SOURCE:
LECG Corporation
2008-07-29 15:14:00
LECG Corporation Reports Second Quarter 2008 Results
LECG Corporation Reports Second Quarter 2008 Results
Fee-Based Revenues Were $89.1 million; EPS Was $0.10
Begins Reporting Revenues and Gross Profit for Two Segments
EMERYVILLE, CA–(EMWNews – July 29, 2008) – LECG Corporation (
expert services firm, today reported financial results for the second
quarter and six months ended June 30, 2008. LECG also announced today new
expert additions in its New York City, NY office.
As of the second quarter of 2008, LECG has organized its business into two
segments: economics services and finance and accounting services (FAS).
The company is reporting revenues, gross profit and certain operating
metrics along these segment lines with the results issued today.
Michael Jeffery, LECG chief executive officer commented, “We are
disappointed with the quarter’s revenues and earnings. These results were
largely a reflection of revenue softness in the US which was partially
offset by a strong contribution from our international businesses. The
revenue decline was particularly marked in our economics services segment,
due to the lag between a number of large projects winding down and the
ramping up of new engagements.”
Mr. Jeffery continued, “We continue to rebuild LECG’s revenue growth
capabilities following a year of restructuring in 2007. Through
disciplined recruiting, we are adding experts in important practice areas
and strategic locations such as forensic accounting in New York and
Houston. While there will continue to be tension between revenue growth
and margins in the short term, we are committed to this current build up of
experts to position us to take advantage of an improving demand outlook and
strengthen our culture of teamwork and collaboration.”
Second Quarter 2008 Financial Results
Second quarter 2008 revenues decreased 3.8 percent to $89.1 million
compared with $92.6 million in the second quarter of 2007, and decreased
1.6 percent from first quarter 2008 revenues of $90.5 million. Net
fee-based revenues were $85.4 million in the second quarter 2008 and $87.8
million in the prior year period, a decrease of 2.8 percent year over year.
Net fee-based revenues decreased 2.1 percent from $87.2 million in the
first quarter of 2008.
Second quarter 2008 net income was $2.6 million or $0.10 per diluted share,
compared with $4.2 million, or $0.17 per diluted share in the second
quarter of 2007, and $4.0 million or $0.16 per diluted share in the first
quarter of 2008. As adjusted for restructuring charges, adjusted earnings
from continuing operations per diluted share(5) was $0.21 in the second
quarter of 2007.
Adjusted EBITDA from continuing operations(6) for the second quarter of
2008 was $5.9 million, a 45.2 percent decrease from $10.8 million for the
second quarter 2007 and a 28.4 percent decrease from $8.3 million in the
first quarter 2008, after adjustment to EBITDA from continuing operations
in the prior period quarters to exclude restructuring charges.
Segment Results
Economics Services
LECG’s economics services segment is comprised of the company’s global
competition, securities, regulated industries, and labor and employment
sectors. Economics revenues were $39.5 million in the second quarter of
2008, or 44.3 percent of total revenues. Net fee-based revenues for the
segment were $37.7 million in the second quarter, down $2.2 million from
the first quarter of 2008. Economics gross profit was $13.1 million, or
46.5 percent of total gross profit in the second quarter of 2008. The
direct profit margin(1) improved 150 basis points from the first quarter of
2008, to 35.0 percent.
Net fee-based revenues declined in the segment compared to the first
quarter of 2008 due to demand softness in the regulated industries,
securities, and labor sectors. Global competition revenues remained flat in
the sequential quarter. Despite the decline in revenues, the direct profit
margin(1) for the segment benefitted from improved revenue mix between
professional staff and experts as well as better expert margins.
Professional staff utilization was unchanged at 77.5 percent in the first
and second quarters of 2008.
