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FTI Consulting, Inc. (NYSE:FCN)
Q4 2008 Earnings Call
March 3, 2009 9:00 am ET
Jack Dunn – President, Chief Executive Officer
Dennis Shaughnessey – Chairman
Jorge Celaya – Chief Financial Officer
Dominic De Napoli – Chief Operating Officer
Declan Kelly – Chief Integration Officer
Paul Ginocchio – Duetsche Bank
James Janesky – Stifel Nicolaus
Arnold Ursaner – CJS Securities
Andrew Fones – UBS
Timothy McHugh – William Blair & Co.
Tobey Summer – SunTrust Robinson
David Gold – Sidoti & Co.
Scott Schneegerger – Oppenheimer
William Sutherland – Boenning & Scattergood
Kevin Wong – JMP Securities
Welcome to the FTI Consulting 2008 fourth quarter conference call. (Operator Instructions) For opening remarks and introductions I would like to turn the call over to Eric Boyriven.
Eric Boyriven
Good morning and welcome to the FTI Consulting conference call to discuss the company's 2008 fourth quarter and full year results which were reported this morning. Management will begin with formal remarks, after which we will take your questions.
Before we begin, I would like to remind everyone that this conference call may include all statements other than statements of historical fact made during this call including without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans, future industry growth and objectives of management's future operations are forward-looking statements that involve uncertainties and risks. There can be no assurance that actual results will not differ from the company's expectations.
The company has experienced fluctuating revenue, operating income and cash flow in period and expect that this may occur from time to time in the future. As a result of these possible fluctuations, the company's actual results may differ from our projections. Further, preliminary results are subjected to normal year end adjustments. A number of factors could cause such differences including the pace and timing of additional acquisitions, the company's ability to realize cost savings and efficiencies, competitive and general economic conditions, retention of staff and clients and other risks described in the company's filings with the Securities and Exchange Commission.
Investors are cautioned not to place undue reliance on any forward-looking statements which speak only as of the date of this earnings call. The company does not undertake to update any of these statements in light of new information or future events.
We use EBITDA in evaluating financial performance. We define EBITDA as operating income before depreciation and amortization of intangible assets plus litigation settlements. Although EIBTDA is not a measure of financial condition or performance determined in accordance with GAAP, we believe that it can be a useful operating performance measure for evaluating our results of operation as compared from period to period and as compared to our competitors. EIBTDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of companies in our industry.
We use EBITDA to evaluate and compare the operating performance of our segments and it is one of the primary measures used to determine employee bonuses. We also use EBITDA to value the business we acquire or anticipate acquiring. EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other company's unless the definition is the same.
This non-GAAP measure should be considered in addition to but not as a substitute for or superior to the information contained in our statements of income. Reconciliations of EBITDA and net income and segment EBITDA to segment operating income are included in the accompanying tables in today's press release available at www.fticonsulting.com.
With these formalities out of the way, I'd like to turn the call over to Jack Dunn, President and Chief Executive Officer of FTI Consulting.
Jack Dunn
Good morning and thank you for joining us this morning to discuss our fourth quarter and year end results. I hope you have had a chance to review and read the press release. If you have not, as Eric said, it is available on our web site at www.fticonsulting.com.
With me this morning on the call are Dennis Shaughnessy, our Chairman, Jorge Celaya, our Chief Financial Officer, David Bannister, our Chief Administrative Officer, Dom De Napoli, our Chief Operating Officer, and Declan Kelly, our Chief Integration Officer.
2008 was another very important year for our company. Despite global financial chaos, we invested even more heavily in our future, diversifying our business, expanding our platform, building our brand and generating cash.
Organic growth was strong at 17% while contributions from key strategic acquisitions brought out total growth to 29%. Our international expansion continued as London became our second largest operation, boasting the full complement of all of our segments.
Most importantly, though chaos continued to reign in the fourth quarter of 2008, as we have seen in every previous cycle, paralysis began to delay action and our markets began to stir. In forensic litigation, the names ripped from today's headlines appear to be setting the stage for an excellent year.
Likewise, in economic consulting we have seen the major matters of the last 12 months begin to devolve into a dispute resolution phase and in technology, we believe we have seen the beginnings of the return of the big case phenomenon as regulatory agencies brought not only a burst of energy, but from an activist President and energized congress and an outraged public.
It is in corporate finance restructuring however where the results are even more dramatic. Since the beginning of the year, we have opened an average of almost four cases per day, and FLC is seeing the prospects for its best market in some time, and in restructuring is seeing the prospects for the best market of all time.
Truly, if our goal is celebrated in our recent global branding initiative is to be the firm you call when the game changes. Never before has the game changed so much.
Our performance in the year underscores the diversity of our platform, both from a geographic and skill sets perspective and the relevance of all of our segments to the events that threaten the well being of our clients. We have built this company to be able to advise our clients on the toughest issues that threaten their businesses, their reputation, their enterprise value, and in some cases, even their very existence.
In the current environment, these threats run rampant and as the company behind the headlines, FTI is at the crux of all of them. For example, with one of the largest restructuring practices by any measure, be it lead table, head count, active cases or volume, we are involved in many of the front page bankruptcies across a broad range of industries.
These include Circuit City and retail, Tribune Newspaper group in media, Lehman and Wamu in financial services and Lanvel in industrials. We have been called into the major fraud cases arising almost daily it seems, from the credit crisis and market melt down of the last 14 months.
Our involvement in a few of these has already been made public, including the Maddoff investigation, the Law Firm case and the Stanford financial affair. We were involved in many of the landscape changing transactions that we shape key industries. Examples include Northwest Airlines, Delta merger in the airlines industry, the purchase of Tarta from Jaguar from Ford in the automotive industry, and the recent transactions in natural resources.
We are active in reviving some of the world's premier companies as they battle challenges to their reputations from the adverse circumstance that are impacting their operation. Companies like AIG, Northern Rock, MP Global, RBS and Society General are just a few.
It is the unique combination of the positioning of our businesses, our global platform and the superb talent we are so fortunate to have that are the keys to our performance in 2008, a year that included one of the two worst quarters in U.S. business history, and why as I'll discuss in a few minutes we are so enthusiastic about 2009 and beyond.
With respect to the year just ended, revenue increased 29% to $1.29 billion with organic growth of 17% contributing the bulk of the increase. Our EBITDA increased 31% on higher margins compared to the prior year.
And EPS of $2.34 was up 17% this despite a 17% increase in the number of shares outstanding. Both revenue and EPS for the year were records, and at the top of the range of our recent guidance.
In addition to our outstanding organic growth, we continued our program of making selective key strategic acquisitions ion 2008 that added over $96 million in revenue for the year. Critical elements of our growth strategy are to expand our range of capabilities, deepen our industry expertise and build on the global platform which we operate and our M&A activity this past year was instrumental in furthering all of those objections.
An example of how we expanded our activity outside the U.S. was the completion of our full service platform in the U.K. as I mentioned through the combination of acquisitions and organic hiring of key professionals. London now represents our second largest office globally and serves as the hub of our European operation.
London is important to us, not only as a market in its own right, but as a bridge beyond, and to achieve this bridgehead in a little more than two years was a significant step for FTI. This is a global credit crisis and recession, and our global platform allows us to service our clients wherever they may be around the world.
In 2008, about 18% of revenues were generated outside the U.S., and we see activity beyond our borders significantly expanding in the future though the exact proportion as measured in U.S. dollars is somewhat dependent on exchange rates.
In summary, as you have seen again in 2008, our people set ambitious goals and then strived to meet them. We are a company that is realistic about market conditions and what we see ion front of us. We are a company that now has a global platform that is sufficiently diverse and flexible to ensure that we are truly a company for all seasons.
And finally, we are a company that is in a strong growth mode with internally generated capital to support it and we expect that growth to continue in 2009.
Now, looking at the fourth quarter, our performance in the fourth quarter came in at the top end of where we thought it would when we spoke to you in early November. Revenue in the quarter was $322.9 million, an increase of 15% over an extremely strong performance a year ago.
Our organic growth in the quarter was 4.4% which included a negative currency impact of over $11 million in revenue that reduced the measurement of organic growth in the quarter by about half.
The organic growth in the quarter was even more impressive considering that it was on top of an outstanding 24% growth in the fourth quarter a year ago when we were experiencing unusual influence of positive demand drivers, so we were somewhat up against some very tough comparisons.
The trends that drove our revenue performance in the quarter were similar to those that were in play in the third quarter. As you would expect, we continued to drive a growing proportion of work from the fall out of the credit crisis and recession which caused the corporate finance segment to have yet another outstanding performance.
The economic consulting segment also benefited as expected from an increasing amount of work in the anticipation of anti-trust litigation which always follows a vibrant period of mergers and acquisitions as we have experienced over the last several years.
The influx of clients having to assess the impact of the credit crisis also continued, and as is apparent from the press, the network industries practice, especially in railroads, energy and telecom continue to develop momentum.
While the fourth quarter did not suffer from the same deer in the headlights paralysis that impacted the third quarter, we did see the lingering effects of a lame duck administration and a desperate economy on levels of activity and litigation and regulatory and enforcement activities.
