FTI Consulting, Inc.
Q1 2009 Earnings Call Transcript

Published: 29 Apr 2009

[Operator:]

Good day and welcome to the FTI Consulting Conference Call. As a remainder today’s call is being recorded. For opening remarks and introductions I would like to turn the call over to Eric Boyriven of FTI. Please go ahead sir.

[Eric Boyriven:]

Good morning and welcome to the FTI Consulting conference call to discuss the company’s 2009 first quarter results we’ve reported this morning. Management will begin with formal remarks, after which they will take your questions. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements within the meaning of Section 21A of the Securities Exchange Act of 1934 that involve uncertainties and risks. Forward-looking statements include statements covering our plans, objectives, goals, strategies, future events, future revenues, future results and performance, expectations, plans or intentions relating to acquisitions and other matters, business trends, and other information that is not historical, including statements regarding estimates of our future financial results. Words such as estimates, expects, anticipates, projects, plans, intends, believes, forecast and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements including without limitation estimates of our future financial results are based upon our expectations at the time we make them and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved or that actual results will not differ from expectations. The company has experienced fluctuating revenue, operating income and cash flow in some prior periods and expects that this will occur from time to time in the future. The company’s actual results may differ from our expectations. Further, preliminary results are subject to normal year-end adjustments. Other factors that could cause such differences include the current global financial crisis, continuing deterioration of global economic conditions, the crisis in and deterioration of the financial and real estate markets, the pace and timing of the consummation and integration of past and future 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 under the heading “Risk Factors” in the most recent Form 10-K and 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. We are under no duty to update any of the forward-looking statements to confirm such statements to actual results. We define EBITDA as operating income before depreciation and amortization of intangible assets plus non-operating litigation settlements. We use EBITDA in evaluating financial performance. Although EBITDA 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. EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies to value and compare the financial performance of the 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 businesses we acquire or anticipate acquiring. Reconciliations of EBITDA to net income and segment EBITDA to segment operating profit are included in the company tables to today’s press release. EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies 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 to net income and segment EBITDA to segment operating income are included in the tables that accompany 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.

[Jack Dunn:]