Finance and Accounting Services (FAS)
LECG’s FAS segment is comprised of the company’s forensic accounting,
intellectual property, health care, higher education, international FAS,
financial services, and electronic discovery sectors. FAS revenues were
$49.6 million in the second quarter of 2008, or 55.7 percent of total
revenues. Net fee-based revenues for the segment were $47.7 million in the
quarter, up $434,000 from the first quarter of 2008. FAS gross profit was
$15.1 million, or 53.5 percent of total gross profit in the second quarter.
The direct profit margin(1) declined 375 basis points from the first
quarter of 2008, to 31.4 percent.
Net fee-based revenues were largely unchanged over the first quarter of
2008 due to strength in our international forensic accounting business,
which was offset by declines in the US forensic accounting and higher
education sectors. The sequential decline in the direct profit margin(1)
is due to unfavorable revenue mix and higher realization allowance.
Professional staff utilization improved 640 basis points to 75.1 percent
compared to the first quarter.
New Expert Hires in New York Office
In a separate release issued today, LECG announced that Kenneth Leissler,
an electronic discovery expert, and Joel Wuesthoff, a computer forensics
expert, have joined its finance and accounting segment’s New York practice.
Mr. Leissler joins as a managing director and leader of electronic
discovery’s eastern region and Mr. Wuesthoff will work with him as a
principal. Together they bring nearly 40 years’ experience advising leading
international law firms and Fortune 500 companies on critical e-discovery
issues.
Six Month Financial Results
Revenues for the six months ended June 30, 2008 decreased 3.1 percent to
$179.6 million from $185.3 million for the same period in 2007. Net
fee-based revenues decreased 2.0 percent year over year, while organic net
fee-based revenues decreased 3.0 percent.
Net income for the six months ended June 30, 2008 was $6.6 million, 11.9
percent lower than net income of $7.5 million reported for the same period
last year. Diluted earnings per share for the first six months of 2008 was
$0.26, compared with diluted earnings per share of $0.29 for the same
period a year ago. As adjusted for restructuring charges, adjusted earnings
from continuing operations per diluted share(5) was $0.37 for the first
six months of 2007.
Adjusted EBITDA from continuing operations(6) for the six months ended June
30, 2008 was $14.2 million, a 26.9 percent decrease from adjusted EBITDA of
$19.5 million for the same period of 2007.
Revised 2008 Fiscal Year Outlook
For the full year 2008, the company now anticipates revenues will be flat
year over year. While the company anticipates that revenues and earnings
will both increase modestly in the second half of 2008 compared with the
first half, full-year diluted earnings per share from continuing operations
excluding restructuring charges will be down year over year.
Longer-term, the company is continuing to target revenue growth in the 8-12
percent range and earnings per share growth to exceed revenue growth.
Mr. Jeffery concluded, “Our new organizational structure is firmly in
place, and our segment leadership is focused on performance management and
the disciplined hiring of experts. Cultural change is underway, and we are
encouraged by the top talent that joined the firm in the first half of 2008
and our robust recruitment pipeline. As a management team, we are committed
to ending the year on a revenue run rate and with an expanded expert base
that will position us well for 2009 and the longer term.”
Conference Call Webcast Information
LECG Corporation will host a conference call and live webcast to discuss
these results at 5:00 p.m. Eastern time today. The webcast will be
accessible through the investor relations section of the company’s website,
www.lecg.com. A replay of the call will be available on the company’s
website two hours after completion of the live broadcast.