These factors particularly impacted the performance of FLC in technology, although we believe they performed well under these conditions. The foreign exchange impact on the quarter was most acutely felt in the strategic communications segments which was also affected by the continued volatile capital markets at dramatically reduced levels of M&A activity, the virtually disappearance of the IPO for awhile, and the impact of the recession on discretionary client spending.
Notwithstanding the considerable headwinds affecting these segments, the diversified and counter cyclical nature of our business enabled us to record EBITDA in the quarter of $17.3 million, up from $64.3 million a year ago. This was the second highest EBITDA we have ever achieved. The EBITDA margin, while lower than last year was improved from the third quarter due especially to the strong performances by ECON and corporate finance.
Net income increased slightly, and we reported earnings per share of $0.58 compared to $0.60 a year ago. We had about two million more shares in the share count in the quarter than we did last year, which accounted for the year over year decline in earnings per share.
In this environment, we believe liquidity is king, and we had a very strong period for cash conversion, generating approximately $91 million in cash from operations in the quarter, almost double the $47 million of a year ago, helped by a very good period for receivables collection where we equaled last year's DSO's of 74 days.
For the full year, we generated $200 million in cash from operations which is well in excess of the $125 million in net income we reported. This strong cash flow enabled us to exit the year with cash and equivalents of about $192 million, even after an extremely active year we had on the investment front and with no increase in debt.
We think this financial flexibility puts us in a tremendous position to take advantage of growth opportunities that might arise in the course of this year and enhances our ability to attract and retain the most talented professionals in our industries.
In summary, I am pleased to be able to report a fourth quarter that completes an extremely strong year for our business where we continued high double digit growth in both revenues and operating income. There are not many companies who can turn in such a performance in this market environment, and it is a tribute to the commitment and contribution of all of our people around the world who enabled FTI to do so.
Now, some brief comments on the key drivers of the segment performance in the quarter. The worsening global credit and liquidity crisis and general economic recession continued to benefit our corporate finance restructuring segment which is firing an all four cylinders.
Revenue increased 46% to $107.3 million from $73.6 million in the prior year period. Organic growth was a very robust 33% with the balance of revenue for the most part contributed by the McCann group acquired during the year.
EBITDA increased 66% to $37.2 million. During the year we added capacity in the U.K. restructuring practice to meet the rapidly growing demand which has enabled them to more than double revenues over the past year.
We now have over 40 professionals in London, with another six arriving in late March or early April. We expect our European corporate finance group to increase further to 65 professionals by year end, helped by expansion on to the continent where we plant to build a CF presence in the next few months.
We also launched a restructuring practice in Toronto with the hiring of seasoned professionals there extends our capabilities to Canada as well as Mexico and South America where we expect to see a continued significant expansion. That practice has gotten off to a very strong start in the few months they have been with us.
The growing impact of the recession and lack of credit availability is propelling restructuring across a multitude of industry sectors. Despite the amount of time that has passed since we warned you of the first signs of stress in the sub prime mortgage market, the financial services sector continues to drive a lot of business for us.
We won 18 new significant engagements in the sector in Q4, the most notable of which was Wamu. We noted on our last call that we anticipated the plummeting consumer confidence could cause a weak holiday season and hurt the retail sector, and that came to pass. We also picked up seven team assignments in this sector in the quarter including Circuit City, KB Tours.
The chemical industry has also seen challenges as commodity prices whip sawed and we received an assignment for Liam [DelBelsel]. Finally, we believe the ongoing structural challenges in the medial and telecom sectors will provide sources of opportunity for some time.
To enhance our ability to service these opportunities such as Tribune, at the end of the quarter we acquired CXO, a firm with a team of experience management professional with a particular focus on the media, telecom and cable industries. We already had the largest team of restructuring and turn around professionals in the space and this underscores how we are building our platform of skill sets to leverage all powerful domain expertise in areas where we see sustainable sources of demand.
The strength of corporate finance is best reflected in our momentum. As I mentioned, since January 1, we have seen our new assignments accelerate at a rate of four per day. This is a staggering number. I'll talk more about that when I get to my discussion on our outlook.
The economic consultant segment had another excellent quarter. Revenue increased almost 20% to $53.3 million, virtually all of which was organic growth. A stronger market for work on anti-trust litigation, which as I said, always follows a period of intense M&A, was a key driver in the quarter as was continued demand building from companies starting to prepare for litigation arising out of the credit crisis.
Network strategies are benefiting from a very robust amount of railroad litigation which should continue throughout the year and into next. We are also seeing increased activity in the public policy arena.
EBITDA rose almost 36% to $16 million or 30% of revenue from $11.8 million or 26.4% of revenue in the prior year. It was also an extremely productive quarter for ECON from a strategic perspective. We launched our auction solutions practice headed by two of the most esteemed experts in auction design, Dr. Paul Mildon and Dr. David Silan. The practice has gotten off to a rapid start, having already won two engagements with a prominent telecom company to help them bid in an upcoming 3D Spectrum auction.
While our economic consulting practices has long been involved in some major European cases, having a local market presence has been a priority for us, and I'm pleased to announce that at the end of the quarter, we achieved that goal when we launched our London based economic practice. The tremendous momentum we've begun to generate in this office, has led to excellent success in attracting new talent and we would hope to have a team of at least 30 new economic professionals by year end.
The pipeline of opportunities in ECON is strong. There are a lot of new engagements in financial economics arising out of the credit crisis from people considering legal action and those who are worried about defending themselves. There is also substantial interest is retaining our ECON practice for strategic M&A work in industries undergoing consolidation from severe economic stress.
Revenue in the forensic and litigation consulting segment increased 7% to $58.6 million from $54.8 million in the prior year. Acquisitions contributed revenues of slightly more than $8 million in the quarter, as we saw a continuation in this market for litigation and regulatory investigations by the government which obviously negatively impacted utilization.
However, the segment continues strong performances from our regulated and special industries groups centered on insurance, health care and pharmaceuticals as well as IP and construction. This bodes well for the segment's 2009 performance as more traditional litigation and investigation and regulatory work is expected to pick up.
FLC's EBITDA was $12.2 million or 20.8% of segment revenue, up in the quarter, but negatively impacted by lower utilization, some foreign exchange fluctuation and certain non recurring integration expenses of our recent acquisitions.
We feel we have reached a point in demand that began late in the quarter when we were hired to work on the Maddoff investigation, and since then we've become increasingly busy with the growing roster of engagements investigating the fraud allegations that are being reported daily on the front page as the market declines.
As a result, in the current quarter we are seeing improving trends and utilization and revenue. Revenue in the technology segments in the fourth quarter increased 10% up to $52.2 million from $47.5 million in the prior year period. This was primarily due to contributions from Attenix and SDI of about $8 million.
As in the third quarter, technology continued to be affected by a lack of big litigation and M&A matters, as well as a slow down in certain large product large liability matters and some pricing pressure. On the bright side however, we believe the same factors driving FLC toward an inflection point of private technology.
Like FLC, in the first quarter technology has experienced an upturn in demand resulting from increased litigation and investigation activity especially with respect to larger matters which are its bread and butter.
Segment EBITDA was $13.6 million or 26.1% of segment revenue, compared to $19.6 million or 41.1% segment revenue in the prior year. The primary drivers of the lower margins were continued pricing pressure in certain parts of the business, increased planned R&D spending, and non recurring integration expenses.
As we had planned early in 2009, segments successfully completed the integration of the market leading and award winning Attenix Ringtail platforms and launched a single e-discovery system of record combining the visual analysis and rapid view capabilities of Attenix with the enterprise case management for action and production features of Ringtail Legal.
The tech segment will continue to pursue its research and development initiatives to further leverage the Attenix Ringtail platform with new generation technology. We are committed to being the technology leader in our industry.
The strategic communications segment earlier faced the headwinds of silent capital markets and a lack of M&A work. The segment also experienced a negative currency impact of almost $8 million and put some pressure on its traditional retained business from clients reigning in their budgets due to the recession.
Revenue declined 14% to $51.6 million from $60 million in the prior year period, almost entirely due to the impact of foreign exchange. FD has been able to pass a good deal of the downward pressure by developing additional crisis work collaborating with work on restructurings and with contributions from acquired businesses.
We're delighted that they have been able to move so adroitly to shift the business to the current climate. FD is emerging as the clear go to firm for truly strategic assignments of critical importance as witnessed by its work for clients such as AIG, Circuit City, Northern Rock and RBS, as well as work on behalf of a number of foreign governments directly affected reputationally by the current economic crisis.
EBITDA was $12.9 million or 24.9% of segment revenue compared to $16 million or 26.9% of revenue last year. Margins were somewhat impacted by the lack of significantly highly profitable M&A work. The segment leadership has taken proactive steps to managing expenses, to preserve margins under a lower revenue base.
Notwithstanding the weak M&A environment, the communications segment has maintained its leadership position in the market and has recently been recognized as the number one M&A communications firm in 2008 based on the volume of deals they revised during the year including several of the worlds biggest and most high profile transactions.