Thank you very much. Good morning and thank you all for joining us to discuss our first quarter 2009 results. I hope that you have had a chance to review our press release. If you have not, it is available as he said on our website 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. This quarter, the first quarter of 2009 was as important for our company as any quarter in its history. Our 13% growth in one of the most difficult quarters the world economy has ever seen is a testament to the business model we have developed and a confirmation of our strategy to differentiate FTI from the rest of the pack. It is only in the crucial ball of an environment like the present that you will find out what you’re made of and the 33,347 employees of FTI as you can see and I hope you will agree you have made pretty start and remarkable start. In a world of new and jugular challenges we’ve built a unique array of skills, services and geographic presence to address them we believe, no matter what the cycle of the economy or what the state of the world. To put it cynically, in an environment where the issue did you work and not only destroy you no one can surround it more effectively, plum it more deeply, analyze it more expertly or communicate it more clearly than the professionals of FTI. Now, to the quarter. Revenues for the first quarter of 2009 were $347.8 million, an increase of 13.3% over revenues of $307 million in the prior year period. Net income for the first quarter of 2009 was $31 million compared to net income of $30.7 million in the prior year period. Earnings per share were $0.60 compared to $0.58 last year and EBITDA was $74 million or 21.3% of revenues compared to $68 million or 22.2% of revenues in the prior year period. Revenues were an all time record performance for our company and net income, earnings per share and EBITDA were all records for our first quarter. As we mentioned a little less than two months ago when we reported our 2008 earnings, we entered this year experiencing an unprecedented amount of demand for our restructuring services. This is clearly a global recession and our efforts to build an international restructuring practice were paying off. As we realized very strong growth in our UK based restructuring practice and a promising initial contribution out of our recently formed Canadian and Latin American practices. In addition, we also discussed how we have been selected to investigate several of the major alleged frauds of the day. These cases continue to take on a life of their own were instrumental in the upturn in performance in our Forensic and Litigation, Consulting and Technology segments, which have collaborated handsomely on these cases and provided a unique and effective solution to our client’s needs. These were among the key factors that drove the 13% increase in our revenues in the quarter, which included positive organic growth of about 2.5% after the negative drag of about 3.5% from foreign currency translation. Contrary to our normal practice you will hear us talk a little bit today about sequential results and little more than usual and that’s for three reasons. First, you’ll remember that the first quarter of 2008 was an extraordinary quarter for us when all our markets were strong, our segments were firing all cylinders and we generated 30% organic growth. In six months the world has turned on its head and the fact that despite this current dreadful economy we can report a first quarter that exceeds that kind of a strong first quarter is further evidence of our ability to grow across the economic cycle in both good and bad times. Second, we have continually explained that the second half of an election year is always slow. Comparison on a sequential basis will help you to judge the applicability of that cycle to the present. Finally in FLC intake the comparison sequentially are all organic so it provides perhaps a better picture of what’s really happening in those markets. During the quarter we maintained our strong financial position and we ended the quarter with cash and equivalents of over $157 million which provides us with a lot of fire power and flexibility to pursue our strategy. Now let’s look at the segments. Corporate Finance/Restructuring had another remarkable quarter as the global financial crisis now settles into trench warfare. There was hardly a single industry that has remained on scale and we are busy across a wide range of sectors. Apart from being active in the long standing challenged financial services, home building, automotive and retail sectors, we have begun to see the issues spreading to the telecom, media, health care, commercial real estate and other areas in a very fast timeframe. In short, any one who has debt or needs money is facing challenges never before encountered. We continue to open new matters at a rapid pace. Further where as in past years this case would be across the spectrum today they are heavily waited towards bankruptcy and restructuring. With new bankruptcy matters in the quarter doubling to 28 from the first quarter of 2008 and new restructuring matters more than doubling from 38 to 78 in the quarter. Not surprisingly as a result organic revenue for Corporate Finance increased 37.9% and together with contributions from acquisitions grew a total of 61% to $127.5 million from 79.3% last year. Because of the demand for our people in resolving utilization and robust pricing, EBITDA increased 86% to $40.7 million equaled 31.9% of revenues. In the quarter we generated the most revenue from the construction and retail, telecom and financial services sectors. Our new media, entertainment and telecom group bolstered by the addition of CXO that was acquired in December continue to gain traction in a market and have been winning assignments in telecom and media, two sectors that we think will continue to be very active for us going forward. The performances of our practices outside the United States continue to validate our reason for expanding into new global markets. Strong demand and expansion of staff in the UK enabled our restructuring group in Europe to grow revenue by more than 85% over the same period last year to remove the impact of currency translation charges their business more than doubled. A new office in Toronto which joined us at the end of 2008 hit the ground running and made a material contribution to Corp Fin’s results in the quarter with a growing list of engagements in Canada and Latin America. Forensic and Litigation Consulting as expected improved its performance on the strength of a significant increase in the US investigations practice. The revenues increased to 11% year-over-year and more importantly I think for the reason stated above 14% sequentially over the 2008 fourth quarter to $66.9 million. High utilization from large cases drove EBITDA to $15.7 million up $1 million from a year ago and up $3.5 million from the prior quarter. EBITDA margins also improved to 23.5% in the first quarter of 2009 relative to fourth quarter levels. While the Madoff, Stanford and Dryer matters were significant drivers of the segment’s performance, the intellectual property, construction, regulated industries and Latin American investigations practices also had strong performances offsetting slower contributions from the Asian investigations practice which is somewhat dependent on financial services clients and financial markets activity. Revenues in the economic consulting segment were $54.8 million compared to its record revenue of $56.4 million a year ago. Segment EBITDA was $10.3 million or 18.8% of segment revenues compared to $13.3 million or 23.6% of the segment revenues in the prior year period. The year-over-year EBITDA performance reflects significant investment in building out the segment domestically and overseas. This included the initial hiring of 26 or so revenue producing professionals including three big name economists in the U.S. and Europe increased investments and infrastructure to support the segment’s geographic expansion and higher expenses for branding and marketing in Europe to accelerate the entry into that market. New engagements booked in the first quarter coupled with the anticipated contribution from the new hires I mentioned once they have settled into the business are expected to fuel the growth of this segment over the remainder of the year. In our Strategic Communications segment, foreign exchange continue to be a major factor in the first quarter performance. On a constant currency basis revenue would have declined 8% which is a very solid performance in a market such as this. The segment also continue to be affected by the downturn in the global capital markets and recessionary effects on their clients. Merger market, the key publications which follows global M&A activity noted that the volume transactions was down almost 60% in the first quarter and that total value of M&A transactions in the fourth quarter was the slowest period for M&A in almost five years. In addition, Strategic Communications is experiencing pressure on fees from its clients, which are feeling their own financial and operational challenges. Offsetting the currency headwinds felt by the segment to a significant degree whereas the segments work on a number of large financial and strategic advisory assignments. In addition retention of clients has been good despite significant fee pressure. While we are not Pollyannaish we believe that there is opportunity here as a strong well capitalized market leader to increase our share and in fact Strategic Communications have been expanding relationships with a number of key clients who are using them for a broader range of assignments and in a number of their markets they have maintained or enhanced their market position during this downturn. With that as a backdrop, segment revenue inclusive of the impact of foreign exchange declined 21.7% year-over-year. While the impact of the environment was felt most acutely in the larger more matured US and UK markets, Strategic Communications continues to perform very well and strong in some of its newer emerging markets such as Asia Pacific, Australia as well as in France and Germany. EBITDA in Strategic Communications was $5.8 million in the quarter, results reflected the lower revenues and included a severance charge of $1.6 million that we took to bring the headcount into alignment with the reality of the current business climate. As it was implemented late in the period there was little benefit in the first quarter and we expect to realize the annualized cost savings of about $7 million beginning in the second quarter. That completes our snapshot of the first quarter, before we hand it over to your questions I would like to talk a little bit about our outlook, but I would like to do it in the context of a question that we continually get more and more these days as we have been very interactive with our investors and that question is, why are your results seem to vary so much from those of your competitors or peer group? Frankly we can’t propose to be an expert on our peer group and certainly wouldn’t have the knowledge that you all the analysts and the investors have of them, but as we discussed with many of you there is a real question in our mind about how well the usual grouping really lines up against our skill sets. What I would like to do is take a few minutes and tell you what I think the differentiation from our company is and why we are so confident in our outlook, not just for the reminder of this year but into the future. First I would be remiss if I didn’t start with our people, whether it’s the top three competition policy economists in the world, seven of the top restructuring professionals, the guy who wrote the book on e-discovery, the best securities practitioners or the top communication strategists, we are committing to being the best place for the best. This pays great dividends in good times, but even better dividends in hard times as there is almost always work for the best. Second, it is our commitment to what our Chairman likes to call gold standard practices. Not only our individuals continually recognize for their achievements, but our businesses as well and is not just sporadically but quarter after quarter, year after year. Third is our geographic presence. We have invested heavily in this and there is no better time than right now to see that this investment is paying off. On the micro side quite simply, money, trade, commerce problems are all is on the move. As we have seen from this quarter we are strong in Asia, Germany, France in Strategic Communications as other areas are slower due to the economy. Our investigations practice in South America is strong while Asia is somewhat slower in this economy as it depends on the capital markets. On a macro basis however is where the investment really pays off. Over the last several years we have grown from a U.S. based professional services firm to now one of the handful of firms that can handle global problems for global clients. I might add that the rest of that handful is probably the big four, so that we have really jump shifted our game in terms of global competition. As our advertisement says, the game has changed and we want to be the leaders of that change. The final factor is the breadth of our services both within the individual practices and then of course the firm as a collection of practices. Take FLC for example, it is not just a group of great forensic accountants, the best of their business, but a combination of skills and expertises that allow us to address all of our client’s needs, getting into or his matters sooner and getting into them deeper. It is former prosecutors and intelligence people who had the finance and put the client ahead and it is the main expert too while the matter continues can keep the client there. No one else can offer the restructuring capability that we have that is exceptional in all cycles but really especially in times like these. No one have the communications capability that we have and frankly while they may have technology as a tool, no one has the commitment to being a leader in that and to having it as a backbone of everything they do that FTI does. Most importantly, this group of practices did not just come together. We are a trusted advisor to our clients and our strategy works hand and glove with theirs. We work hard at coordinating these practices into holistic solutions. In summary, we have built a company that helps build and defend our clients’ enterprise value. This value is a product of their results times to reputation. The FTI brand is increasingly being recognized as a global basis to accomplish this and their goals. With that, we would like to turn it over to your questions.

[Operator:]

(Operator Instructions) Your first question comes from Andrew Fones - UBS.

[Andrew Fones:]

I wanted to ask a couple of questions about margins, first on a technology. You rolled out the new platform in the quarter. We saw a nice jump in the margin, how sustainable is that, I know you have committed to continuing to invest there? Thank you.