About LECG
LECG, a global expert services firm with 800 experts and professionals in
30 offices around the world, provides independent expert testimony,
original authoritative studies, and strategic advisory services to clients
including Fortune Global 500 corporations, major law firms, and local,
state, and federal governments and agencies worldwide. LECG’s highly
credentialed experts and professional staff conduct economic and financial
analyses to provide objective opinions and advice that help resolve complex
disputes and inform legislative, judicial, regulatory, and business
decision makers. LECG’s experts are renowned academics, former senior
government officials, experienced industry leaders, and seasoned
consultants. NASDAQ: XPRT
Statements in this press release concerning the future business, operating
and financial condition of the company, including expectations regarding
revenues and net income for 2008 and subsequent periods, and statements
using the terms “believes,” “expects,” “will,” “could,” “plans,”
“anticipates,” “estimates,” “predicts,” “intends,” “potential,” “continue,”
“should,” “may,” or the negative of these terms or similar expressions are
“forward looking” statements as defined in the Private Securities
Litigation Reform Act of 1995. These statements are based upon management’s
current expectations. These statements are subject to risks and
uncertainties that may cause actual results to differ materially from those
expectations. Risks that may affect actual performance include dependence
on key personnel, the cost and contribution of acquisitions, risks inherent
in international operations, management of professional staff, dependence
on growth of the company’s service offerings, the company’s ability to
integrate new experts successfully, intense competition, and potential
professional liability. Statements in this press release concerning
historical segment revenue, costs of services and other operational data
have been recast as if the current management and reporting structure had
been in place since the beginning of all periods presented. Since we have
historically measured our business performance at a consolidated entity
level and made resource allocations differently under that structure, the
recast of historical segment information is not intended to represent the
actual results that would have been achieved if our business segments had
been managed under the new structure since the beginning of the period
presented or future results. Further information on these and other
potential risk factors that could affect the company’s financial results is
included in the company’s filings with the Securities and Exchange
Commission. The company undertakes no obligation to update any of its
forward looking statements after the date of this press release.
LECG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Six
months ended months ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Fee-based revenues, net $ 85,359 $ 87,822 $ 172,530 $ 175,999
Reimbursable revenues 3,720 4,758 7,051 9,325
--------- --------- --------- ---------
Revenues 89,079 92,580 179,581 185,324
Direct costs 57,176 56,943 114,348 116,937
Reimbursable costs 3,700 4,718 7,011 9,305
--------- --------- --------- ---------
Cost of services 60,876 61,661 121,359 126,242
Gross profit 28,203 30,919 58,222 59,082
Operating expenses:
General and administrative
expenses 22,165 22,140 43,466 43,336
Depreciation and amortization 1,426 1,786 2,961 3,675
--------- --------- --------- ---------
Operating income 4,612 6,993 11,795 12,071
Interest and other expense, net 217 370 691 216
--------- --------- --------- ---------
Income from continuing operations
before income taxes 4,395 6,623 11,104 11,855
Income tax provision 1,784 2,681 4,508 4,800
--------- --------- --------- ---------
Income from continuing operations 2,611 3,942 6,596 7,055
--------- --------- --------- ---------
Income from operations of
Discontinued subsidiary,
net of income taxes - 278 - 431
--------- --------- --------- ---------
Net income $ 2,611 $ 4,220 $ 6,596 $ 7,486