In summary, the overview of the segments underscores our strategy in building the company as we have over the last 10 years. It is designed as an integrated portfolio of complementary practices where negative performance in one segment can be offset through the improved performance of the other segments with a counter cyclical bias.
This is the value proposition of our strategy and the fundamental strengt5h of our FTI's business plan going forward.
Now let's take a look at our outlook for 2009. In short, we expect to have a very good year and one which we think will definitively separate FTI as the leader in event driven consulting. Top line we are guiding to revenue of between $1.45 billion and $1.55 billion which represents a growth of between 12% and 20% assuming as we always do for purposes of guidance existing currency exchange rates and no contributions from acquisitions.
In terms of the trajectory of the year, we expect all quarters to be sequentially higher beginning in Q1 driven by the expansion of our restructuring and economic staffs and continued increases in litigation and government regulatory activity. The year over year comparisons get easier as we proceed through the year, because as you'll remember, in Q1 and Q2 of 2008, represented performances for several of our segments, and you just can't do that all the time.
We expect slightly higher EBITDA margins on 2009 as we continue to leverage core through the restructuring cycle, with momentum of FLC and technology pick ups in the second.
For the year we are guiding to earnings per share on a range of $2.55 to $2.70. Included in that guidance is a $0.05 non cash cost from the required implementation of FAS-B staff position, APB14-1 which relates to how you account for convertible notes and it has the effect of increasing our hypothetical non cash interest expense.
I'd be remiss if I didn't remind you that we have the usual first quarter impact of higher social security and other front end loaded benefit costs which typically have a sequential impact of around 250 to 300 basis points on the margin compared to the prior fourth quarter.
As we said last year, when we reported Q1 of 2008, the seasonal impact of these costs in that quarter was offset by two large engagements that caused the period to be exceptionally strong.
Now I'd like to just take a few minutes and tell you what supports our confidence in our outlook for this year. First, we strongly believe that the company has never been more appropriately aligned with the demands of the market place than it is now. As I said earlier, we have positioned ourselves to be the firm that our clients turn to when the going gets rough and we are now most definitely moving into the type of environment for which the company was built.
As you all know, the key drivers of our business are restructuring, litigation, regulatory activity and capital markets activity. Let me talk about 2009 in the context of these drivers.
First, when we first warned you about a global pandemic of crisis in the financial markets about this time last year, we believed it would be painful, but no one could have foreseen the events of the last 12 months. This is longer, deeper, more painful and more pervasive than anything we have ever seen before.
Our professionals believe we are in this jackpot for years to come with the major fallout continuing for at least the next five years. The factors in the global economic system are more pervasive and the American consumer is no longer standing by to bail out the country much less the world.
While the market for high grade debt has improved lately, there has not been a commensurate improvement in the speculative grade market and there are literally over $500 billion of debt in private equity deals that are coming due and will need to be financed in the next few years.
Moody's is forecasting that default rate on a speculative grade debt to more than triple from 4% at the end of 2008 to over 14% by the year end 2009 which dwarfs anything that happened in the last period of 2000 to 2002.
This is serious stuff. This is no celebratory assessment of being right, but a sober one. This goes beyond input for financial models or market predictions. The world is in the trenches and we are lucky that we have built a company that we think can help our clients as they face many of these challenges going forward.
With regard to FLC as we have said for some time, we expect the pace of regulatory investigations to accelerate once the new political appointees in the Obama administration get settled in their positions and build momentum for FLC and technology. There has been so much value destroyed during this financial melt down and an unprecedented amount of alleged fraud being revealed that at the current melt down if all follow past patterns, litigation, regulatory and enforcement action will follow.
There is little question that the government and regulators will want to know how we got into this mess, who knew about it when, and who was responsible. This is also reflected in the pick up in activity we have already seen inside our own FLC segment in the first quarter of 2009 with the segment being called in to work on several of the major fraud and investigations that you're reading about in the newspapers every day.
Here are some precursors of what could be coming. A sub committee of Senate, Homeland Security and Governmental Affairs will hold a hearing on March 9 on the topic of Where Were the Watch Dogs, Systematic Risk and the Breakdown of Financial Governance.
President Obama recently named Interior Department Inspector General Earl Devaney to lead a new board charged with monitoring potential waste, fraud and abuse of economic stimulus funds. You may remember that Devaney led to high profile investigation of the Jack Abramoff lobbying scandal.
Last month, Senator Leiberman appointed Senator Clair McCaskell to lead a commission responsible for investigation federal contracting. Congressman Edolphus Towns, the new Chairman of the House Investigative Committee, laid out at a meeting hosted by FTI, an agenda that includes an accounting by financial services of how they spent the first $350 billion in bail out funds and an examination into executive bonuses of firms that received bail out money.
Senator's Leahy and Grassley have introduced legislation to provide more resources to law enforcement as they try to prosecute fraud and the bill will provide about $420 million over the next two years for extra agents, investigators and prosecutions.
Finally, under the President's budget proposal, the SEC would receive a 13% increase in funding. Chairman Shiparo said the agency would use the funds to better detect fraud and ensure stronger oversight of the nation's security markets.
Based on the activity that we have seen so far, we are confident this administration will be much more hands on in and an aggressive pursuer of misdeeds. In every cycle of investigation, we get more than our fair share of the cases and this should be no exception. We have been using this slack period to strengthen our resources and make some key hires who will enhance our position.
We have already been engaged in many of the headline fraud investigations that have come to the fore and the pipeline of opportunities that are coming to us is filling up. It's interesting that the current environment for litigation and investigations feels very much like the turn of structuring market a year ago when momentum was starting to build and we saw how that exploded.
The rest of the year is obviously the health of the capital markets this year and whether the availability of credit and investor psychology will cover enough to allow for the resumption of M&A and even IPO's. This of course has significant bearing on whether strategic communications reverts back to its traditional growth.
I made the point in my segment discussion that they are market leaders in M&A communications, so when the credit environment falls and transactions begin to happen, we would expect them to participate in the upturn and even increase market share. And with their presence in so many of the world's capital markets and financial markets, they offer us the infrastructure to leverage our global opportunities even more as we did in the U.K.
To ensure that we take full advantage of the current demand environment, we are making a significant investment in the integration of our businesses around the world and strengthening of the FTI brand in the markets where we operate globally. We are dedicated with a renewed vigor to use the platform we've built to share and leverage our greatest resources; expertise and relationships across the pond to expand client relationships and develop major business opportunities.
On the branding side, we have launched our When the Game Changes and our Company Behind the Headlines marketing campaigns which represent the first globally coordinated and far reaching brand development initiatives ion our history. The reaction to these initiatives and their marketing outreach has already been very strong.
We believe the time to invest proactively in our brand and to focus heavily on how we can expand their services and our presence in multiple new markets around the world when others won't or others can't.
This time last year I spoke to you of the spread of the global credit crisis and what I termed full blown and financial economic pandemic. As I said, ironically that has been proved to be more accurate than we even predicted. While the world is struggling with one of the most challenging times in a generation or more, FTI was built to prosper in both good and bad times.
This is due to our vision, and especially to our people who are the trusted advisors to our clients in their times of need. We have never been in a better position to service that market and to make returns for our shareholders and at the same time, attract the very best talent that is interested in participating in our future.
So to conclude, I'd just like to say that we feel like we had a very good 2008. I'd like to thank our people for their contributions and we look forward to another great year in 2009 and we believe we have the momentum to reach those objectives.
With that, I'd like to turn it over to your questions.
Question-and-Answer Session
(Operator Instructions) Your first call comes from Paul Ginocchio – Duetsche Bank.
Paul Ginocchio – Duetsche Bank
Could you maybe break out the difference in tech between sort of pricing and investment on the margin?
Dennis Shaughnessy
You mean the impact of pricing costs into margins, I'd say the majority would be pricing and a significant minority would be R&D spend.
Paul Ginocchio – Duetsche Bank
Then R&D spend is not going where, I think you've gone through some investments.
Dennis Shaughnessy
Yeah, we were very happy to announce at the Legal Tech the successful integration of the Attenix Ringtail platforms and we are continuing that spend rate in order to add what we think will be dramatic increases to the efficiencies of that new platform over the next 12 months.
Paul Ginocchio – Duetsche Bank
In the fourth quarter, was there any significant success fees in your corp restructuring practice or what that mainly just ongoing business.
Dennis Shaughnessy
There were success fees, but business as usual.
Paul Ginocchio – Duetsche Bank
I know there was one high profile where the creditors pushed back on some success fees in retail you're trying to get. Is there any issues with getting success fees in the cycle?
Dennis Shaughnessy
Not so far.
Your next question comes from James Janesky – Stifel Nicolaus.
James Janesky – Stifel Nicolaus
As a follow up to the tech margin question, you had talked about getting back to the low 30% margins over time, and you had also talked about some momentum with some recent wins in cases. Do I assume those revenues do come on line, that we would have more natural margin expansion despite the pricing pressure and the continued spend on R&D?