[Dennis Shaughnessey:]

Andrew, its Dennis. Actually, the new platform did not have a big impact on the margin in the first quarter, but we see it helping us going forward. I think the margin in the first quarter was really a product of really just sustained new business across technologies platform in the U.S. and over in Europe. I would say that we’re very pleased with the rapid return to our historic margins; we have not accomplished it by slowing down any of our R&D. So we would expect this margin to continue at this rate, maybe some slight improvement towards the end of the year, but we as I think we’ve said we will definitely aggressively continue to spend the R&D which would be one of the main differentials in sort of the historic margin here and the mid-30s margin that we’re looking at for this quarter.

[Andrew Fones:]

Then you mentioned making investments in economic consulting and that including highest in infrastructure and that weighing on the margins there. Are you expecting this new highest kind of ramp of the next quarter or two and how should we think about the margin trajectory there, please?

[Dennis Shaughnessey:]

I think as you know when you bring a lot of these high power economists and their teams come with them, we have a lot of upfront expense to bring them in-house and sign them up and also the portable type expenses of getting them in our shop to practice. There tends to be a time lag that is just simply then getting acuminated to us and sometimes some legal restrictions as to when they can start aggressively servicing clients and billing and working on some of their old client relationships. So I would say you would start to see the benefit of this build up in this quarter and moving forward especially into the second half, I think that the penalty to margin that signing this many people up this rapidly in a quarter. As you saw in the first quarter we’ll clearly flatten out as these people start to bring in a contribution and then finally, we’ve had one of the best new engagement sign-ups in a while in the first quarter and we would expect that the new engagements that we were putting on the books are starting to actuate and activate more aggressive billing as we go forward. So we should see margin improved by those two factors especially in the second half.

[Jack Dunn:]

Yes, there is nothing in terms of the investments that we have made that has a lingering nature that would impact the normal margins which you come to expect from that business when it becomes fully mature.

[Andrew Fones:]

Then just finally on strategic communications, the restructuring there, did that have any impact in Q1 and do you expect that the restructuring to allow you able to maintain or even -- how should we think about the margin trajectory there for Q2?

[Jorge Celaya:]

It crossed $1.6 million in direct expense in Q1. We’re estimating a savings of about $7 million on an annualized basis going forward, so just lightning math take three quarters of the $7 million and that should be a benefit they would receive over the remaining three quarters.

[Operator:]

Your next question comes from Torin Eastburn - CJS Securities.

[Torin Eastburn:]

My first question is on plants and restructuring. Obviously it was a fantastic growth in the quarter. A month into the second quarter, have you seen any positive or negative change in that trend?

[Dennis Shaughnessey:]

Actually it was interesting we have looked at the case opening just to kind of bring it today, looked a couple a days ago and I think in April we had opened in the neighborhood of 66 cases through, we cut three weeks of it. So certainly it’s not abating, but I have expert here, so Dom I’ll turn it over to you.

[Dominic De Napoli:]

We haven’t seen a slowdown at all in the new cases coming in and we’re actually seeing some even larger opportunities in the average cases that we’ve seen after we have got the Lehman Brothers and some of the other cases that we had mentioned before. So we’re pretty optimistic that that practice is going to have a strong 2009.

[Torin Eastburn:]

Then on communications, you mentioned in the prepared remarks that if you were given opportunity to increase share there. What exactly you think could have happened?

[Jack Dunn:]

What happens traditionally as the strong competitors do get stronger. We have the added advantage of large part of our practices strategic or sometimes crisis management special situations. Those are opportunities where they are a little bit less discretionary than retain business. We get those clients, we were able to impress them and we pick them up as retained clients as the cycle changes so that’s the opportunity. We also think that again, as the FDP would have joined us are very happy at FTI they have become prosodies for what we do here. I think our opportunity to hire people from some of the competitors will be an increasing one over the course of the year. So I look to expand the business that way. Declan, you might wanted to comment on this.

[Declan Kelly:]

I think the only additional point is that in this economy we’ve seen a tremendous number of clients come to us and say we want to stay with you rather than some of our competition who have just lost clients and lost revenue. So we’re not experiencing a dramatic fall off in client relationships or contractual relationships, its more contraction on the bidding side depending because of what’s happening in the market. So to Jack’s point about the strength of this segment, we at this time see a number of larger clients coming to us to work with us because they’re confident in the long term durability of what we have to offer, and actually in the last month or so we have actually signed a number of very large engagements in different places around the world that reflect that dynamic. So having been in this business for over 25 years or 23 years, I think the quality underpinning this segment is really being borne out in the market.

[Operator:]

Your next question from Jim Janesky – Stifel Nicolaus.

[Jim Janesky:]

Can we spend a little bit of time looking at the environment or the macro environment I guess within the FLC area? Is there really new activity coming out of the new government, or do you think it’s more that these are the large fraud cases that you’ve been involved in and so the shift is really more towards your company than any real activity, and if there is real activity what areas of the government is that coming from? Thanks.

[Dennis Shaughnessey:]

Let me start Jim its Dennis. I think a combination of both, it’s just a matter of sort of the amount of speed and build up that we see in a momentum, clearly we are the beneficiary of being selected for these historic fraud cases and others that we really can even talk about. The fact that the economy and the traumas, and the world destruction and is obviously putting so much more visibility on people that operate around the edges under the best case and operate within bright and frauds, some of the worst case is clearly going to be a driver work for us. We are seeing increased activity from the government, we’re seeing it primarily I think as we’ve said before any engagements that were being received on our economic side. So we are seeing a lot of retention first of our top experts in anticipation of having to use them to respond to a wide variety of governmental enquiry. Now a lot of those centers around competition, but it also centers around securities issues and so we are certainly seeing that work being booked. It’s early in that cycle in other words the enquiry soppiness; the regulatory investigations are just touching the target companies or potential target companies. So we’re very early and again we have to remember I think today is the 100th day of the administration, and a lot of this is probably simply been pent-up stuff that a different view on Washington allowed to open up. I think we’re finally seeing companies in just the civil litigation as Jack said our IP practice is doing extremely well, some of the other practices within FLC are doing well and it’s just a result of the companies who can sit on litigation, delay trying to resolve issues, but eventually they have to get them resolved. If they can’t get them resolved it firmly means, they have to go to a third party venue and we are finally starting to see that activity definitely start to pick up. So a lot of the engagements that were probably put on the books in the third and fourth quarter are activating as company simply get too frustrated with the delaying process and get a lot more aggressive as they move forward. I don’t think it changes our perspective on saying that most of this activation will benefit us primarily in the second half. So I think we’re the beneficiary of things that are going on the commercial market right now, whether you treat that to gaining share or keeping share I’ll let you make that decision, and I think would be the beneficiary of what we’re now seeing as increased regulatory investigation and activity in the second half as the responses to these enquiries start to mature and the actual sort of hand-to-hand combat for some of these agencies start to begin in the second half.

