may decline based on our leverage ratio; a $7.5 million
revolving credit facility, bearing interest at prime plus 1.75%, which also may
decline based on our leverage ratio; and $30.0 million of senior subordinated
notes maturing January 31, 2007, bearing 12% annual cash interest and 5% annual
interest payable in kind (PIK). We obtained interest rate protection on $41.0
million of the $61.0 million term loan.
The credit facilities are secured by all of our assets. We are required to
comply with various specified financial covenants related to our operating
performance and liquidity at the end of each quarter. We believe we will be in
compliance with all covenants throughout 2000. We used the proceeds of these
facilities, together with approximately $3.0 million of our existing cash, to
purchase P&M and to refinance our existing debt of approximately $44.0 million.
We also issued 604,504 shares of our common stock to retire approximately $2.7
million of our seller notes to several members of our senior management team
whose businesses we had previously acquired.
In connection with the senior subordinated notes, we issued the holders warrants
to purchase approximately 670,000 shares of our common stock at an exercise
price of $4.44 per share. The warrants expire ten years from the date of
closing. At the same time, we retired warrants for 130,835 shares of our common
stock issued in March 1999, in connection with our prior subordinated debt of
$13.0 million, which we repaid as part of this refinancing.
In 1998, we had borrowed $26.0 million under our prior $27.0 million long-term
credit facility with a bank to provide the $26.4 million of cash needed for the
initial payments in the acquisition of KK&A, KCI and SEA. We renegotiated this
credit facility in March 1999, and repaid it on February 4, 2000. In March 1999,
we issued $13.0 million of subordinated debentures, that we also repaid on
February 4, 2000.
In connection with the acquisition of businesses in 1997 and 1998, we issued
seller notes that totaled $10.8 million at December 31, 1999. We repaid $8.1
million of these notes in the refinancing on February 4, 2000, and exchanged
approximately $2.7 million for our common stock as noted in Note 6 of Notes to
Consolidated Financial Statements.
During the nine months ended September 30, 2000, we spent $4.3 million for
additions to property and equipment. This amount included expenditures for
internal information systems that allow us to better manage our expanding
operations, software developed to provide service to our clients, and about $2.2
million for leasehold improvements, furniture and fixtures for a new office in
New York City, which we occupied in late September 2000.
22
<PAGE>
We believe that cash generated from our operations will allow us to meet our
obligations that mature in 2000 and thereafter, and also provide us the
necessary cash resources we will need in the near term to fund our expanding
operations.
In addition, in October 2000, we completed an equity offering of 3.5 million
shares of common stock, which resulted in net proceeds of $20.8 million, after
deducting underwriting discounts, commissions and offering expenses. The
proceeds of this offering plus other financial resources of the company were
used to retire approximately $25.3 million of the principal on our senior
subordinated notes, plus accrued interest and a prepayment penalty. As a result
of retiring a portion of the senior subordinated debt, the company incurred an
extraordinary loss of approximately $3 million, net of related income taxes, for
the prepayment penalty, waivers and the write-off of unamortized deferred
financing costs and debt discount.
Further, in November 2000, we issued 525,000 shares of common stock upon the
exercise of an over allotment option by the underwriters of our equity offering.
The proceeds of this issuance were used to retire $3.2 million of the principal
on our senior subordinated notes.
Year 2000 Compliance
During 1999, we completed a four-stage process to assure Year 2000 compliance of
all hardware, software and ancillary equipment that were date dependent and
believe that the Year 2000 issue did not and will not cause us any significant
operational problems. We also contacted our important suppliers and customers
and received positive statements of compliance from all significant third
parties. To date, we are not aware of any Year 2000 non-compliance by our
customers or suppliers that would have a material impact on our business, and we
are not aware of any other material Year 2000 non-compliance that would require
repair or replacement or that could have a material effect on our financial
position.
Forward-Looking Statements
Some of the statements under "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and elsewhere in this Quarterly Report
contain forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. These statements involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements expressed or
implied by such forward-looking statements not to be fully achieved. These
forward-looking statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms or other comparable terminology. These statements
are only predictions. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of such statements. We are
under no duty to update any of the forward-looking statements after the date of
this Quarterly Report to conform such statements to actual results and do not
intend to do so. Factors which may cause the actual results of operations in
future periods to differ materially from intended or expected results include,
but are not limited to (1) the loss of any key employees because the Company's
business involves the delivery of professional services and is labor-intensive;
(2) the loss of key officers of the Company, without 90 day replacement, which
would constitute an event of default under the Company's senior and subordinated
credit facilities; (3) the availability and terms of additional capital or debt
financing to fund future acquisitions and for working capital purposes; (4)
significant competition for business opportunities and acquisition candidates;
(5) technological changes affecting our Litigation Consulting division; (6) the
risks of professional liability; (7) any factor that diminishes our professional
reputation; (8) fluctuations of revenue and operating income between quarters or
termination of client engagements; (9) the successful management of the growth
of our business; (10) the integration of P&M and of future acquisitions; and
(11) risks associated with quantitative and qualitative market risks such as
fluctuations in interest rates.
23
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss to future earnings, to fair values or to future
cash flows that may result from the changes in the price of financial
instruments. We are exposed to market risk from changes in interest rates,
which could affect our future results of operations and financial condition. We
manage our exposures to these risks through our regular operating and financing
activities, including the use of derivative financial instruments.
At September 30, 2000, $58.9 million of our long-term debt bore interest at
variable rates. Accordingly, our earnings and after-tax cash flow are affected
by changes in interest rates. To mitigate our exposure, management has utilized
three year interest rate swap and cap agreements initially covering $41.0
million of this long-term debt. In the event of adverse changes in interest
rates, management may take actions to further mitigate our exposure.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently a party to any material litigation.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
24
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule for nine months ended September 30, 2000
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on February 15, 2000, regarding
the Company's acquisition of P&M and refinancing of its indebtedness. On April
6, 2000, the Company amended the foregoing Report to add financial statements of
P&M and pro forma financial information.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FTI CONSULTING, INC.
Date: November 10, 2000 By /s/Theodore I. Pincus
---------------------
THEODORE I. PINCUS
Executive Vice President, Chief Financial Officer
(principal financial and accounting officer) and
Secretary
26