Dennis Shaughnessy
We will see margins move back up even though we have made a conscious decision to continue the spend rate of R&D. As Jack had enumerated, we are being brought into very large, complex challenges with a global reach and the pricing pressure tends to abate the more complex the issues, and a lot of the ones you've either been reading about or heard about are extremely complex, require very sophisticated data management collection and analysis. So we would definitely expect to see some margin expansion, especially in the second half.
James Janesky – Stifel Nicolaus
And some of these larger cases that you've won recently, you talked about Maddoff and Dryer, are they flowing through multiple segments within the company?
Dennis Shaughnessy
Maddoff, Dryer are multiple segments, yes.
James Janesky – Stifel Nicolaus
When we look at the seasonality of earnings other than Jack, you did point out about the pressure in the first quarter because of payroll resets and such, that combined with these cases building throughout 2009, would I also assume that the earnings will build as the year progresses?
Jack Dunn
Yes, that would be a good assumption.
James Janesky – Stifel Nicolaus
Could you talk about what interest expense you would expect for the year and what tax rate you would expect?
Jorge Celaya
I think the tax rate should be about flat at around 39%. The interest expense if you include the change in the convert that Jack mentioned in his opening remarks that should add about $4.6 million to interest expense. So combining interest expense with that, interest expense would normally be flat; you add $4.6 million in interest income should be down a bit.
So we're probably looking at net interest combined probably, the interest expense about $1.2 million higher per quarter.
James Janesky – Stifel Nicolaus
$1.2 per quarter?
Jorge Celaya
So about $4.7 million for the year.
Jack Dunn
It's a function really of two things. Cash interest expense should be slightly down. You can almost model it off of last year, down a little bit, and then you have to add a non cash charge for the new rules on how you calculate convertible interest, and that's going to add about $0.05 per share or $0.12 per quarter to the interest charge.
James Janesky – Stifel Nicolaus
Would that be also subtracted from the prior year?
Jorge Celaya
Yes. Part of what the accounting will do is that as we report our 2009 first quarter and so forth, we will be for comparative purposes restating the comparable quarters of 2008 which has a similar affect of about $0.1.2 per quarter.
Your next question comes from Arnold Ursaner – CJS Securities.
Arnold Ursaner – CJS Securities
First question I have relates to your head count. You mentioned you would increase it by about 14% in 2009. Is that from the year end levels and how much of those would you expect to get either through just hiring individuals or through acquisitions or practices?
Jack Dunn
That would be fairly much what we'd look at organically to support the organic growth that we have. We don't include any impact of acquisitions in our guidance. We would also expect obviously some opportunities to have some group hires and things like that which we're gaining a lot of momentum and as we open up new areas, especially in Europe, we mentioned that we are fortunate to have a group join us in Canada that has a significant impact on our ability to also service Mexico and Latin America.
We think in those areas, we see a large opportunity.
Dominic De Napoli
Including acquisitions, head count is almost up 30%, almost 29%. And the difference between the organic and obviously t hat number was the head count acquired through acquisitions, and we'll grow head count. As you know, we don't budget acquisitions, but as Jack mentioned head count is planned to grow in the area of 14%. And that is from last year, from the end of the year.
Arnold Ursaner – CJS Securities
Second question I have relates to, kind of thinking about all of your businesses combined for the upcoming year, obviously the piece related to restructuring seems like it's doing extraordinarily well with tremendous backlogs, but the problem areas, FLC and tech, it sounds like you're poised for a pretty good cyclical pickup. Is that another way to think about this?
Dennis Shaughnessy
I would say, let me go through them this way. Corp is obviously going to have a tremendous year. Tech and FLC have come out of the gate in the first quarter much faster than we had planned. We thought they would have very strong second half of the year if the momentum continues. It's too early to declare victory obviously. They're going to do very well.
ECON as we said is moving along very nicely being engaged in some really interesting new assignments. They are adding capacity. They're one of the groups that are definitely adding capacity on an organic and a group hire basis. The one division that we think will have the most headwinds to go through not only on a FX basis because so much of their operations are offshore, but just in an internal market basis would be the strategic communications.
So great phenomenal year in restructuring. We think a very good year in tech and FLC. Continued excellent performance by ECON. Tough year ahead for strategic communications.
Recently some people have done some historical perspective analysis on litigation. They've gone back and looked at for example foreign practices cases and you go back to 1992, every year before an election, a Presidential election, they have dwindled to the single digit level and every year following the election they've exploded to make up for what was probably a lame duck view towards enforcement.
We truly believe that certainly our experience here over the last 20 years has been seeing that kind of renewed vigor and enforcement and regulation follow. I think it's exacerbated by the fact that you have as the great man said, the tides going out and you're seeing who's swimming naked.
The amount of fraud we're seeing, started at a much earlier time in the cycle than it did back ion 2001, 2002. 2201 you saw the explosion. The capital markets you saw the explosion and the litigation and regulatory happen in 2003 and 2004. Here it's starting almost immediately so that bodes well for that market place again over the next three to five years.
Arnold Ursaner – CJS Securities
I think what I'm trying to do is equate your 14% head count growth. You had acquisitions that are still contributing into '09. In line with your 12% to 20% revenue growth, unless you have some material give back on fees, or something else, it would seem to me your revenue growth should be certainly towards the higher end of that range based on head count.
Jack Dunn
One thing we're lapping don't forget, is we're lapping a tough, tough currency. This time last year the pound and the euro were significantly premium against the dollar. I think it was about 2.1, the one was. The pound exchange rate is down to 1.4, and so what's happening is if we showed you the growth in constant currencies, you would be right on it and your assessment it would be at the upper end if not even through the upper end.
But we've got given the good news about global is the assignments, the bad news about being global is you have FX issues and it's clearly affecting the top line growth.
We're also hiring more than ever at the lower level of staff. The head count increase is more skewed than ever at the lower level.
Arnold Ursaner – CJS Securities
Can you give us a feel for the shape of how business has evolved so far this quarter, meaning kind of walk us through the very early part of January? I know when you were at our conference; things were still very, didn't pick up immediately after year end, but perhaps give us a feel for how the last eight weeks or so have shaped up?
Dennis Shaughnessy
Building momentum, large assignments, incredible amount of new engagement acquisition in corp as Jack said averaging about four a day. And again, I think the biggest surprise is very, very large fraud investigation assignments.
Jack Dunn
I think probably you can use as a benchmark, January 20. After that in terms of political hearings, in terms of people at the government being sent back to their desks and finding that they better do something picked up dramatically when you really had the investiture of the new administration.
Your next question comes from Andrew Fones – UBS.
Andrew Fones – UBS
Just following on about the question earlier about revenue growth guidance and the fact that it appears from the head count growth that you might go through the high end of the range. I was wondering if you could also talk a little bit about the relative revenue per consultant for international versus U.S. and of that 14% growth, what do you expect to come internationally versus U.S.
Jack Dunn
I don't think we've seen a particularly different view of the revenue per consultant. I mean, when you look at economic consulting because it's built on a system where you have the highly reputation economist, they typically have a lot of revenue for the senior people, and their revenue professionals are pretty much the same.
So I don't think that we've noticed a big change in that number. Professional, we would expect that to stay relatively the same.
Andrew Fones – UBS
In terms of the hiring, can you give us a sense of how much of that will come internationally? You mentioned you'd be adding people in ECOM consulting and corporate financing.
Jack Dunn
The bulk of the people will be where our businesses already are because they need to sustain the growth that they have. On a percentage basis, we're starting with a very small base. We would think that, we're hopeful that we'll significantly expand the capacity both in restructuring and an economic consulting in London.
We would hope to move economic consulting and also restructuring onto the continent. Those would be smaller kind of step out acquisition there. And then we continue very strong in South America, Latin America on both the investigation side and with the restructuring side, and we would continue to explore Asia for technology for investigations where Steve Vickers is out there in Hong Kong running our operation. So that's kind of the pattern.
Andrew Fones – UBS
If you could, controlling the new technology platform, can you give us any thoughts on clients reaction to the new platform and whether you think there was any kind of delay in projects ahead of that launch in order for people to take advantage of the new platform and what kind of trend you've seen post the launch.
Jack Dunn
I think the response that we got from participants in legal tech were for the combined platform has been excellent. I think sort of the window that some of our technologists gave the constituencies on the applications that we're working on and developing ourselves and partnering with other technology firms caused a lot of excitement.
I think as we said, we're seeing technology begin to build momentum. A lot of that is just simply a pick up of very large engagements, but we're seeing the applications of the technology by a wider constituency so we're pleased so far.
Your next question comes from Timothy McHugh – William Blair & Co.
Timothy McHugh – William Blair & Co.
I was wondering if you could give some more context to your comments about four cases per day in the restructuring segment, if you could talk about how many did you have at the end of '08 and what type of growth rate that might set you up for as you think about '09 here in your guidance?
Dominic Di Napoli
We have in the first quarter so far we've opened up almost 160 new cases, so that's an unprecedented amount of new cases, and when you look at the way we look at the economy and the opportunities there, you've got the three pillars of the consumer confidence really under attack.
