2 0 1 3 ANNUAL REPORT ©2014 FTI Consulting, Inc. All Rights Reserved. Steven H. Gunby President & Chief Executive Officer Fellow Stockholders, Over the last 30 years, FTI Consulting has grown to become a market-leading global consulting firm by serving as a trusted advisor to our clients in both good and bad times. From headline grabbing engagements, including the Bernie Madoff investigation, the Lehman Brothers bankruptcy, the Bush vs. Gore dispute, the Major League Baseball Steroid case, and many more, our people have played a role in matters that have shaped history. I am honored and excited to have the opportunity to serve as FTI Consulting’s next President and Chief Executive Officer and I am proud to be part of this organization – one with a rich history of collaborating with clients to make a fundamental difference in their businesses. I also want to underscore just how convinced I am of the strength of our platform and the many opportunities ahead to leverage our capabilities to accelerate growth and enhance stockholder returns. Though I have only been in this role for a short time, I have been energized by the expertise and passion within this organization. The power of our market-leading businesses and the dedication of our professionals, together with the capabilities and global reach at FTI Consulting, is something we can work with. There are, of course, areas for improvement in every business, and no business can stand still; those points are true for us as well. There’s obviously much work to be done to realize your aspirations for this company, as well as my own. In the coming months, I hope to meet many of you to hear your views and share my perspectives and enthusiasm about FTI Consulting’s next generation of success. Additionally, we will host an investor day in New York City in June that will provide you with an opportunity to gain more insight into the drivers of FTI Consulting’s business and our plans for harnessing future opportunities as well as meet the team that will drive this transition. We have tremendous potential ahead and the FTI Consulting team and I are focused on taking this company forward in a meaningful way. I want to thank you for your continued support and I look forward to working with you. Steven H. Gunby President & Chief Executive Officer of FTI Consulting, Inc. FTI Consulting 2013 Annual Report • 1 Financial Highlights 2013 REVENUES BY SEGMENT 3 YEAR REVENUES (IN BILLIONS) Strategic $1.80 Communications Corporate Finance/ $1.60 12% Restructuring $1.40 23% $1.65 $1.57 Technology $1.58 $1.20 12% $1.00 $0.80 $0.60 $0.40 $0.20 26% 27% Forensic and $0.00 Litigation Economic 2011 2012 2013 Consulting Consulting 3 YEAR ADJUSTED EBITDA(1) (IN MILLIONS) $350.0 2013 REVENUES BY GEOGRAPHY $300.0 $250.0 North 74% $200.0 America $271.6 $259.1 $251.0 $150.0 $100.0 3% Latin America $50.0 7% Asia Pacific $0.0 2011 2012 2013 16% EMEA 3 YEAR ADJUSTED EPS(1) $3.00 $2.50 $2.00 $2.60 $2.39 $2.30 $1.50 $1.00 $0.50 $0.00 2011 2012 2013 (1) Please refer to pages 9 through 12 of this annual report for the definitions of non-GAAP measures and the reconciliations of non-GAAP measures to GAAP measures. 2 • FTI Consulting 2013 Annual Report 2013: A Year in Review FINANCIAL REVIEW • On May 1, 2013, we acquired Princeton Economics Group, a prominent economic consulting firm based in In 2013, revenues of $1.65 billion were 4.8 percent higher Princeton, New Jersey. As a part of the transaction, we than in 2012. Acquisitions contributed $48.2 million and secured access to the services of three world renowned represented 3.1 percent of the year-over-year revenue economists. growth. Our Adjusted EBITDA was $259.1 million, or 15.7 percent of revenues, and Adjusted EPS were $2.39. • On November 4, 2013, we acquired affiliates ofWD Scott Limited, providers of insurance management consulting FINANCIAL POSITION, CAPITAL MANAGEMENT services with professionals in Dublin, London and & CAPITAL ALLOCATION New York. Net cash provided by operating activities for 2013 was • On December 18, 2013, we acquired Risk Solutions $193.3 million compared to $120.2 million in the prior year International LLC, an independent provider of solutions period. Cash and cash equivalents were $205.8 million at to operational risks. December 31, 2013. LEADErshIP SUCCEssION In 2013, we maintained our balanced capital allocation On December 16, 2013, the Company’s Board of Direc- strategy, which includes the pursuit of high-quality acquisi- tors announced Steven H. Gunby as the next President tions, making capital investments to support our long-term and Chief Executive Officer of FTI Consulting. Mr. Gunby growth objectives and returning value to stockholders assumed the positions of President and Chief Executive through share repurchases. During the year, we purchased Officer of FTI Consulting and joined the Board of Directors and retired 1.96 million shares of our common stock for a on January 20, 2014. total cost of $71.1 million and invested $51.0 million on six tuck-in