========= ========= ========= =========
Basic earnings per share:
Income from continuing operations $ 0.10 $ 0.16 $ 0.26 $ 0.28
Income from operations of
discontinued subsidiary - 0.01 - 0.02
--------- --------- --------- ---------
Basic earnings per share $ 0.10 $ 0.17 $ 0.26 $ 0.30
========= ========= ========= =========
Diluted earnings per share:
Income from continuing operations $ 0.10 $ 0.16 $ 0.26 $ 0.28
Income from operations of
discontinued subsidiary - 0.01 - 0.01
--------- --------- --------- ---------
Diluted earnings per share $ 0.10 $ 0.17 $ 0.26 $ 0.29
========= ========= ========= =========
Shares used in calculating net
income per share
Basic 25,307 25,111 25,303 24,860
Diluted 25,525 25,505 25,522 25,413
LECG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
June 30, December 31,
Assets 2008 2007
------------- -------------
Current assets:
Cash and cash equivalents $ 10,676 $ 21,602
Accounts receivable, net of allowance of $930
and $866 115,476 103,444
Prepaid expenses 6,444 6,156
Deferred tax assets, net 11,402 12,301
Signing, retention and performance bonuses -
current portion 14,071 16,162
Income taxes receivable 3,475 2,674
Other current assets 2,666 2,310
Note receivable - current portion 504 490
------------- -------------
Total current assets 164,714 165,139
Property and equipment, net 11,256 12,586
Goodwill 108,797 106,813
Other intangible assets, net 8,970 9,696
Signing, retention and performance bonuses -
long-term 42,498 45,523
Deferred compensation plan assets 14,354 15,599
Note receivable - long-term 2,232 2,510
Other long-term assets 5,500 1,453
------------- -------------
Total assets $ 358,321 $ 359,319
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accrued compensation $ 51,341 $ 64,577
Accounts payable and other accrued
liabilities 9,658 7,856
Borrowings under line of credit 4,000 -
Payable for business acquisitions 2,284 2,750
Deferred revenue 3,681 2,989
------------- -------------
Total current liabilities 70,964 78,172
Deferred compensation plan obligations 12,214 15,133
Deferred tax liabilities 4,505 4,505
Deferred rent 7,408 7,718
Other long-term liabilities 302 301
------------- -------------
Total liabilities 95,393 105,829
------------- -------------
Commitments and contingencies - -
Stockholders' equity
Common stock, $.001 par value, 200,000,000
shares authorized, 25,550,228 and 25,444,678
shares outstanding at June 30, 2008
and December 31, 2007, respectively 26 25
Additional paid-in capital 168,580 166,325
Accumulated other comprehensive income 3,057 2,471
Retained earnings 91,265 84,669
------------- -------------
Total stockholders' equity 262,928 253,490
------------- -------------
Total liabilities and stockholders' equity $ 358,321 $ 359,319
------------- -------------
LECG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six months ended
June 30,
------------------
2008 2007
-------- --------
Cash flows from operating activities
Net income $ 6,596 $ 7,486
Adjustments to reconcile net income to net cash
provided by operating activities:
Bad debt expense 66 108
Depreciation and amortization of property and
equipment 2,235 2,246
Amortization of intangible assets 726 1,440
Amortization of signing, retention and performance
bonuses 8,270 5,899
Tax benefit from share-based compensation - 48
Equity-based compensation 3,039 3,010
Non cash restructuring charges - 2,433
Other 57 (34)
Changes in assets and liabilities:
Accounts receivable (11,385) (11,336)
Signing, retention and performance bonuses paid (12,578) (16,988)
Prepaid and other current assets 462 (2,085)
Accounts payable and other accrued liabilities 1,619 (141)
Income taxes (918) 2,227
Accrued compensation (4,824) 900
Deferred revenue 713 281
Deferred compensation plan assets, net of
liabilities (1,672) 209
Deferred rent (430) 115
Other assets (3,972) 379
Other liabilities 20 20
-------- --------
Net cash used in operating activities (11,976) (3,783)
-------- --------
Cash flows from investing activities
Business acquisitions, net of acquired cash and earn
out payments (2,436) (15,481)