Unemployment's growing to almost 9%. You've got retirement savings down 30%, 40%, 50% and then you've got home values declining 10% to 30% depending upon the market you're in. Unless we have the consumer come back, this economy is not going to correct itself. So we see this as a pretty long, deep recession at least through some time in 2010.
Two other things I think you should focus on as well. We are only now just beginning to see the impact on this economic crisis on commercial real estate. It's happening quickly. It's happening in major metropolitan marketplaces, and the whole level people of commercial real estate paper is very, very high and has some obscure ties, so we think that will clearly yield new engagements.
And then finally, as Jack said, there's about half a trillion dollars worth of structured finance that was put in place earlier in the decade on a very large prominent private equity led deals. Even though it was covenant like, it does have maturities and maturities commence this year and run for the next three years and that finance cannot be rolled over in this current credit market, so they would clearly be candidates for restructuring.
Timothy McHugh – William Blair & Co.
Is it fair to assume maybe relative to the 33% organic growth rate in the fourth quarter that your guidance would assume a further acceleration in that business as we look to '09?
Dominic De Napoli
It's hard to take what is clearly extraordinary new engagement numbers and annualize them. I guess the caveat would be if it continues at that rate, then yes you're right. If it slows down it will be more in line with what our thinking was when we put the budget together at the end of last year.
Timothy McHugh – William Blair & Co.
Just more broadly, can you talk about there's the low end and the high end of the guidance range, what may be some of the assumptions are that would take you up to the high end versus what would take you down to the low end and more so in terms of the revenue?
Dominic De Napoli
It's timing. I think when we put the budget together, we didn't anticipate some of these large cases breaking so quickly early in the year. We're early in most of them except for one, so we really just don't know how it's going to play out yet. I think from the view of currency, it's very difficult to predict. It's been going one way, and that's against us. We modeled using the currency numbers at the end of the year. We're already down, so the dollar has strengthened even more, so clearly a negative factor would be it's difficult to understand where the currencies are because it's such a fluctuating marketplace.
So I guess it would be a combination of two things; if momentum that we're beginning to see continues, and some of the reach into some of these accounts, and then finally, FDD is difficult to model this year. They've done a tremendous job of being adroit in allocating capital markets talent into the crisis communication work, but they have such a high percentage already of large crisis communications cases, that it's difficult to forecast a lot of growth and clearly you can tell me better. We don't foresee very much if any capital markets work this year, so I think they would be another anchor to win Obviously the very good news we're getting in some of the other areas.
Timothy McHugh – William Blair & Co.
The head count in technology seemed to be down quite a bit sequentially. What were you doing in the quarter there?
Dominic De Napoli
What we told you was that we were not going to attempt to integrate the Attenix acquisition until the beginning of this year mainly because we wanted to do the integration of two platforms. We have commenced the integration efforts of the acquisition into tech, and as a result you do, when you do these integrations, unfortunately there were redundancies that we had always planned to eliminate. And that's the main reason for it.
Timothy McHugh – William Blair & Co.
Is that part of the margin lift you would expect for '09?
Dominic De Napoli
I think the margin will primarily come from, we'll get a little bit certainly some of the integration expenses that are non recurring will burn off over the next two to three quarters, so that will influence margin. We think the main increase to margin will be somewhat of a slow down in the R&D spend towards the back end and bigger impact from the larger assignments that we're getting.
Your next question comes from Tobey Summer – SunTrust Robinson.
Tobey Summer – SunTrust Robinson
Stepping back and looking at the sequence of the business, judging from what you're saying it looks like corp restructuring has a multi year tailwind, and I'm just wondering from your perspective if there's going to be an opportunity where we're going to have a period of time where restructuring corp is still going kind of full boar, and some of the pro cyclical elements of your business could actually start performing better as well.
Jack Dunn
I think probably the last time we went through the cycles from our perspective, the good caveat that we think this restructuring market has a lot of legs to it. This is, we're in such a jackpot right now that our professionals are seeing this as a five year run. Typically, it takes longer for the collateral damage that you would experience in ECON and in FLC take a little longer, so you would think that that we're still seeing litigation now that dates back to the 2001/2002.
So we would think that maybe two years out that you would have the beginning of those segments clicking. Technology, restructuring, and FLC clicking on all their cylinders together at the same time. FD has returned to its glory days of last year. We've tended a little bit on the capital markets, but there they will be increasing their market share.
In terms of our ECON, they seem to be, they are beneficiaries of the litigation phase for sure there and they would also be the beneficiary of continued M&A type work. So I think that there's a, we have a platform that's put together to take care of periods like this where there's a real imbalance on what the economy is doing, but when we have a period where funding returns, where you can actually get restructuring done, you still have to do the restructuring and where the litigation starts to follow helps out. Even Enron and others, that only wrapped up last year.
I think you're looking at a pretty good five year run for FTI if not longer.
Tobey Summer – SunTrust Robinson
I wanted to ask a specific question with commercial real estate issues maybe coming to the fore, how your real estate business is doing and if there's opportunity for liquefaction of some investments. Maybe you could give us a thought for what Sovereign Funds may be thinking at this stage.
Jack Dunn
It's staring to pick up. Without a doubt it's doing very well now over in Europe. It's been one of our best cross sell opportunities in combination with the restructuring people as well as the FD people. We've won some very big assignments in the Middle East in partnering with some of the other groups. I think we're now up to three or four assignments in the Gulf area, Saudi Arabia.
We won some large assignments in Dublin, as you're probably well aware. Commercial real estate has been one of the major drags on their economy. I think they're being viewed by some of the key people in Ireland as a very valuable resource and potentially navigating Ireland's economy out of some of these messes.
Dominic De Napoli
We have the SMG acquisition working closely and being integrated into the corporate finance practice. Our corporate finance professionals are really the guys that drive the bank negotiations, but we can bring in the real estate expertise from the SMG acquisition to really provide valuation and all the other components that are necessary in the commercial real estate debacle.
That's really just beginning. That's the news that I think we're going to be reading about over the next six months, but to date you haven't seen the big ones. You've seen some of the industries like the casino's collapsing and a lot of the large resorts really under stresses, tourism and vacation spend is down and dropping. So stay tuned for a lot of real estate work outs in '09 and 2010.
Jack Dunn
SMG has a unique position in the REIT world. They have a very broad client base there number one, and an experienced base so as each come under pressure in a lot of their investments, they're uniquely positioned to help the REIT's handle some of those problems.
Dominic De Napoli
And there are some REIT's that have cash that they want to invest so SMG would be the first call there to help them structure the deals and value the acquisitions.
Tobey Summer – SunTrust Robinson
Am I right in thinking that from a margin perspective the last several quarters, SMG probably has underperformed its historical margin and perhaps looking out over the next year or two, there's an opportunity to go back to that margin with success?
Jack Dunn
That's the plan. With the M&A down, that's the largest part of their margin we would expect going forward.
Your next question comes from David Gold – Sidoti & Co.
David Gold – Sidoti & Co.
On resource growth, or the 14% head count you spoke a little bit about adding corporate finance and economic consulting, but curious if you can give a little bit more color as to where we should look for the head count adds to be weighted towards. And then, coupled with that utilization at the corporate finance practice presumably still weak, some room for progress, so pressed with margins there, but could we expect that some of that would be from higher utilization near term?
Jack Dunn
Utilization is increasing with the increasing pace of business. I remember fourth quarter, we digest a lot of our new hires from the universities that come in late third quarter, so our margin was up, utilization was down a little bit, and that was again mainly SMG because of the real estate market, and two just digesting all these new entries. So utilization will increase as a result of increasing momentum.
Dominic Di Napoli
As far as adds, we're going to be adding across all the practices. Notwithstanding in 2008 we had a slower FLC overall practice, there are pockets within FLC as Jack mentioned that did extremely well, even in 2008 that we would expect to go forward to 2009.
As Dennis mentioned, the margin expansion in corp is possible with the high utilization. If we ended the year at around 75%, there's clearly room to increase that utilization, and with the younger staff that we're brining on, our margin rates are the highest at the lower level versus the senior level professionals.
David Gold – Sidoti & Co.
If we backtrack a little bit, you said no significant success fees in the fourth quarter and some margin potential in that business. How high do we think the margin could get there?
Jack Dunn
I think what we said was large success fees are becoming standard operating procedure on the creditor side and the big creditor cases, they're the accepted way of doing business which helps the creditors keep their monthly fees at a reasonable level and we get paid sharing in their success. I think there were, but I think we anticipate them throughout the year in these types of matters.
So there are those. They will be a permanent back ion to the margin and I think that we're seeing those cases and the others, pretty healthy margins. So I don't think it's a huge margin expansion from where they were in the fourth quarter, but they have every capability of sustaining that type of margin.
Dominic De Napoli
We clearly had more success fees in 2008 and they're predominantly in the corporate finance practice and the restructuring practice and the health care practice. And the larger the cases, and hopefully the cases in 2009 and forward will be larger, the more opportunities in both company side and creditor side there will be for us to get success fees or transaction fees.
David Gold – Sidoti & Co.