[Jim Janesky:]

Okay. That’s helpful. Just shifting now to the revenue side of the Technology segment. You have talked, and we have talked in the past about some of these large forensic type cases including the technology component especially early on in the case, with that backdrop in mind how should we look at sequential revenue progression in the tech segment as we move through 2009?

[Jack Dunn:]

I think when we talked last on our annual earnings call, we said that we expected tech to grow sequentially from Q4 quarter-over-quarter, over-quarter-over-quarter for the balance of the year. Without a doubt we’re very happy with the performance in the first quarter that almost lacked the highest quarter of record in the history that was driven by two very unique projects. I think we are hopeful that we can continue to the sequential growth, on the other hand we’ve outperformed our initial estimates, so I think we got to work hard at that. I think they are poised to do sequential growth, but it still is a tough market out there pricing wise and parts to continue on. We are not immune to that, I think we are doing a good job of overcoming that as first quarter results start to demonstrate, but I think we have to be realistic that there could be some other surprises in the market that could dampen some of that growth especially since the first quarter outperformed our initial expectations.

[Operator:]

Your next question comes from David Gold - Sidoti.

[David Gold:]

Wanted to drill down a little bit on restructuring. Couple of questions there; one, favorite question from 2002 to 2003 which is, can we add some color to where you think we are in sort of process or the quarter-on-quarter cycle, but more so do you think based on the sharp ramp up that things are really accelerated this time versus the historical performance?

[Dominic De Napoli:]

I think we’re at the beginning of the cycle, I think we are going to have a strong practice through 2010 at least. As Jack mentioned that, no industry has been spared from the credit crisis, I mean any company with debt maturing, any company with highly leveraged balance sheet is going to have trouble refinancing debt. There was a lot of LBO debt that’ll come due over the next 18 months, it needs to be refinanced. By definition it will be more levered as the operating results of these companies that suffered because of the recession. So there will be challenges in every industry, no company is spared and we saw like a broken record, but over the last I guess two calls, the industry is that we are really spending a lot of time and we’ll continue also They include retail, they include automotive, and they include commercial real estates really starting to pick up as we had said before. If you look at healthcare that’s going to continue as they change some of the reimbursement rules that’s going to increase the amount of healthcare work until this economy recovers and it won’t recover until the consumer recovers and are going to be very busy in that space. The good news is we were able to bring in other practices into that space, particularly the Strategic Communications practice where roughly 40% to 50% of the work that we do is on the company side, so we can be very influential in demonstrating how important it is to effectively communicate with the creditors, with employees, with the shareholders and lenders in these situations to get them resolved on a timely basis.

[Jack Dunn:]

I would differ to Dom, but I don’t think we’ve seen anything from our perspective to believe that this is in spire of that’s continuing, I mean you have a bunch of traps for the unwary, if you will, coming up. I don’t believe there is any company in America that isn’t looking to reevaluate its goodwill at this point as their stock prices drop and I have to look at those types of issues. At the same time, you have portfolios in regional financial institutions that are chockfull of commercial real estate as Don says. As those things get revalued and devalued, people have to look at ratios and things like that. That’s just a tremendous amount of work that goes with basically of resetting evaluation in the global economy and the good news as Don says is that not only involves restructuring folks, but as things get into restatements into other issues, balance sheet issues and valuation issues that involves other areas of our companies such as ECON and FLC. So I think I’m glad that stock markets doing better and all that, but I think from where we are sitting, we are not really seeing and abating of what’s going on in the credit markets.

[Dominic De Napoli:]

David, I think the other thing that’s differentiation for us is we are a global company now versus being pretty much an American company back in the last cycle. As Jack said, our European practicing constant currency very quickly, doubled their revenues more than doubled their headcount. We’re aggressively looking to push the practice deeper on to the continent where clearly, there is more and more business for us as well as we’re doing business, restructuring business in Asia and especially Australia. I think we should not overlook the fact that that we are now being retained to advise sovereign governments on financial challenges within their countries. Again for us it is a new and different type of restructuring assignment which could have a different set of legs or longer type of runway as we get involved with countries that have deep systemic or structural issues they are going to take years to change. So, I would say one of the biggest differentiations besides the debt that Dom talked about and Jack talked about is geography. We simply are much better positioned as a global company to not only benefit here in the states like we did in the last time, but in this one.

[David Gold:]

The other side of the question of strength and restructuring is both utilization and hiring climate there. Can you give some color on both of those basically, where could we go on utilization from say 83% or will it now be more a function of adding right people to help you do some of these businesses as it comes in?

[Jack Dunn:]

I think it’s all the above, Dave. We’ve had times where we have spiked over 100%, clearly 100% is in the sustainable rate over a long period of time, you think about it its 40 hours a week, it’s 100%. So we certainly can do that, we can go to 120%. We’ve got people in multiple [inaudible] that makes it a little more difficult to keep everybody working at the highest rate possible, because you have got piece of work. If you’ve got a person with four hours free in LA, he can’t easily use he/her in a project in New York for those four hours. So I mean geographically becomes a challenge, but we’ve got pockets of the practice working well over 100. We are able to retract a lot of talented people, we’re brining in significant number of people around the world in Corporate Finance and I think people are recognizing that companies like FDI they get an opportunity to work on some of larger more interesting and challenging opportunities. Clearly we’ve got to compensate them competitively so we are a preferred place to work, given our size and opportunity that we present to their young carriers.

[Dennis Shaughnessey:]

David, this is amount the best hiring markets we’ve ever seen. I think the trauma in the financial services community is to a lesser extent some of the other professional services companies has given us a much broader runway in the universities for recruiting there as well as hiring season professionals come in. So we’re certainly a beneficiary at the marketplace that has a very good set of supply dynamics for our demand.

[Operator:]

Your next question comes from Tim McHugh - William Blair & Co.

[Timothy McHugh:]

Okay. We just want to first ask, you didn’t say anything formally about your guidance that you had given last quarter, is it fair to say that you’re pleased that unchanged give that you didn’t comment on them?

[Jack Dunn:]

It’s been our practice to review guidance significantly at the end of the second quarter. So we will continue that practice, yes.

