FTI Consulting Completes Acquisition of Dispute Advisory Services Business Of KPMG

FTI Consulting's picture

Annapolis, MD-November 3, 2003

ANNAPOLIS, MD, November 3, 2003—FTI Consulting, Inc. (NYSE: FCN), the premier nationalprovider of turnaround, bankruptcy and litigation-related consulting services, today announced that ithas completed its previously announced acquisition of the domestic Dispute Advisory Services (DAS)business of KPMG LLP for approximately $89.1 million in cash. The acquisition will be slightlyaccretive to FTI’s earnings per share in 2003 and is expected to be accretive to earnings per share in2004.

The DAS business assists clients in the analysis and resolution of all phases of complex claims anddisputes in a variety of forums, including litigation, arbitration, mediation, and other forms of disputeresolution. Twenty-six KPMG partners, approximately 125 other billable professionals, plus supportstaff have joined FTI. The 26 DAS partners and two other members of the DAS leadership group haveentered into five-year employment agreements and have become senior managing directors of FTI.

The DAS business was not historically operated by KPMG as a separate reporting unit of its forensicaccounting and litigation support practice unit and was not separately accounted for financial reportingpurposes. KPMG advised FTI that for the trailing 12 months ended September 30, 2003, the unauditedrevenues associated with the 26 DAS partners were approximately $74.0 million. Future annual directcompensation and other costs associated with the transferred DAS partners and billable staff areexpected to total approximately $43.5 million. Selling, general and administrative expenses areestimated at approximately $12.5 million, resulting in pro forma income from operations ofapproximately $18.0 million prior to one-time integration costs.

The purchase price did not include any working capital. Because FTI did not acquire the net workingcapital of DAS, the initial working capital, estimated at approximately $14.0 million, will be providedby FTI and reflected as a use of cash in operating activities for FTI’s financial reporting purposesduring the first three to four months after the acquisition.

About FTI Consulting
FTI Consulting is a multi-disciplined consulting firm with leading practices in the areas of turnaround,bankruptcy and litigation-related consulting services. Modern corporations, as well as those whoadvise and invest in them, face growing challenges on every front. From a proliferation of “bet-thecompany”litigation to increasingly complicated relationships with lenders and investors in an everchangingglobal economy, U.S. companies are turning more and more to outside experts andconsultants to meet these complex issues. FTI is dedicated to helping corporations, their advisors,lawyers, lenders and investors meet these challenges by providing a broad array of the highest qualityprofessional practices from a single source.

This press release includes "forward-looking" statements that involve uncertainties and risks. Therecan be no assurance that actual results will not differ from the company's expectations. The companyhas experienced fluctuating revenues, operating income and cash flow in some prior periods andexpects this may occur from time to time in the future. As a result of these possible fluctuations, thecompany’s actual results may differ from our projections. Other factors that could cause suchdifferences include pace and timing of additional acquisitions, the company's ability to realize costsavings and efficiencies, competitive and general economic conditions, and other risks described in thecompany's filings with the Securities and Exchange Commission.

FTI is on the Internet at www.fticonsulting.com.

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