With cash building, you've always been good about giving us a little bit of a look as to what areas you might want to build in if the right acquisition came along.
Jack Dunn
Not to be facetious, but I don't mind building cash right now. It's a tough world out there as we're seeing four times a day. But in all seriousness, we're looking at, we have an incredible opportunity to hire right now, and that's one of the areas where we get our biggest bang for the buck, and so I think that we would put a portion of that aside for signing bonuses.
We would put in terms of, we still are looking to I think it's critical that we move onto the continent from London in both the economic and consulting and the restructuring businesses, and I think we're looking to expand our domain expertise.
When you look at the CXO acquisition where we picked up great capability in terms of being restructuring officers plus domain expertise in the telecom and media area, that's exactly the kind of thing we'd like to be doing; small bite size things like that ,and in no hurry as both the prices and the people seem to be coming our way.
Dominic De Napoli
I think also we're clearly building out our channel distribution in Asia. We're very aggressively looking at opportunities in Hong Kong, mainland China, Korea and in Australia. We've made
numerous acquisitions out there over the last 18 months and we're in conversations with other people that would possibly like to join us.
Your next question comes from Scott Schneegerger – Oppenheimer.
Scott Schneegerger – Oppenheimer
Branding a strong initiative for you this coming year. How variable a cost is that for you? Is that something where you can accelerate and decelerate as revenues go? And also is you could discuss is that more of an overall corporate push or is it done on a segment by segment basis?
Declan Kelly
The answer to your question is yes, we have complete flexibility in the way we're managing the program so we can accelerate and decelerate depending each week, each month. There's complete flexibility built into the plan. As you've seen it's spread across all of our businesses, across all of our platforms and all our geographies, so we have a lot of flexibility in there.
We will manage that program as we should with any expense on an ongoing basis quarter by quarter.
And the second part of your question?
Scott Schneegerger – Oppenheimer
Is it a corporate wide initiative, meaning the FCI brand or is it more of a segment by segment brand initiative.
Declan Kelly
It's a corporate wide initiative with two different aspects to it. There's When the Game Changes, and also the Company Behind the Headlines. One is related to brand building around some of our sports activation in golf and equestrian sports and in baseball and a number of other places. The second is in leadership which is where we use the Behind the Headlines.
So we have an overall corporate theme and approach to the campaign and each of the segments then has a tailored usage of those themes depending on the application. So we have a full suite of materials and initiatives that apply both on a corporate level and then on a segment by segment basis.
Jack Dunn
To be clear, this is a migration from brands and segments into one FTI. We think that as we said, we don't mean to be presumptuous, but this is an opportunity to separate some of the platform we have which is global and which has the diverse offerings. This is a change to separate ourselves from being a parochial U.S. company to really competing with the bigger brands in the world, and that's every intention we have is to do that.
Scott Schneegerger – Oppenheimer
In tech consulting, you allude to some competitive pricing but at different levels of the business and you mentioned that at the start to '09 you see some large initiatives where you are very competitive. How many others can compete with you at the high end? And if you could elaborate a little bit more on the pricing pressure.
Dennis Shaughnessy
Pricing pressure again tends to be, smaller deals tend to be more price sensitive. I don't think tech buys are any different than a lot of other things and the more complex it is, the less people are concerned about price, and the more complex it is, and the larger dollars involved, there tends to be a lot more enterprise risk, so you have a risk management issue that's involved as well as a pricing issue.
As clearly as you move up the chain of complexity, of geography, of risk, the pricing pressure tends to abate. So it's clearly at the lower end. It's a lot of smaller companies coming in trying to buy trial or mind share. A lot of them won't make it. A lot of them need the trial or mind share in order to get their next round of funding and so clearly we expect that to continue but it doesn't really do so at the upper end.
I think that technology, as you're well aware, goes through cycles where there's introduction, there's development, there's new development and you see pricing pressure be sustained at the low end. We don't think anything is going to be different here. We think the low end of the continuum will have continued pricing pressure. The upper end will trade at more of a premium.
The more complex jobs that Jack referred to clearly are very demanding. I'm not going to arrogant enough to say that we're the only one that could do it, but I think the fact that we seem to be getting almost all of them to our knowledge, says that there are a lot of people out that think we're the first people to go to.
Jack Dunn
That's the billion dollar questions, is who can compete with us at this level. The two largest cases we have in technology last year came from cleaning up messes that they tried to go to a low cost competitor. So I think that, we don't know yet who can compete with us. We're having a good sampling now because there are more entrants than there were last year at this time, and they're all going to vying for it.
But we think that we can charge a fair price for us, because we really are a technology company, we're not just harnessing a few technological tools, so we believe that we'll be able to continue to compete with an edge for those big cases.
Your next question comes from William Sutherland – Boenning & Scattergood.
William Sutherland – Boenning & Scattergood
The economics group had a very nice operating for the quarter. Obviously the rates look very strong but utilization was actually not as strong. I'm just kind of curious about the sustainability of that margin.
Dennis Shaughnessy
I think the margin is sustainable. I think Jack mentioned to you before that it was like on January 20, somebody flipped a switch and I think a lot of pent up activity at Justice and the FTC was released. I don't believe it was the Democrats going in and creating it. I think the activity. So it's a broad range of very high profile clients. It's a wide variety of anti-competition type of investigations, subpoenas, pricing collusion, competition.
I think that the thing is we will add capacity in that group. As you add capacity, certainly you could see just digesting the capacity could impact you margins downward slightly, but it will be more than offset by the additional capacity going forward, so we're looking for the group to have a very good year, not only here but as Jack said, in Europe.
William Sutherland – Boenning & Scattergood
I was just curious about that 30% margin. I had not seen that before and didn't know whether to extrapolate on that or not.
Jack Dunn
We've never entered a period like this where we had both a strong global affairs business as we have in communications and the economic fire power that we have in the ECON combined. And I think there you also see the opportunity for some fixed priced projects. That's going to be in this world where you're changing not only administrations, but you're changing as some people warn, a way of life.
You're going to see that really be something that can also help add fire to those margins as well.
Dominic De Napoli
I think in fairness, we would plan that the division would see historic margins, not the fourth quarter margin over the year, so we're happy with the fourth quarter. Nothing has happened that would change our mind on the trajectory of the division, but in our planning and our forecasting we pretty much used a traditional margin on that business to forecast the year and that's very largely dependent on mix because the higher level margins are lower and they seem to have the highest utilization.
We also put in a price increase at the end of the September that we've started to feel the benefit of that in the fourth quarter.
William Sutherland – Boenning & Scattergood
That was another question I had. So the price was economic group specific or did it apply to other groups?
Dominic De Napoli
No, it was economic group specific.
William Sutherland – Boenning & Scattergood
And pricing plans this year?
Dominic De Napoli
It depends on the practices, but we usually have price increases of about 6%, 7% to 8%.
Jack Dunn
And when we're back to a traditional client and we introduce those, they are a part of the January/February in some cases where we have longer term arrangements, they kind of bleed in over the year. Others we're able to have it right away.
William Sutherland – Boenning & Scattergood
The amazing rate of new cases per day right now, what's kind of a typical world for those?
Jack Dunn
I would think going back a couple of years, if you got three or four cases a week or even a couple of weeks that was a good thing. This is just unprecedented. I don't want to make too much of it but it's just we continually try to give people that are very interested in what kind of the level of activity is, and I don't think any of our people who have been doing this a long, long time have seen something like this.
You next question comes from Kevin Wong – JMP Securities.
Kevin Wong – JMP Securities
Looking at head count for both FLT and technology, both obviously down sequentially. Should we look at those as sort of low, sort of crop levels and will be building on those for those segments or for all the segments from here?
Dominic De Napoli
I think tech in the first half as we said was the beneficiary of extraordinarily large cases last year, so to a certain extent you're seeing a little bit of normalcy. I think those would be about the trough levels. As Jack said, we expect to see sequential growth going forward, that there's nothing that we see in FLC or tech that would say we shouldn't see sequential growth on a segment basis from them.
Jack Dunn
We consciously managed down FLC's head count as we saw the third quarter and the fourth quarter activity slow down, so we can flex up and flex down the head count depending upon the volume that we see coming in.
Dominic De Napoli
We're actively looking at those areas now because the pattern is becoming clearer as to where we think the insurance area is going to be a vibrant issue coming up, obviously from today's news. We look at the investigations area which has to be that way, forensic accounting, looking at some of the fraud areas and that kind of thing. So we're out activity hiring now, so I think your analysis of that as a trough is probably right.
And IP is another big area where we've got plans to expand significantly.
Kevin Wong – JMP Securities
Also looking at bill rates, you obviously just had a price increase. For forensic litigation, I mean at least in the lawyer role, there seems to be a lot more pricing pressure coming in. Would you expect to be able to hold your rates around these levels or is there going to be some pressure on those rates. What's your thoughts on that?
Jack Dunn
It depends on the case. Some of the smaller cases, you get some fee pressures, but we're not experiencing significant pressure where we thing we're going to be reducing our rates, and we hold our rates pretty fast. And as the larger cases roll in, there's a lot less fee pressure.