Purchase of property and equipment (1,099) (2,491)
Other 8 36
-------- --------
Net cash used in investing activities (3,527) (17,936)
-------- --------
Cash flows from financing activities
Borrowings under revolving credit facility 37,000 10,000
Repayments under revolving credit facility (33,000) (8,000)
Proceeds from exercise of stock options 30 1,693
Tax benefit from share-based compensation 28 1,094
Proceeds from issuance of stock - employee stock
purchase plan 66 110
Other 3 59
-------- --------
Net cash provided by financing activities 4,127 4,956
-------- --------
Effect of exchange rates on changes in cash 450 766
-------- --------
Decrease in cash and cash equivalents (10,926) (15,997)
Cash and cash equivalents, beginning of year 21,602 26,489
-------- --------
Cash and cash equivalents, end of period $ 10,676 $ 10,492
======== ========
Supplemental disclosure
Cash paid for interest $ 276 $ 184
======== ========
Cash paid for income taxes $ 5,821 $ 1,725
-------- --------
LECG CORPORATION
SEGMENT OPERATING RESULTS
($ in thousands except rate amounts)
(Unaudited)
Three months ended June 30,
----------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Finance Finance
and and
Economics Accounting Total Economics Accounting Total
-------- -------- -------- -------- -------- --------
Fee-based
revenues, net $ 37,688 $ 47,671 $ 85,359 $ 38,540 $ 49,282 $ 87,822
Reimbursable
revenues 1,781 1,939 3,720 1,462 3,296 4,758
Revenues $ 39,469 $ 49,610 $ 89,079 $ 40,002 $ 52,578 $ 92,580
-------- -------- -------- -------- -------- --------
Direct costs,
before
restructuring
charges $ 24,485 $ 32,691 $ 57,176 $ 25,123 $ 30,384 $ 55,507
Restructuring
charges - - - 193 1,243 1,436
Reimbursable
costs 1,856 1,844 3,700 1,394 3,324 4,718
-------- -------- -------- -------- -------- --------
Gross profit $ 13,128 $ 15,075 $ 28,203 $ 13,292 $ 17,627 $ 30,919
Direct profit
margin (1) 35.0% 31.4% 33.0% 34.8% 38.3% 36.8%
Gross profit
margin 33.3% 30.4% 31.7% 33.2% 33.5% 33.4%
Operating
statistics
Paid days 65 65 65 65 65 65
Billable
headcount,
period end 298 470 768 307 587 894
Billable
headcount,
period average 301 470 771 312 618 930
Billable FTEs,
period average (2) 246 373 619 269 490 759
Average
billable rate $ 369 $ 324 $ 343 $ 341 $ 282 $ 306
Paid
utilization
rate of
billable FTEs
(3) 79.7% 75.8% 77.4% 80.8% 68.4% 72.8%
Expert
headcount,
period end 120 187 307 123 212 335
Expert FTEs,
period average
(2) 64 112 176 88 121 209
Jr/SR FTE
paid
utilization
rate (3) 77.5% 75.1% 76.1% 77.2% 66.6% 70.1%
Six months ended June 30,
----------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Finance Finance
and and
Economics Accounting Total Economics Accounting Total
-------- -------- -------- -------- -------- --------
Fee-based
revenues, net $ 77,622 $ 94,908 $172,530 $ 75,157 $100,842 $175,999
Reimbursable
revenues 2,813 4,238 7,051 2,912 6,413 9,325
-------- -------- -------- -------- -------- --------
Revenues $ 80,435 $ 99,146 $179,581 $ 78,069 $107,255 $185,324
Direct costs,
before
restructuring
charges $ 51,032 $ 63,316 $114,348 $ 50,479 $ 63,384 $113,863
Restructuring
charges - - - 200 2,874 3,074
Reimbursable
costs 2,873 4,138 7,011 2,866 6,439 9,305
-------- -------- -------- -------- -------- --------
Gross profit $ 26,530 $ 31,692 $ 58,222 $ 24,524 $ 34,558 $ 59,082
Direct profit
margin (1) 34.3% 33.3% 33.7% 32.8% 37.1% 35.3%
Gross profit
margin 33.0% 32.0% 32.4% 31.4% 32.2% 31.9%
Operating
statistics
Paid days 129 129 129 130 130 130
Billable
headcount,
period end 298 470 768 307 587 894
Billable
headcount,
period average 303 484 787 314 646 960
Billable FTEs,
period average (2) 254 391 646 269 502 771
Average
billable rate $ 368 $ 320 $ 340 $ 337 $ 281 $ 303
Paid
utilization
rate of
billable FTEs
(3) 80.4% 73.4% 76.2% 79.7% 68.6% 72.5%
Expert
headcount,
period end 120 187 307 123 212 335
Expert FTEs,
period average
(2) 70 112 183 88 121 208
Jr/SR FTE
paid
utilization
rate (3) 77.5% 71.7% 74.0% 76.0% 66.5% 69.6%
(1) Fee-based revenues, net less direct costs before restructuring
charges as a percentage of fee-based revenues, net.