[Timothy McHugh:]

Then next I want to ask about the technology margins. You kind of attribute it to like new business activity globally, I guess why I’m little unclear is that the revenue, the EBITDA went up by more than the revenue sequentially and so I’m just trying to understand some costs exited the business I guess in some fashion. Just trying to understand how that impacted the margins?

[Jack Dunn:]

Well, I think we did tell you that we would begin to integrate the 10X business in the first quarter after we integrate the platforms, and that has begun and recognized costs all through the quarter in an effort to basically begin to eliminate the redundancy in these organizations. We are not totally finished that, but we are very close, but we have in fact integrated the platform. I think the other is efficiency, a lot of these large international assignments some of the ones you’ve been reading it on the paper and a bunch of them that we’ve gotten over in Europe and Asia, you can really get extremely efficient in your allocation of large teams on to them. Utilization gets very high, the utilization, the technology is very profound and the demands on scale and size as far as some of the ancillary services hosting things really come into play. So I think it’s a combination of as we said at the beginning of the year 10X organization which clearly would consolidate some cost of the integration that into FTI and then finally just the efficiency to gain from a lot of this very large business from around the globe.

[Timothy McHugh:]

Did you maintain R&D function within the 10X or is that --?

[Jack Dunn:]

We increased it. We’re integrating the R&D function with our R&D function, we have not cut it back and we have actually increased the combined run rate.

[Timothy McHugh:]

Then on the forensic accounting side, there are some question early about looking at the broader environment and versus the impact of some of the large fraud cases that you’ve seen, can you in anyway quantify the sequential improvement just in a directional sense if you don’t want to give the specific number, but is half the improvement due to three to five of the large cases that you won, is that in right ball park. How can we think about the impact of those? As well as then, it might be helpful any comment on the length of those engagements that you expect?

[Dennis Shaughnessey:]

Clearly they’re prominent engagements and they help, so I think get start off with that. I think all of them are very complex; some of them are growing more complex the deeper we get into them so I think certainly would view them having significant lags at least through the balance of this year. I actually go back to something that Jack said. I think we were fully expecting to see good sequential growth off of the end of an election year. I think as Jack has said before in some of his others comments, it seems like every Presidential election cycle either because of a lain up nature of the Department of Justice, and this one you couple with a very profound and rapidly declining economic scenario. We fully expect to see some degree of snapback, not only in federal driven litigation or litigation support, but also in civil. We are feeling that. We are feeling it, from the point of view of increased engagements, we’re feeling it from the point of view of increased investigations and we’re certainly seeing it activate in a lot of our practices as we talked about IP and things like that.

[Operator:]

Your next question comes from Tobey Summer - SunTrust Robinson.

[Tobey Summer:]

I was hopping that you could comment on your expectation for cash flow this year and maybe in that context with the pilot cash you have in the balance sheet describe what the market is looking like for you to be to able to deploy that? Thanks.

[Jorge Celaya:]

Tobey, I think most people know we draw off a lot of cash. We would anticipate given our guidance and our margins and the amount of non-cash charges that we have on the books that would continue. We are seeing a lot of opportunities to invest. We are obviously being careful and selective in the way we look at those opportunities because honestly if companies like ourselves may have some degree of challenge and visibility, smaller organizations have a much better challenge and visibility. So I think you have to be a little more careful. Second, there are clearly issues of valuation. Good companies and their managements understand how markets are valuing them and often times it’s reluctant on their part to bring their companies to market in an environment that we have. So I think you’ll see us continue to be aggressive in acquisitions Dave Bannister has a lot on its plate, but we’re very selective right now, we’re seeing a lot of things, we’ve turned a lot of things down and those we’re looking at we’re trying to get creative in bridging the valuation gap between our expectations of what we should be paying in the market and possibly, so as expectations of what the true enterprise value is. So I think we feel we are in very good shape liquidity wise to continue to execute our five-year plan which does call for us to be aggressive in making acquisitions, we are always looking for the next lag of the store, the big acquisition that could make a significant impact, but again would have the margins that we used, would be a C-Suite board room and will be global in its reach. So within those parameters trust me David Bannister is out there looking.

[Tobey Summer:]

Then I wanted to ask a question on the currency side. Most of that exposure if I recall correctly is in Strategic Communications, we can’t forecast exactly where those rates will go, but based on what they fit now sort of in the back half of the year that starts to abate so constant currency versus GAAP rates would start to normalize, is that accurate?

[Dennis Shaughnessey:]

Yes we have September labeled in red on the calendar is the Liberation Day, so that was when the precipitous fall in the talent place.

[Operator:]

Your next question comes from Paul Ginocchio - Deutsche Bank.

[Paul Ginocchio:]

Just a question on Strategic Communications, your headcount looks like its down 26 people Q-on-Q; does that capture the entirety of the severance or it there more than that? Thanks.

[Dennis Shaughnessey:]

More or less that covers it, yes. Let me put this way though. We continue to be aggressive there. Since the first quarter last year we’ve done several acquisitions and we have areas of the world that are extremely active right now, as we mentioned Asia with the activism of the Chinese government and M&A activity, and we are very active. Germany has continued to be a good market and France, so that snapshot captures basically what we did by coincidence actually.

[Paul Ginocchio:]

Would that be maybe a good indication of what you are thinking revenue would be down this year on a sort of ex-acquisitions ex-currency?

[Dennis Shaughnessey:]

No, we really didn’t look at it that way at all.

[Paul Ginocchio:]

Product wise, would you expect it to get worse from here, the ex-acquisition ex-currency revenue trends?

[Declan Kelly:]

I think in the last month or so we are seen some green shoots of activity in various markets around the world and so we are encouraged with the most recent trends after difficulties at the first quarter which was explained. I think we’re hopeful and optimistic that we can maintain the performance of what we’ve seen in the last month or so. So a lot depends on larger crisis management engagements that we can get in some of the larger markets, specifically in the US and UK. I mean in the last couple of weeks in particular there are some strong indications that that kind of activity is returning.

[Operator:]

Your next question comes from Scott Schneeberger - Oppenheimer.

[Scott Schneeberger:]

I guess, I’m going to start off obviously on the restructuring segment, very, very strong, but would like to get an update on the integration of SMG. What’s happening that’s good and bad there and seen much of a headwind. So can you just take a bit deeper there?