Kevin Wong – JMP Securities
So your position is helping you hold onto that?
Jack Dunn
We didn't forecast for decreasing rates in that area. We haven't seen that kind of pressure at all.
Kevin Wong – JMP Securities
On the restructuring, just a lingering issue, but the finance issue, had that started to become any kind of an issue for you at all as far as being able to get good financing if not forcing people to liquidations for restructuring. What's happening there?
Jack Dunn
There is good financing available. Certainly it's not at the level it's been historically, but if you look at the credit worthiness of the borrowers, that's really dropped. So you can't provide funding to anybody that's so far under water that there's no surety that the funder is going to get repaid in full, which historically is one of the safest loans you can make.
And you've got defensive dips that are going to continue to happen. Banks are going to have to step up and finance operations either to get a restructuring accomplished or to liquidate in an orderly fashion where they can maximize their recovery on their collateral.
The dip in financing doesn't really have a significant impact on us. We've got big cases that are liquidations. We've got large cases that are restructuring. One way or the other, the companies that have the operational problems, that's not going to change by whether or not there's financing available.
If you look at the automotive industry, we've all heard a lot about it, the government's going to have to step in and back stop some of the dip lending that's going to be necessary, not only the big three but add all the suppliers to the big three.
Dominic Di Napoli
Somebody has introduced to the mix the concept that if we work on a case and it ends up going to liquidation, that's it's less work or less of an impact to us than if it goes into a restructuring and I'd like to disabuse people.
What you have is lenders and other equity players who have tremendous stakes in these things that want to get the maximum for those whether it's through a restructuring or whether in the sorry circumstance it has to be liquidation. That's a lot of work. Sometimes it's harder in a liquidation scenario, because you're not just talking small retail things where what you do is sell off a rack of suits.
We're talking about people that operating subsidiaries, have major operations around the world. That's a tremendous amount of work to do the cash flows from that to figure out how you can maximize values and all that. So I'd just like to disabuse people that that is something that is a major concern for us.
Dominic De Napoli
And it could be a higher likelihood of litigation activity in liquidation so the more opportunities to cross sell the forensic practice into the corporate finance practices.
Kevin Wong – JMP Securities
With that, if there was a pick up in liquidation versus restructuring, would that change the length of the contract where it would be shortened versus having multiple years where you're trying to bring it back around to come off life support?
Dominic De Napoli
It depends when they decide to pull the plug and go liquidation. If it's a pre-packaged liquidation, there will be a lot of work because you still have to get through the Chapter 11, but it would be a shorter period of time.
The complexity issue really drives it. I think no one would argue that Lehman Brothers is anything but a liquidation, yet that's probably going to take three years start to finish to effectuate. So I think complex, the bigger they are even if its straight liquidation, it's very complex. It's a lot of work and you still have to maximize the value on the assets on behalf of the constituents as Jack said.
Kevin Wong – JMP Securities
With economic consulting you talked about demand for consulting on strategic M&A. Is that a positive reflection, positive signal as far as economy. A lot of companies lining up getting ready to purchase companies out there because they're cheap and maybe just holding off to a certain period?
Dominic De Napoli
No. I would say it's more the distressed nature of a lot of the micro markets has caused some competitors to be extremely weak. The stronger competitors in the market see it as an opportunity to perhaps consolidate in a regulatory environment that's influenced by economic stresses to where they'll let deals go through that they normally might turn around and take objection to in order to save jobs, save companies, save positioning.
I think unfortunately a lot of it is driven by companies under stress that need to find a strategic partner to stay alive.
Jack Dunn
Speaking on behalf of 3,700 employees, I don't think we've seen many positive signs of anything yet. It's pretty ugly out there, and we're in a pretty good position to see.
Kevin Wong – JMP Securities
It sounds like more distressed companies seeking more than people out there figuring out the targets of who to pick up.
Dominic De Napoli
I think there are clearly companies out there targeting distressed companies. I didn't want to sound like it was one way. But I think the catalyst is that you have competitors under stress and a regulatory group that is conflicted both here and in Europe of trying to look at the competitive or anti-competitive deals versus trying to preserve jobs.
Jack Dunn
It's not all to distressed companies trying to get together to save the ramps. These are healthy companies looking at opportunities so to that extent it is good that they're thinking that way.
There are no further questions. At this time I would like to turn the conference back over to management for any closing remarks.
Jack Dunn
Thank you all for joining us. As you can see we're optimistic about the prospect for our company in 2009. Hope we can do some good while we're doing well and look forward to joining with you again when we report our first quarter results. Thank you.
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subset: commoncrawl


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Antwon Bailey is hoping to beat the odds and play for his hometown team. Bailey is from Maryland, starred at a high school in DC, and has signed with the Redskins, as the team gears up for Training Camp.
© WJLA | Portions are © Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or distributed.
WJLA is the local ABC affiliate for the greater Washington DC area. From our studios in Arlington, VA ABC7 covers national and local news, sports, weather, traffic and culture and carries entertainment and sports programming. WJLA serves Alexandria, Springfield, Annandale, Tysons, Reston, Ashburn, Centreville and Manassas, Virginia and Bethesda, Rockville, Gaithersburg, Silver Spring, Wheaton, Beltsville, Greenbelt, Bowie, College Park, Largo, Crofton, Annapolis, Hyattsville and Takoma Park, Maryland, and all the communities in between.


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realmagick.com The shrine of knowledge.
Paddy Field Japan
A selection of articles related to paddy field japan.
Original articles from our library related to the Paddy Field Japan. See Table of Contents for further available material (downloadable resources) on Paddy Field Japan.
- King James Bible: Leviticus, Chapter 27
- Chapter 27 27:1 And the LORD spake unto Moses, saying, 27:2 Speak unto the children of Israel, and say unto them, When a man shall make a singular vow, the persons shall be for the LORD by thy estimation. 27:3 And thy estimation shall be of the male from...
Old Testament >> Leviticus
- Suggested "Field Trips" for Runic Study
- I began this article after discussing with my colleagues just what the Runes mean and how one goes about studying them. I also remembered that my Rune teacher, Thorr Sheil, told me that he and HIS teacher went to a dairy farm while they were studying the Rune...
Divination >> Rune Stones
- What is the History of Reiki?
- Usui Shiki Ryoho: The Usui System of Natural Healing Ancient Origins The Development of Usui Reiki Dr. Mikao Usui Dr. Chujiro Hayashi Hawayo Takata Mrs. Takata Talks about Reiki (transcript) Usui Shiki Ryoho: The Usui System of Natural Healing Reiki In Japan...
Body Mysteries >> Reiki
- Hyperspace Reality
- Despite the fact that the 'new' physics, a godchild of the Einsteinian revolution has taught us that the Universe we perceive is a mere shadow of a vastly more unpredictable one, most of us still view the world in a distinctly materialistic way. A world where...
Modern Science >> New Physics
- King James Bible: Exodus, Chapter 9
- Chapter 9 9:1 Then the LORD said unto Moses, Go in unto Pharaoh, and tell him, Thus saith the LORD God of the Hebrews, Let my people go, that they may serve me. 9:2 For if thou refuse to let them go, and wilt hold them still, 9:3 Behold, the hand of the LORD...
Old Testament >> Exodus
- King James Bible: Matthew, Chapter 13
- Chapter 13 13:1 The same day went Jesus out of the house, and sat by the sea side. 13:2 And great multitudes were gathered together unto him, so that he went into a ship, and sat; and the whole multitude stood on the shore. 13:3 And he spake many things unto...
New Testament >> Matthew
- Manifesting World Enlightenment: Part 3
- One of the very best ways to raise personal or group consciousness, is to MANIFEST spiritual Intentions into the environment at large. The projection of love into one's surroundings for instance, results in love being reflected back to the sender, like...
Mind >> World Mind
Paddy Field Japan is described in multiple online sources, as addition to our editors' articles, see section below for printable documents, Paddy Field Japan books and related discussion.
Suggested News Resources
- How the Oscars' social activism took on Hollywood
- Poitier took to the screen and became the first African American male to win an Oscar with his performance in Lilies of the Field.
- Meet Mullins' trusted eyes and ears in France
- Boulard credits Paddy Mullins' spirit of adventure as the spark that has made his son a regular visitor to the Paris track as well as chasing glory as far afield as Japan and Australia.
- The 'Star Wars' Force grows fresh in this Japanese rice field
- An epic display of Star Wars love was discovered in Aomori prefecture in northern Japan earlier this month.
- Hunger Banquet Offers WSU Students A Unique Perspective On Poverty
- Last week, a group of students at Wichita State hosted an interactive meal called a hunger banquet. The goal of the event was to participate in a lesson about global income disparity and unfair food distribution.
Great care has been taken to prepare the information on this page. Elements of the content come from factual and lexical knowledge databases, realmagick.com library and third-party sources. We appreciate your suggestions and comments on further improvements of the site.
Paddy Field Japan Topics
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To What Extent should less Developed Countries Enforce Intellectual Property?