(2) Full Time Equivalents (FTEs) are calculated by dividing actual total
paid hours in the period by the number of paid days in the period
times eight hours per day, assuming a forty-hour work week or 2,080
paid hours per year.
(3) Paid utilization rate is calculated by dividing the actual number of
billed hours in the period by the actual number of paid hours in the
period, assuming a forty-hour work week or 2,080 paid hours per year.
LECG CORPORATION
SEGMENT OPERATING RESULTS (continued)
($ in thousands except rate amounts)
(Unaudited)
Three Months Ended
----------------------------------------------------
June March Dec. Sept. June March
30, 31, 31, 30, 30, 31,
2008 2008 2007 2007 2007 2007
------- ------- ------- ------- ------- -------
Economics Services
Fee-based revenues,
net $37,688 $39,934 $35,729 $41,040 $38,540 $36,617
Reimbursable
revenues 1,781 1,032 1,713 1,360 1,462 1,450
------- ------- ------- ------- ------- -------
Revenues $39,469 $40,966 $37,442 $42,400 $40,002 $38,067
Direct costs, before
restructuring
charges $24,485 $26,547 $24,104 $27,331 $25,123 $25,356
Restructuring
charges - - 113 - 193 7
Reimbursable costs 1,856 1,017 1,619 1,368 1,394 1,472
------- ------- ------- ------- ------- -------
Gross profit $13,128 $13,402 $11,606 $13,701 $13,292 $11,232
Direct profit margin
(1) 35.0% 33.5% 32.5% 33.4% 34.8% 30.8%
Gross profit margin 33.3% 32.7% 31.0% 32.3% 33.2% 29.5%
Operating statistics
Paid days 65 64 66 65 65 65
Billable headcount,
period end 298 305 308 315 307 312
Billable headcount,
period average 301 305 312 314 312 317
Billable FTEs, period
average (2) 246 262 266 281 269 269
Average billable rate $ 369 $ 366 $ 336 $ 337 $ 341 $ 333
Paid utilization rate
of billable FTEs (3) 79.7% 81.1% 75.8% 83.4% 80.8% 78.7%
Expert headcount,
period end 120 120 122 122 123 127
Expert FTEs, period
average (2) 64 77 84 90 88 88
Jr/SR FTE paid
utilization rate (3) 77.5% 77.5% 70.4% 80.0% 77.2% 74.8%
Three Months Ended
----------------------------------------------------
June March Dec. Sept. June March
30, 31, 31, 30, 30, 31,
2008 2008 2007 2007 2007 2007
------- ------- ------- ------- ------- -------
Finance and Accounting
Services
Fee-based revenues,
net $47,671 $47,237 $47,712 $51,064 $49,282 $51,560
Reimbursable
revenues 1,939 2,299 3,077 3,410 3,296 3,117
------- ------- ------- ------- ------- -------
Revenues $49,610 $49,536 $50,789 $54,474 $52,578 $54,677
Direct costs, before
restructuring
charges $32,691 $30,625 $30,970 $31,801 $30,384 $33,000
Restructuring
charges - - 4,967 - 1,243 1,631
Reimbursable costs 1,844 2,294 2,894 3,371 3,324 3,115
------- ------- ------- ------- ------- -------
Gross profit $15,075 $16,617 $11,958 $19,302 $17,627 $16,931
Direct profit margin(1) 31.4% 35.2% 35.1% 37.7% 38.3% 36.0%
Gross profit margin 30.4% 33.5% 23.5% 35.4% 33.5% 31.0%
Operating statistics
Paid days 65 64 66 65 65 65
Billable headcount,
period end 470 493 521 547 587 660
Billable headcount,
period average 470 497 528 562 618 673
Billable FTEs, period
average (2) 373 410 405 447 490 514
Average billable rate $ 324 $ 316 $ 303 $ 292 $ 282 $ 280
Paid utilization rate
of billable FTEs (3) 75.8% 71.2% 73.5% 75.2% 68.4% 68.8%
Expert headcount,
period end 187 196 184 194 212 221
Expert FTEs, period
average (2) 112 113 108 117 121 122
Jr/SR FTE paid
utilization rate (3) 75.1% 68.7% 70.8% 74.0% 66.6% 66.4%
(1) Fee-based revenues, net less direct costs before restructuring
charges as a percentage of fee-based revenues, net.