acquisitions. Mr. Gunby brings more than 30 years of strategic, operation- al and performance improvement experience in global man- ACQUISITIONS agement consulting to multi-national corporations. He has Business in general is increasingly becoming more compli- deep expertise in building long-term client relationships and cated and more global and FTI Consulting recognizes that growing a highly regarded consulting firm. Mr. Gunby joined clients need support to navigate through these complexi- FTI Consulting from The Boston Consulting Group, Inc. ties. FTI Consulting’s broad practice offering, global reach, (“BCG”), where he had been employed since 1983, and had industry expertise and expert model, is designed to meet been a senior partner and managing director since 1993. He these needs. previously led BCG’s global Transformation & Large Scale Change Practice and BCG’s operations in the Americas. In 2013, the Company invested $51.0 million on six tuck-in acquisitions. Each of these acquisitions expanded our ser- In connection with these changes, the Company also an- vice offering, geographic footprint or industry expertise. nounced that the Board of Directors adopted a revised gov- ernance model in which it has an independent Chairman of the Board. On December 13, 2013, the Board accepted • On February 7, 2013, we acquired Alliance Construc- Dennis Shaughnessy’s resignation as a director, to be tion Consultants, providers of claims consulting, CPM effective upon his retirement as Executive Chairman of the scheduling, quantity surveying and project controls Board following the Board’s December 17, 2013 meeting. services to sectors of the construction industry. The Board appointed director Gerard E. Holthaus, previ- • On March 19, 2013, we acquired C2 Group, a highly ously the Presiding Director, to become the indepenent regarded bipartisan government relations and lobbying Chairman of the Board effective December 17, 2013. firm based in Washington, D.C. • On April 4, 2013, we acquired Taylor Woodings, an Aus- tralian specialist corporate advisory firm with offices in Sydney, Melbourne, Perth and Brisbane. FTI Consulting 2013 Annual Report • 3 2013 Business Segment Review $394,719 CORPORATE FINANCE/RESTRUCTURING $400,000 $382,526 $364,409 Our Corporate Finance/Restructuring segment focuses on $350,000 strategic, operational, financial and capital needs of busi- nesses around the world. Our professionals address the full $300,000 spectrum of financial and transactional challenges facing our clients, which include companies, boards of directors, $250,000 private equity sponsors, banks, lenders and other financing $200,000 sources and creditor groups, as well as other parties-in-in- (in thousands) terest. We advise and implement on a wide range of areas, $150,000 including restructuring, bankruptcy, interim management, financings, merger and acquisition (“M&A”), post-acqui- $100,000 $101,137 sition integration, valuations, tax issues and performance $84,933 $78,797 $50,000 improvement. We also provide expert witness testimony, bankruptcy and insolvency litigation support and trustee $0 2011 2012 2013 and examiner services. Revenues Adjusted Segment EBITDA Our Corporate Finance/Restructuring services are offered through a global network of 47 offices in 14 countries. In 2013, we increased revenue-generating professionals in Corporate Finance/Restructuring Services our Corporate Finance/Restructuring segment by approxi- • Bankruptcy Support Services mately 5.7 percent to 737 professionals, of whom 72 profes- sionals, or 9.8 percent, joined us through acquisitions. • Interim Management Services • Investment Banking In 2013, our Corporate Finance/Restructuring revenues of • Performance Improvement Services $382.5 million declined 3.1 percent compared to $394.7 • Private Equity Sponsor Services million in the prior year period. 2013 Adjusted Segment • Real Estate and Financial Advisory Practice EBITDA was $78.8 million, or 20.6 percent of revenues, compared to $101.1 million, or 25.6 percent of revenues • Restructuring and Turnaround Services in 2012. • Transaction Advisory Services • Valuation and Financial Advisory Services 2013 Awards & Accolades • #1 crisis management firm in The Deal league tables of crisis management firms for seven con- secutive years (2007-2013) • Named a 2013 TMA Turnaround and Transaction of the Year winner in October 2013 • Honored by the Global M&A Network with six Turnaround Atlas Awards for excellence and out- standing achievements in the global restructuring, special situation M&A and turnaround markets in July 2013 4 • FTI Consulting 2013 Annual Report FORENSIC AND LITIGATION CONSULTING $500,000 $450,000 $428,730 $433,632 Our Forensic and Litigation Consulting segment provides law $407,586 firms, companies, government clients and other interested $400,000 parties with dispute advisory, investigations, forensic ac- $350,000 counting, business intelligence assessments, data analytics $300,000 and risk mitigation services.