This Paper discusses a number of issues in the context of the debate on intellectual property in less developed countries (LDCs). It starts by discussing the consequences of IP enforcement in LDCs for global innovation and welfare in poorer countries. It then considers the costs and benefits of IP enforcement for a small, open LDC, abstracting from global issues. Finally, it discusses the protential merits of an industrial policy based on open source software. The analysis suggests that the view that it is best for LDCs to free-ride on the global IP regime is overblown.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
|Date of creation:
|Date of revision:
|Publication status:
|Published in World Economics, vol. 6, n. 3, 2005.
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| Postal: Manufacture des Tabacs, Aile Jean-Jacques Laffont, 21 Allée de Brienne, 31000 TOULOUSE
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daron Acemoglu & Joshua Linn, 2004.
"Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 119(3), pages 1049-1090.
- Daron Acemoglu & Joshua Linn, 2003. "Market Size in Innovation: Theory and Evidence From the Pharmaceutical Industry," NBER Working Papers 10038, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," Levine's Working Paper Archive 228400000000000002, David K. Levine.
- Gould, David M. & Gruben, William C., 1996. "The role of intellectual property rights in economic growth," Journal of Development Economics, Elsevier, vol. 48(2), pages 323-350, March.
- Arora, Ashish & Athreye, Suma, 2001.
"The Software Industry and India's Economic Development,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Arora, Ashish & Athreye, Suma, 2002. "The software industry and India's economic development," Information Economics and Policy, Elsevier, vol. 14(2), pages 253-273, June.
- Diwan, Ishac & Rodrik, Dani, 1991.
"Patents, appropriate technology, and North-South trade,"
Journal of International Economics,
Elsevier, vol. 30(1-2), pages 27-47, February.
- Ishac Diwan & Dani Rodrik, 1989. "Patents, Appropriate Technology, and North-South Trade," NBER Working Papers 2974, National Bureau of Economic Research, Inc.
- Diwan, Ishac & Rodrik, Dani, 1989. "Patents, appropriate technology, and North-South trade," Policy Research Working Paper Series 251, The World Bank.
- Smith, Pamela J., 1999. "Are weak patent rights a barrier to U.S. exports?," Journal of International Economics, Elsevier, vol. 48(1), pages 151-177, June.
- Goh, Ai Ting & Olivier, Jacques, 2002. "Free Trade and Protection of Intellectual Property Rights: Can We Have One Without the Other?," CEPR Discussion Papers 3127, C.E.P.R. Discussion Papers.
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text:
GREENLAWN - Officials say a man was seriously injured in a hit-and-run in Greenlawn.
According to police, Jose Murillo, of Huntington Station, was walking with a group of friends around 3 a.m. when he was hit.
Police say a dark-colored sedan hit Murillo on Pulaski Road and then drove away.
Murillo is in critical condition .
Anyone with information is asked to call Suffolk Crime Stoppers at 1-800-220-TIPS.


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Pop-rock vets Chicago to play Milwaukee's Riverside Theater
Veteran pop-rock act Chicago returns to Milwaukee April 30 for a 7 p.m. show at the Riverside Theater, 116 W. Wisconsin Ave.
Formed in 1969 as the Chicago Transit Authority, the horns-and-harmonies-powered band has had 21 top 10 singles in its 40-plus-year tenure ( "Saturday in the Park," "25 or 6 to 4," "If You Leave Me Now," "Make Me Smile," "Hard to Say I'm Sorry," etc.), and is still recording new material, including "America," posted online earlier this year. »Read Full Article(2)
Roger Hodgson supersizes Supertramp tunes at Potawatomi concert
Funny that one of Supertramp's most famous songs is the singalong love fest "Give a Little Bit." As a performer and as a composer, Roger Hodgson, co-founder and a former chief architect of the pop-flavored progressive rock band that achieved stardom in the '70s and '80s, doesn't seem to understand the definition of "little bit."
That was abundantly clear at Hodgson's show at the Potawatomi Bingo Casino's Northern Lights Theater on Wednesday, the first of a sold-out, four-evening residency running through Saturday. Surprised? Don't be. As Hodgson stated at the start of the show, Supertramp broke out in Milwaukee — and judging by the series of standing ovations — people in Milwaukee still adore Hodgson. »Read Full Article(6)
Singles Scorecard: Hear new songs from Ariana Grande, Jennifer Hudson and Waka Flocka Flame
Nickelodeon star Ariana Grande, frequently compared to Mariah Carey, sounds more like Macklemore on her latest single, "Problem." Photo by Frazer Harrison. »Read Full Blog Post
Contrasting productions demonstrate power of 'Fiddler on the Roof'
Is it really possible to grow tired of "Fiddler on the Roof" — a musical, which, as Alisa Solomon notes in her extraordinary book on "Fiddler," has seeped into our culture "like no other musical before or since"?
Both the Fireside Dinner Theatre in Fort Atkinson and Children's Theater of Madison obviously don't think so. Last weekend, both of these Wisconsin companies opened their fifth productions of "Fiddler," featuring veterans Ed Flesch (Fireside) and Brian Mani (Children's Theater). And since I, too, can never have my fill of "Fiddler," I hit the road to see both of them. »Read Full Article
Milwaukee's Peter Mulvey funds new album via Kickstarter
After more than a dozen albums and two decades of constant touring, a musician, theoretically, should have a pretty good fan base behind him.
But Milwaukee singer-songwriter Peter Mulvey didn't know his fan base was that good. »Read Full Article
A culinary day trip to Chicago, via Milwaukee Public Market
The Milwaukee Public Market is organizing a culinary day trip to Chicago on May 10 that will include a hands-on cooking class and lunch at Le Cordon Bleu school and an excursion to Eataly, the 63,000-square-foot Italian market that opened in December.
Participants meet at the public market at 7:30 a.m. for coffee and a snack before leaving by motor coach. At 10 a.m. at Le Cordon Bleu, instructors will show how to make orange-currant scones, roast lamb, pork, chicken, four-cheese potatoes and asparagus with mustard-caper vinaigrette. The school's chefs will make dessert for the class. »Read Full Blog Post
Rocket Baby Bakery opens its Bay View store
Note: The cafe has adjusted its hours and currently will be closed Mondays.
Wauwatosa's popular Rocket Baby Bakery opened its second location Wedneday, at 2434 S. Kinnickinnic Ave. in Bay View. »Read Full Blog Post(1)
Reading the John Updike stories: 'A & P'
I'm reading and commenting on a story from The Library of America's 'John Updike: The Collected Stories' each Wednesday until I finish the collection or give up.
Reading John Updike's widely anthologized story "A & P" this week, I was mostly struck by how much of a period piece it is. »Read Full Blog Post
On Tap Today: Beer, books, hip-hop and Higgins
First of all, it's beer week, and our resident suds explorer Kathy Flanigan has outdone herself with a rather intense list of beer-related doings in Brew City. For beer pairings, events and specials today from Meritage to Discount Liquor, from Tess to Sugar Maple, do check out Kathy's coverage.
Elsewhere, True Skool is celebrating a decade of its existence with a film series featuring hip hop-related screenings. It's free and open to the public. This month's film is "Scratch" and the event includes before and after demos by DJ Bizzon. »Read Full Blog Post
Nas, McCreery among Harley-Davidson Roadhouse headliners
Seminal rapper Nas, hard-hitting rock act Five Finger Death Punch and former "American Idol" champion and country singer Scotty McCreery are among the Harley-Davidson Roadhouse headliners at Summerfest this year, officials announced Wednesday morning.
Generally one of the most diverse musical stages at the Milwaukee festival, Harley this year will host everything from reggae-flavored rapper Matisyahu to jam band Umphrey's McGee to a DJ set from former "Jersey Shore" star Pauly D. »Read Full Article(3)


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MAI - Medical Ambassadors International
Quick Info
Profile Stats2693
ContactLaura Nelson
5012 Salida Blvd
Salida, CA 95368
Healthcare Specialties
Global Health Issues
Levels of Engagement
TweetsTweets by http://twitter.com/LifeWindMAI
Mission Statement
Medical Ambassadors International (MAI) mission is equipping communities through Christ-centered health and development.
MAI is part of an international network of people who are passionately committed to holistic missions. We believe that practical action and prayer are equally indispensable for transforming lives physically, socially, and spiritually.
MAI became the organization that incubated the growth of the international CHE movement. Tirelessly, its health practitioners integrated into their lessons a profound understanding of healing the world Christ's way. The work of MAI is accomplished as trained individuals in villages and urban slums go from home to home, teaching others how to be responsible for their own preventive health care and related topics. Instead of white and Western "experts," these new faces are now predominately multi-cultural and multi-ethnic.
ServiceReef Map Points
In the 30+ years since MAI's founding, pioneering individuals have field tested the teaching methods in real-life settings, country to country, and honed a method that is learner-centered, highly-participatory, and empowers the adult learner.
MAI is facilitating this teaching methodology in over 100 countries, and it is being rapidly adapted by numerous mission organizations because it's a surprisingly effective church planting tool.
We still believes as the founder, Dr. Raymond Benson, always said, "Above all else, the world needs Jesus."