(2) Full Time Equivalents (FTEs) are calculated by dividing actual total
paid hours in the period by the number of paid days in the period
times eight hours per day, assuming a forty-hour work week or 2,080
paid hours per year.
(3) Paid utilization rate is calculated by dividing the actual number of
billed hours in the period by the actual number of paid hours in the
period, assuming a forty-hour work week or 2,080 paid hours per year.
LECG CORPORATION
SEGMENT OPERATING RESULTS (continued)
($ in thousands except rate amounts)
(Unaudited)
Three Months Ended
----------------------------------------------------
June March Dec. Sept. June March
30, 31, 31, 30, 30, 31,
2008 2008 2007 2007 2007 2007
------- ------- ------- ------- ------- -------
Total LECG
Fee-based revenues,
net $85,359 $87,171 $83,441 $92,104 $87,822 $88,177
Reimbursable
revenues 3,720 3,331 4,790 4,770 4,758 4,567
------- ------- ------- ------- ------- -------
Revenues $89,079 $90,502 $88,231 $96,874 $92,580 $92,744
Direct costs, before
restructuring
charges $57,176 $57,172 $55,074 $59,132 $55,507 $58,356
Restructuring
charges - - 5,080 - 1,436 1,638
Reimbursable costs 3,700 3,311 4,513 4,739 4,718 4,587
------- ------- ------- ------- ------- -------
Gross profit $28,203 $30,019 $23,564 $33,003 $30,919 $28,163
Direct profit margin
(1) 33.0% 34.4% 34.0% 35.8% 36.8% 33.8%
Gross profit margin 31.7% 33.2% 26.7% 34.1% 33.4% 30.4%
Operating statistics
Paid days 65 64 66 65 65 65
Billable headcount,
period end 768 798 829 862 894 972
Billable headcount,
period average 771 802 840 876 930 990
Billable FTEs, period
average (2) 619 672 671 728 759 783
Average billable rate $ 343 $ 337 $ 317 $ 310 $ 306 $ 300
Paid utilization rate
of billable FTEs (3) 77.4% 75.1% 74.4% 78.4% 72.8% 72.2%
Expert headcount,
period end 307 316 306 316 335 348
Expert FTEs, period
average (2) 176 190 192 207 209 210
Jr/SR FTE paid
utilization rate (3) 76.1% 72.1% 70.6% 76.2% 70.1% 69.0%
DSOs
Billed 84 88 72 82 81 79
Unbilled 35 37 35 32 33 36
------- ------- ------- ------- ------- -------
Total 119 125 107 114 114 115
(1) Fee-based revenues, net less direct costs before restructuring
charges as a percentage of fee-based revenues, net.
(2) Full Time Equivalents (FTEs) are calculated by dividing actual total
paid hours in the period by the number of paid days in the period
times eight hours per day, assuming a forty-hour work week or 2,080
paid hours per year.
(3) Paid utilization rate is calculated by dividng the actual number of
billed hours in the period by the actual number of paid hours in the
period, assuming a forty-hour work week or 2,080 paid hours per year.
