• the level of leverage incurred by companies;• merger and acquisition activity;• over-expansion by businesses;• business and management crises;• new and complex laws and regulations;• other economic and geographic factors; and• general business conditions.Our Corporate Finance/Restructuring segment provides various restructuring and restructuring-relatedservices to companies in financial distress or their creditors or other stakeholders. In <strong>2009</strong>, as the U.S. and globaleconomic decline continued, we worked on large bankruptcy and restructuring engagements. That reversed thetrend that the segment had been experiencing between 2005 and 2007, which saw a decline in large cases andresulted in a greater portion of that segment’s business being comprised of bankruptcy and restructuringengagements involving mid-size companies. In our experience, mid-size bankruptcy and restructuringengagements are more susceptible to cyclical factors such as holidays and vacations and lower utilization duringthose periods.Factors outside of our control also drive demand for the services of our other business segments. Forexample, decreases in litigation filings, class action suits and regulatory investigations and settlements ofproceedings may adversely affect our Forensic and Litigation <strong>Consulting</strong>, Economic <strong>Consulting</strong> and Technologysegments. Our Economic <strong>Consulting</strong> segment, which provides antitrust and competition advice and damagesconsulting, has experienced decreased utilization due to fewer large mergers and acquisitions, and client imposeddelays in authorizing major work on engagements until later in the litigation cycle. Our StrategicCommunications segment has seen utilization decline and retainer revenues decrease across the full range of itsservices, primarily as a result of decreased M&A and public stock offering activity, and client decisions topostpone or curtail discretionary spending.We are not able to predict the positive or negative effects that future events or changes to the U.S. or globaleconomy, financial markets and business environment could have on our operations. Changes to any of thefactors described above as well as other events, including by way of example, continuing contractions of worldeconomies, banking and credit markets and real estate and retail industries, changes to laws and regulations,including changes to the bankruptcy code, tort reform , banking reform, or a decline in government enforcementor litigation or monetary damages or remedies that are sought, may have adverse effects on one or more of oursegments.Our revenues, operating income and cash flows are likely to fluctuate.We have experienced periodic fluctuations in our revenues, operating income and cash flows and expect thatthis will continue to occur in the future. We experience fluctuations in our annual or quarterly revenues andoperating income because of the timing of our client assignments, utilization of our revenue-generatingprofessionals, the types of assignments we are working on at different times, new hiring, business and assetacquisitions, decreased productivity because of vacations taken by our professionals and economic factorsbeyond our control. Our profitability is likely to decline if we experience an unexpected variation in the numberor timing of client assignments or in the utilization rates of our professionals, especially during the third quarterwhen substantial numbers of our professionals take vacations. We may also experience future fluctuations in ourcash flows because of increases in employee compensation, including changes to our incentive compensationstructure and the timing of incentive payments, which we generally pay during the first quarter of each year.Also, the timing of future acquisitions and the cost of integrating them may cause fluctuations in our operatingresults.22
Our segments may face risks of fee non-payment, clients may seek to renegotiate existing fees and contractarrangements, and clients may not accept billable rate increases, which could result in loss of clients, feewrite-offs, reduced revenues and less profitable business.Our segments are engaged by clients who are experiencing or anticipate experiencing financial distress orare facing complex challenges that could result in financial liabilities. This is particularly true in light of the2008/<strong>2009</strong> economic recession, the current economy and the credit and real estate crises. Such clients may nothave sufficient funds to continue operations or to pay for our services. We typically do not receive retainersbefore we begin performing services on a client’s behalf in connection with a significant number of engagementsin our Forensic and Litigation <strong>Consulting</strong> and Economic <strong>Consulting</strong> segments and with respect to bankruptcyengagements in our Corporate Finance/Restructuring segment. In the cases where we have received retainers, wecannot assure the retainers will adequately cover our fees for the services we perform on behalf of these clients.With respect to bankruptcy cases, bankruptcy courts have the discretion to require us to return all, or a portion of,our fees.We have received requests to discount our fees or to negotiate lower rates for our services and to agree tocontract terms relative to the scope of services and other terms that may limit the size of an engagement or ourability to pass through costs. We consider these requests on a case-by-case basis. We have been receiving thesetypes of requests and negotiations more frequently as the economy has deteriorated. In addition, our clients andprospective clients may not accept rate increases that we have recently put into effect or plan to implement in thefuture. Fee discounts, pressure to not increase or even decrease our rates and less advantageous contract terms,could result in the loss of clients, lower revenues and operating income, higher costs and less profitableengagements. More write-offs than we expect in any period would have a negative impact on our results ofoperations. There is no assurance that significant client engagements will be renewed or replaced in a timelymanner or if at all, or that engagements will generate the same volume of work or revenues, and be as profitableas past engagements.Our Technology segment has recently experienced significant price competition from lower costcompetitors. The clients of our Technology segment increasingly prefer fixed and other alternative feearrangements that place cost ceilings or other limitations on our fee structure. The Technology segment’s abilityto service clients with these fee arrangements at a cost that does not directly correlate to time and materials maynegatively impact or result in a loss of the profitability of such engagement, adversely affecting the financialresults of the segment.Our Technology segment faces certain risks, including the risk that (i) its proprietary software products maybe subject to technological changes and obsolescence, which would make it more difficult for us to compete,and (ii) we may not effectively protect the intellectual property used by that segment.The success of our technology business and its ability to compete depends, in part, upon our technology andother intellectual property, including our proprietary Ringtail ® , Attenex ® and TrialMax ® software and otherproprietary information and intellectual property rights. The software and products of our Technology segmentare subject to rapid technological innovation. There is no assurance that we will successfully develop newversions of our Ringtail ® and Attenex ® software, or other products. Our software may not keep pace withindustry changes and innovation. There is no assurance that new, innovative or improved software or productswill be developed, compete effectively with the software and technology developed and offered by competitors,or be accepted by our clients or the marketplace. If our Technology segment is unable to develop and offercompetitive software and products or is otherwise unable to capitalize on market opportunities, the revenues, netincome and growth of the Technology segment and the Company could decline.We rely on a combination of copyright, trademark, patent laws, trade secrets, confidentiality procedures andcontractual provisions to protect these assets. Our Ringtail ® and TrialMax ® software and related documentationare protected principally under trade secret and copyright laws, which afford only limited protection, and thelaws of some foreign jurisdictions provide less protection for our proprietary rights than the laws of the U.S.23
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ITEM 9. CHANGES IN AND DISAGREEMENT
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PART IVITEM 15. EXHIBITS AND FINANC
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SIGNATURESPursuant to the requireme
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FTI Consulting Canada LLC .........
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The Board of DirectorsFTI Consultin
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Exhibit 31.2Certification of Princi
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Exhibit 32.2Certification of Princi
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CORPORATE TEAMJack B. Dunn, IVPresi