[Jack Dunn:]

Well, obviously the strength of the core restructuring had overshadow everything, but SMG is integrating very nicely with Corporate Finance as well as other practices including financial dynamics. They are working on joint projects around the world. So it is integrating very nicely. Clearly this is the worst real estate market anybody seen in their careers, so because of the lack of M&A activity and lack of financing in real estate the core mergers and acquisitions business is down but the work that they do on a day-to-day business for their re-clients and other real estate related entities continues. So I’m just slogging it out, the key here that was the ability to cross sell there services within FTI and that’s an internal client that they have now, but that haven’t had before and they are clearly focused on that. So the outside opportunities are fewer the inside opportunities significant. So I mean they’re holding their own and they’re pretty much operating at a level where we would expect in this environment.

[Dennis Shaughnessey:]

Scott, they were a US-based company, we have clearly taken them abroad, and they are doing restructuring work and consulting with financial institutions in Europe, governments in Europe as well as a lot of activity right now down in the Persian Gulf.

[Scott Schneeberger:]

Shifting up a little bit; economic consulting. Looking at the average rate in that segment, it’s my understanding that you’ve been doing some price increases in sequential looks about flattish, just kind of curious is it the new hires coming on that we are going to see the pick up there or am I expecting to see too much in the pricing?

[Jorge Celaya:]

We put a price increase in this segment back in November of last year and so I think you would expect to see some degree of sequential flatness given price increase by the end of the year. So I would say that the demand there wanted the increase, the market has received it well we haven’t got a very much push back on this at all. I think we just have to look at how these engagements we talked about activate as well as how the new teams that we brought on hit the road and that could influence while we make another interim adjustments some time later in the year.

[Dennis Shaughnessey:]

And remember the figure that’s published is just a reflection of the mix of people that worked during that period, if you still look apples-to-apples at a given economist in a group or what ever you’ll see that their rates have gone up, it just reflects whether in fact a big named economist was in trail, whether or more the work was being done or research during the period and that kind of thing. So that published figure gives you an indication of the activity mix in the period, but not of the actual price structure or rate card if you will that might be used in any given segment.

[Scott Schneeberger:]

One more if I may, in Technology Consulting could you just update us a little deeper on the pricing environment and what are you seeing there? Thank you.

[Dennis Shaughnessey:]

Again you have to look at in across the continual; I would say sort of the broad based search calling type of e-discovery effort which is in the beginning we think that that’s extremely aggressive pricing there. In more of the mid market, down market cases where a more simplistic approach, in other words these are not complex issues, but we are seeing significant competitive pricing there. What we are not seeing a lot of it is obviously in the more sophisticated uses to the technology, the actual management, [shiloing] movement, privileging of the data. Then finally the more complex the cases are the more global reach for example, some of the huge foreign practices, investigations that touch the Middle East, Asia, Africa places like that, we are really not seeing a lot of pricing competition there at all. So I think it would be a function of significant pricing competition in the front end of technology, continuing significant pricing competition and sort of the mid market to down market more simplistic type of cases, a lot less as you move up, the technology continuum and much, much less as you move up the complexity of the issues.

[Operator:]

Your next question comes from Kevane Wong - JMP Securities.

[Kevane Wong:]

Just a few things, first looking at the acquisition revenues and corps and restructuring basically doubled in first quarter from the fourth quarter ‘08. Was that all basically CXO and Canada ULC acquisition and is that sustainable or whether other factor that sort of drilled that?

[Jack Dunn:]

Main impact is SMG. We acquired SMG right at the end of the first quarter so really second quarter, first quarter of last year that we had it and then the other two certainly contributed towards the main differential is SMG.

[Kevane Wong:]

So basically SMG actually sequentially or party big pick-up from fourth quarter?

[Jack Dunn:]

SMG is performing better than we have budgeted them in the first quarter.

[Kevane Wong:]

And do you basically suspect that sustainable, so that continue to ramp up?

[Jack Dunn:]

I think Dom answered it pretty succinctly. I think they have acquired a huge new client, that’s called FTI and that clients allowing them to move into areas that they haven’t gone before and geographies where they haven’t been. So, I think where the really ramp is as we get to basically clearing prices in these various municipalities for a lot of this commercial real estate that’s going to come out. I think they’re going to be a good player in developing the capital solutions for those, and as the credit markets opened up and again the money comes into address the opportunities with these clearing prices, I think you will really see them ramp from that.

[Kevane Wong:]

Looking at headcount in Forensic and Litigation again sort of sequential drop in the headcount there, did you feel that you sort of gotten now to the level on headcounts that this is sort of a base for the year or did you think there is reason to think that should be further cut in the year?

[Jack Dunn:]

We don’t have plans to make significant cuts, and though all the practices we monitor very closely. In forensic, we’ve moved that practice into a collection of specialty practices, we no longer are just general litigation consultants. So, we are specializing in the real estate, the global investigation, we’ve got a tremendous healthcare practice, we do a lot of monitor ship, so we’ve found that it’s important to specialize and more and we are just building practices within FLC that meets the current demands of our clients. We’re moving people from generalists, to specialists and if we’re not able to do that we’ve got to bring new specialists. So we’re really focused on the areas within that sector that have the most and it’s not been a general litigation specialist.

[Dominic De Napoli:]

I think the one thing you should understand, we are a calendar year company and so we do our valuations for our people on a calendar year. So you could see, it could be false positive or a false negative, you could see changes in headcount Q4 to Q1 that is nothing more than in voluntary movement of people in small numbers where we simply don’t feel that their career alignment is going to be best with FTI. So I think Q1 is a little bit of anomaly, because that is when we do all of our valuations and you do have some fallout from that on a normalized basis

[Jack Dunn:]

Yes, year-to-date we’ve hired 24 professionals in that period, so we are actively looking for people. It’s just a question of, its great market right now we’re able to really, again attract the best FTI and that’s what are about --.

[Dominic De Napoli:]

Sometimes you’ll just see some dips Q4, Q1 and continue to grow, as I think Jack said before, we’re looking at about 14% of cost personal complement in this year.

[Jack Dunn:]

This is one of the areas we expect to grow.

[Kevane Wong:]

Two other quick ones. One, last quarter you talked a lot about sort of putting more money into brand development etcetera, when I’m looking at corporate activity’s expense, you’re basically at a level where the year ago down from the fourth quarter. Is that kind of pick up going forward, how should we look at that?

[Declan Kelly:]

I think, this is Declan. We obviously made a decision that we’re going to invest in the brand and invest in the marketing of company around the world and we have done that. However we’ve also done it prudently and we’ll continue to do so. We found that there has been considerable leverage ability in the way we’ve gone to market and we found that some of the expenditures that we have planned to make, we didn’t need to make because of the reactions of the campaign frankly. So we have tremendous flexibility built into the way we’re going about the marketing program and we manage it on a month-by-month basis, but so far that’s worked truly well for us that approach not just sort of spend all the money upfront and then see what happens, we’re spending it as we go and it’s working really well.