LECG CORPORATION
Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
Three Six
months ended months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Fee-based revenues, net $ 85,359 $ 87,822 $ 172,530 $ 175,999
Direct costs 57,176 56,943 114,348 116,937
Adjustment to direct costs of
services
restructuring charges - (1,436) - (3,074)
--------- --------- --------- ---------
Direct profit $ 28,183 $ 32,315 $ 58,182 $ 62,136
========= ========= ========= =========
Direct profit margin 33.0% 36.8% 33.7% 35.3%
Three Six
months ended months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net income $ 2,611 $ 4,220 $ 6,596 $ 7,486
Income from operations of
discontinued
subsidiary, net of income
taxes - (278) - (431)
--------- --------- --------- ---------
Income from continuing
operations 2,611 3,942 6,596 7,055
Adjustments to net income
Restructuring charges - 2,308 - 3,946
Income tax provision (4) - (934) - (1,598)
--------- --------- --------- ---------
Adjusted income from continuing
operations (5) $ 2,611 $ 5,316 $ 6,596 $ 9,403
========= ========= ========= =========
Adjusted earnings from
continuing operations per
diluted share (5) $ 0.10 $ 0.21 $ 0.26 $ 0.37
Shares used in calculating net
income per share
Diluted 25,525 25,505 25,522 25,413
Three Six
months ended months ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net income $ 2,611 $ 4,220 $ 6,596 $ 7,486
Income from operations of
discontinued subsidiary,
net of income taxes - (278) - (431)
--------- --------- --------- ---------
Income from continuing
operations 2,611 3,942 6,596 7,055
Income tax provision 1,784 2,681 4,508 4,800
Interest expense, net 121 128 175 -
Depreciation and amortization 1,426 1,786 2,961 3,675
--------- --------- --------- ---------
EBITDA from continuing
operations (6) 5,942 8,537 14,240 15,530
Adjustments to EBITDA from
continuing operations
Restructuring charges - 2,308 - 3,946
--------- --------- --------- ---------
Adjusted EBITDA from continuing
operations (6) $ 5,942 $ 10,845 $ 14,240 $ 19,476
--------- --------- --------- ---------
(4) Assumes a 40.5% tax rate in the quarter and six months ended
June 30, 2007.
(5) Adjusted income from continuing operations and adjusted earnings from
continuing operations per diluted share are non-GAAP financial
measures. Adjusted income from continuing operations excludes
restructuring charges relating to the implementation of the 2007
value recovery plan. Adjusted earnings from continuing operations per
diluted share is calculated using adjusted income from continuing
operations divided by diluted shares. The Company regards adjusted
income from continuing operations and adjusted earnings from continuing
operations per diluted share as useful measures of financial
performance of the business. Generally, a non-GAAP financial measure
is a numerical measure of a company's performance, financial position
or cash flow that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. This measure,
however, should be considered in addition to, and not as a substitute
or superior to, operating income, cash flows, or other measures of
financial performance prepared in accordance with GAAP.
(6) EBITDA from continuing operations and Adjusted EBITDA from continuing
operations are non-GAAP financial measures. EBITDA from continuing
operations is defined as income from continuing before provision for
income tax, interest, and depreciation and amortization. Adjusted
EBITDA from continuing operations excludes restructuring charges
relating to implementation of the 2007 value recovery plan.
The Company regards EBITDA from continuing operations and Adjusted
EBITDA from continuing operations as useful measures of financial
performance of the business. Generally, a non-GAAP financial
measure is a numerical measure of a company's performance,
financial position or cash flow that either excludes or includes
amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance
with GAAP. This measure, however, should be considered in addition
to, and not as a substitute or superior to, operating income, cash
flows, or other measures of financial performance prepared in
accordance with GAAP.
| Investor Contacts Steven R. Fife Chief Financial Officer 510-985-6700 Erin Glenn |
|
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