[Dennis Shaughnessey:]

I think the other thing you should understand, and even we’ve been pleasantly surprised. On an optimistic buy basis, there has probably been a better time to try to use media to enhance your brand. Clearly the pricing, the opportunities, the partnerships that are available are totally different pricing structure and financial commitment to say two to three years ago, helped enhance what we want to do, number one, but allow that one to actually lessen the impact on our P&L. So I think they have done a good job of balancing both taking advantage of the opportunity, but also taking advantage of phenomenal pricing.

[Jorge Celaya:]

And just as a practical matter, given the scale of the matters that we’re involved in the high profile nature of many of the assignments, frankly a large number of the largest news organizations in the world consistently want to talk to us about what we’re doing and our advice on what’s going to happen around the world, as we continue to expand our portfolio of interest around the world. So in many cases we don’t need to spend money because people are coming to us asking us for an opinion, because we are the leading experts in the world as Jack said across so many different segments in our business.

[Kevane Wong:]

Then my last question is for Jorge. I know one of the things you pointed to before usually going from the fourth quarter to first quarter you have 200 to 300 basis point drop in margins, EBITDA margins, obviously a much better performance this quarter. Usually going from first quarter to second quarter you also get a lift, so you also expect to see that from these levels or was this particularly strong it might not sequentially see that some kind of lift you normally see seasonally?

[Jorge Celaya:]

You did see the fourth quarter to first quarter drop in the gross margin percent or EBITDA margin percent a bit. Especially on the gross margin you’ll see it, I think going in to the second quarter you will typically see a couple of hundred basis point improvement due to those factors we talked about, on the fillip side the previous question on the marketing side we are going to continue to spend, we probably spent in the first quarter for the reasons we just talked about a little less than we had anticipated, but we think we’ll get back to our plan in the second quarter. So you’re going to see that margin improvement at the gross margin levels, but you may see the SG&A going up a bit in the second quarter.

[Operator:]

Your next question comes from Dan Leben - Robert W. Baird

[Dan Leben:]

On the civil litigation dispute side, looking out of the year and talking about some of the engagements you signed back in the third quarter and fourth quarter finally starting to ramp up. What is the new engagement activity look like in the first quarter and so far in April?

[Jack Dunn:]

I think it’s good, I mean I think we feel that I mean the economists especially are seeing a lot of retentions. I think we have already talked about how especially practices are extremely busy and have very high utilization. I think we are seeing good traction , the economy is generating a lot of spark right on companies and their investors, the regulators, the investigators are getting very busy, so as a result that group is getting more busy.

[Dan Leben:]

Then just on the restructuring business, could you talk a little bit about you mentioned that you are starting to see some larger engagements coming through both in phenomenal numbers and total engagements, but just to the extend you start getting some bigger and bigger engagements coming in. Is there any thought that your ability to be able to continue to hire to ramp those or you need to potentially turn away from smaller restructuring deals to focus on some of the larger ones?

[Jack Dunn:]

Well, clearly and we are focusing on the larger, medium and larger engagements and our focus is not the smaller ones, because we do have to rationalize where we put our people, but we don’t see significant constrains in handling the number of cases that are coming out of the trends as now, nor do we believe with our problems handling larger ones as those opportunities arise. Remember we got cash practice that we had moved into for restructuring business for the most part, and we were able to move those people those our because they’ve got the same skill set and has got the got the same financial experiences that many of the younger non-core restructuring people have. So we’re able to do that and we are able to also move out with FRC people were needed. So there are opportunities to continue to grow that practice and even from an internal bench and that’s why we continue to do, and right now we’re probably three quarters in moving attached people over to the restructuring projects and that’s going very well, because many of them started their careers as restructuring professionals and the model that we dealt is to be able to move people back and forth in different economies.

[Operator:]

Your next question from Sean Jackson - Avondale Partners

[Sean Jackson:]

Can you quickly talk about within the FLC some of the distribution of revenue through out the quarter, was it measurable pick up in March and how did that distribution compared to pervious years?

[Jack Dunn:]

I would say January traditionally as you can imagine is a vacation extension out of December, so people don’t come back anymore and hit the ground running. So Jack, January would have been okay, not great February or March where extremely good. So it would be weighted into the last months of the quarter, but again some of the engagements and fairness have been sitting on the box, for quarter and a half so it wasn’t as we didn’t have them, it simply when the people decided to button and start to work and that seem to pickup significantly in February. Again I think a lot of this is again when people decide they can’t wait anymore, and when they get frustrated by not being able to get a solution to their problems and they’ve got to move more aggressively into a different venue.

[Sean Jackson:]

Okay, so its sound like the pick up this year was a little more pronounced than the pick ups on previous years?

[Dennis Shaughnessey:]

I think it was because you had now option again. I think you just had an awful lot of non-action of people simply waiting out what would happen and so you had sort off, for us a perhaps a perfect storm. I mean you had the election number one fringing up, people either severely or responding to potential criminal issues to get on the ball and start moving. You had very, very large cases that we received not only here, but in Europe and that I think just a combination of normal seasonal movement, I wouldn’t say taking out the election I am not sure it was dramatically different than we normally experience, the election clearly was a demand suppressing agent last year and I think with that gone we saw demand free up.

[Jack Dunn:]

As we start these large investigations, I mean there is a big spike in activity because we need to put a large of number of professionals on the field very quickly. So we were fortunate as Jack and Dennis have mentioned to get several of the larger investigations making up the headlines.

[Sean Jackson:]

You talked about the tail of all cases being fairly long. I didn’t get exactly what the exact numbers that you put toward that, I mean do you expect these last several years probably most of your expectation?

[Jack Dunn:]

I think the answer we gave is, they’re very complex in their global, a lot of them they’re not related something to the US. So a lot of it is, we think they have legs through the end. To predict it beyond that gets a little more difficult and part of that will be how intergovernments get together, I mean their activities in some of these that you need governmental co-operation offshore in order to continue the investigation or to really intensify it and that comes with fits and starts. So I think predicting how the government negotiations, government-to-government on access to information, access into institutions that are foreign chartered institutions that would be under the umbrella of these organizations that are being investigated is very difficult to forecast and obviously the frequency of deals is tough because each way to forecasting is tough because country is different.

[Dennis Shaughnessey:]

I wouldn’t be so quick to view this as a bubble going through a snake either. I think just this morning the SEC announced it’s creating a task force to look at this type of fraud and it shows we’re sitting here, there is more off the pages of the Wall Street Journal and the New York Times and the FT today. So as I say, when we decided the first options back dating case or the first reinsurance case, we thought that’s a one-time spike, but those typically are endemic of something else going on. So as I said our investigations people are going to be busy for a long time both on the existing matters which at this point as in many situations we don’t know which way they’re going to go, whether they’re go to end up in years of litigation or whether they’re going to end relatively quickly. So I would sit back and say that was a nice benefit to the quarter, the other areas we mentioned FLC segment is doing very well and improving as we predicted, we had expected to be a little bit more back-end loaded than it is, but we’ll take this at it comes and I think as I say I don’t think it’s just a symptomatic couple of cases that popped out here in the first quarter.

[Jorge Celaya:]

I think you’ve miss, not to also mention that we try to be proactive with the vast majority of fund to funds and hedge funds that clearly are doing a good job, don’t have these problems, but need a different type of transparency in order to deal with their investors, and we feel that we’re uniquely equipped, one with the experience that we have that Jack outlined in our domain expertise and forensics and in the financial services industry. Obviously the confidence that the government and others have shown in us to give us these very large cases, we are in a unique position to put together a product to really help bridge that transparency between all of these fund managers and the vast institutional investors. So we have launched this product, it is a hedge funds/private equity fund-to-fund transparency product. It has gotten very good reception from not only the people that would be using the product as far as generating this information. They fund themselves; it got extremely good traction and support from some of large institutional investors that clearly see the benefit of the funds using this type of product in their communication of their investors. So, I think we’ll start to see some benefit from that towards the second half of the year and certainly in the next year as the market comes down. A lot of these funds go after market to raise new capital and they change the way they’re reporting their results and everything on an annual basis to their investors.

[Sean Jackson:]

Okay, very last question. The competition some of the harder areas specifically restructuring as there been new people that you’re seeing or is it just so much business there that you’re not seeing anybody else?

[Dominic De Napoli:]

Well, I didn’t say that to Tim. I think for the larger cases they go to the established practices that have been around like our practice. So we do get an opportunity on almost all of the larger matters. So we haven’t really seen a growth of a lot of new competitors in the higher profile larger cases that we’re considered for.

[Dennis Shaughnessey:]

Now our competition in the U.S. would be to boutiques investment banks, several, a couple large private consulting firms and overseas the competition is predominantly the big four. So that’s who we see Dom, I would say in what 90% to 95% of the big cases.

[Dominic De Napoli:]

And certainly if the cases have been driven by the large banks which in Europe particularly, they are the big and are the largest competitors, but some of the large boutiques that we see here are also in Europe and around the world.

[Operator:]

Your final question comes from Joseph Foresi - Janney Montgomery Scott LLC

[Joseph Foresi:]

My first question here and I’ll just make them two quick ones. On the communication side, I guess a lot of people are wondering, can that business work at the same time the restructuring is working. Maybe you can give us some idea what you expect out of that business in the back half of the year and just your thoughts in general on a high level whether those two can work at the same time?

[Declan Kelly:]

In fact, I glad you raised that point, because there has been a tremendous amount of cooperation between corporate finance and FTI over the course of the last several months and we have seen a significant pick up in that since the back end al thought the first quarter. So in United States in particularly and now increasingly in the UK and our Communication segment in the UK actually launched a restructuring practice inside its own business at the beginning of this year to reflect the demand. So the answer to your question is, yes we are working on several cases together at the current time and we do think that there is a lot of lift in that potentially for the back end of the year.

[Joseph Foresi:]

Would you say that we’re getting close to bottom in that business or is it too early to tell or I mean just your general thoughts on the trajectory leaving this quarter into next in the back half of the year?

[Declan Kelly:]

As I said earlier, I think in the last several weeks three, four, or five weeks we’ve been more encouraged than in the first two or three months in terms of the matters that are coming forward and so we are more encouraged, we are still cautious because of the obvious volatility in the market, but we’ve taken all the measures than we can possibly take to be able to take advantage of it and we are one of the largest players in the industry and so at this time if large matters do come forward, we are actually better placed than most to take them on.

[Dennis Shaughnessey:]

I think, we have pretty carefully built this company as we talked about in our opening remarks to be for all cycles of the economy and I think it’s interesting that you only have to go back to the comparable quarter to see a time when restructuring and Strategic Communication were both humming, and they were humming necessarily because they were each beating other. There are times in the economy when you are turning from the poor economy where restructuring is still rock and roll and you are also critical time for communications, so as we’ve said, we believe for the next five years you will see a situation grow from this to where our practices get into balance, and perhaps in five years time where they go the other way. But we think we have the right mix of businesses right now to provide not just a good 2009 but a sustainable platform as we increase it globally for the next five years.

[Jack Dunn:]

One additional point is that as we have brought into an increasing number of restructuring matters more and more clients are asking for the communications offer. That’s an important point and an important differentiator between those in our competitors. So we are able to sell in more services at one time which previously of course were not possible before the segments are put together.

[Joseph Foresi:]

Then just lastly on e-discovery we talked a little bit about it’s showing a little bit better signs in the beginning of the year, has that business stabilized yet in your opinion or is it being driven by sort of some of the larger cases in litigation, and if so what do you think of the trajectory that business on an annual basis versus what we are typically used to?

[Jack Dunn:]

I think as we try to say it’s a combination of a lot of things. I think clearly the large cases help the globalization of a lot of cases. The business we’re getting out of Europe given the complexity of it certainly helps, it’s a lumpy business. I think you can get intense work on a short-term basis which can clearly distort a quarter which is why we’re being somewhat cautions in saying you can expect to see just seriatim good sequential growth from this point on. I think that we are spending R&D at a rate that the company is not experienced in the past, on the other we are spending it because of the opportunities that we see going forward to possibly come out with some significant disrupted technologies to introduce into the market. So I think it’s as Jorge was talking before. We’re pleased with the way they have started. We think they’re going to have a very good year. The competitive arena has not changed much in some instances it’s increased as far as price competition. We’ve been able to manage through that fairly well and we’re pushing very hard to introduce new and much more creative technological solutions into this marketplace on a faster rate of introduction than we had originally planned.

[Operator:]

There appears there are no further questions at this time. I would like to turn the conference back over to management for any additional or closing remarks.

[Jack Dunn:]

Again, thank you all for being with us and we look forward to speaking to you for our second quarter results. Thank you.

[Operator:]

That does conclude today’s conference. Thank you for your participation.