LECG Corporation Reports 2004 First Quarter Financial Results and Raises Fiscal Year 2004 Revenue and Net Income Expectations.Business Editors EMERYVILLE, Calif.--(BUSINESS WIRE)--May 5, 2004 Recent Investments Include Acquisition of Low Rosen Ros´en a. 1. Consisting of roses; rosy. Taylor Taylor, city (1990 pop. 70,811), Wayne co., SE Mich., a suburb of Detroit adjacent to Dearborn; founded 1847 as a township, inc. as a city 1968. A small rural village until World War II, it developed significantly in the second half of the 20th cent. Soriano Soriano may refer to:
in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and Expanded Operations in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). LECG LECG Law and Economics Consulting Group LECG Laboratory of Ecological and Conservation Genetics Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :XPRT), a global provider of expert services, today reported financial results for the first quarter ended March 31, 2004. Revenues for the first quarter increased 11% to $43.1 million from $38.8 million for the first quarter of 2003. Revenues increased 16%, excluding performance based revenue of $315,000 in the first quarter of 2004 and $1,990,000 for the same period in 2003. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (1) was $6.2 million for the quarter, a 25% increase from $4.9 million in the first quarter of 2003. Net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares increased 78% to $3.3 million, or $0.14 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the first quarter of 2004 compared to $1.8 million, or $0.12 per diluted share, for the same period in 2003. LECG was a limited liability company in the first quarter of 2003 and was not subject to corporate income taxes. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per diluted share(2) were $0.11 for the first quarter of 2003. Income before taxes was $5.5 million, 92% higher than income before tax of $2.8 million in the first quarter of 2003. Included in the first quarter of 2004 was $447,000 in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. incurred during the month of March in connection with opening three new offices in Europe. LECG ended the first quarter with 752 employees and exclusive independent contractors A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. , an increase of 17% from 643 as of December December: see month. 31, 2003. Expert headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. increased to 235 from 197 as of December 31, and professional staff headcount increased to 357 from 298, for a combined increase of 97, predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. in the month of March. Professional staff utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be for the first quarter of 2004 was 82%, unchanged from the same period in 2003. "LECG's recruiting efforts paid-off during the first quarter of 2004," said Dr. David Teece David J. Teece is the Mitsubishi Bank Professor of International Business and Finance and director of the Institute of Management, Innovation, and Organization at the Haas School of Business, University of California, Berkeley. , LECG Chairman. "Not only have we added close to 100 professionals company-wide, but we have also opened three new offices in Europe. This quarter's professional headcount growth has laid the foundation for future growth in revenues and net income. Accordingly, I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the potential to exceed our previous revenue and net income expectations for the fiscal year." Acquisitions and Expansion in the US, Canada and Europe LECG is pleased to announce the acquisition of Low Rosen Taylor Soriano (LRTS LRTS Library Resources and Technical Services LRTS Living Room Theatre of Salado (Texas, USA) LRTS Long-Range Technical Search LRTS Laser Rangefinder Theodolite System ), a privately held expert services firm based in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , Canada. The acquisition was effective March 26, 2004 and therefore had no revenue impact on the quarter. Prominent experts joining LECG include Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. B. Low, Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. N. Rosen, Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a C. Taylor and Errol D. Soriano. In total, 17 LRTS employees joined the Toronto office, strengthening the Company's business valuation and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. support practices both in Canada and internationally. Effective March 1, 2004, LECG acquired substantially all of the assets of Economic Analysis LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a privately held expert services firm based in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . Also in March, LECG opened offices in Brussels Brussels (brŭ`səlz), Fr. Bruxelles, Du. Brussel, city and region (1995 pop. 948,122), 63 sq mi (162 sq km), capital of Belgium, central Belgium, on the Senne River and at the junction of the Charleroi-Brussels and Willebroek , Madrid Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. and Paris with the announced additions of Dr. David S. Evans Ev·ans , Herbert McLean 1882-1971. American anatomist who isolated four pituitary hormones and discovered vitamin E (1922). and Dr. A. Jorge Jorge (IPA pronunciation: /'xoɾxe/ ) is a Spanish-language given name, equivalent to English George. It is of Greek origin, and its meaning is "farmer". Padilla Padilla has several meanings:
Revised Fiscal Year Outlook For the fiscal year 2004, the Company is raising its revenue expectations to reflect the acquisitions of Economic Analysis LLC and Low Rosen Taylor Soriano. Revenues are expected to be in the range of $205 to $215 million, compared to previous expectations of $195 to $205 million, based on 253 billing days for the year. This revised revenue expectation also reflects lower anticipated performance based revenue of $5.0 to $6.0 million for the year compared to previous expectations of $8.0 million. The Company expects net income will be in the range of $17.7 to $19.0 million, or $0.75 to $0.79 per diluted share, compared to earlier expectations of $17.0 to $18.0 million. Conference Call Webcast Information To listen to a live audio webcast of LECG's first quarter 2004 financial results conference call, visit the Company's website www.lecg.com. The conference call begins at 5:00 pm EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today. A replay of the call will also be available on the Company's website until Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 13, 2004. About LECG LECG is a global provider of expert services. LECG's highly credentialed cre·den·tial n. 1. That which entitles one to confidence, credit, or authority. 2. credentials Evidence or testimonials concerning one's right to credit, confidence, or authority: 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and business decision makers. LECG provides independent expert testimony Testimony about a scientific, technical, or professional issue given by a person qualified to testify because of familiarity with the subject or special training in the field. , original authoritative studies and strategic advice to its clients. LECG's experts are renowned academics, former senior government officials, experienced industry leaders and seasoned consultants. Statements in this press release concerning the future business, operating and financial condition of the Company 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based upon management's current expectations as of today, February February: see month. 17, 2004. There may be events in the future that the Company is not able to accurately predict or control and they may cause actual results to differ materially from expectations. Information contained in these forward looking statements is inherently uncertain, and actual performance is subject to a number of risks, including but not limited to, among others, dependence on key personnel, acquisitions, risks inherent in international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , management of professional staff, dependence on growth of the Company's service offerings, the ability of the Company to integrate successfully new experts into its practice, intense competition and potential professional liability. 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 cannot guarantee any future results, levels of activity, performance or achievement. 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 INCOME
(dollars in thousands, except per share data)
Quarter ended
March 31,
-----------------------
2004 2003
Revenues $43,110 $38,800
Cost of services:
Compensation and project costs (28,497) (26,212)
Equity-based compensation 171 (61)
----------- -----------
Total cost of services (28,326) (26,273)
----------- -----------
Gross profit 14,784 12,527
Operating expenses:
General and administrative expenses (8,593) (7,710)
Depreciation and amortization (755) (1,231)
----------- -----------
Operating income 5,436 3,586
Interest income 111 15
Interest expense (67) (857)
Other income (expense), net (27) 95
----------- -----------
Income before income tax 5,453 2,839
Provision for income taxes (2,202) -
----------- -----------
Net income 3,251 2,839
Accrued preferred dividends and accretion of
preferred shares - (1,014)
----------- -----------
Net income attributable to common shares $3,251 $1,825
=========== ===========
Net income per share:
Basic $0.15 $0.15
Diluted $0.14 $0.12
Weighted average share amounts:
Basic 21,406,061 12,466,280
Diluted 23,345,878 14,992,622
LECG Corporation
CONDENSED CONSOLIDATED
BALANCE SHEET
(dollars in thousands)
March 31, December 31,
2004 2003
------------ ------------
Assets
Current assets:
Cash and cash equivalents $36,065 $67,177
Accounts receivable, net of allowance of
$537 and $482 51,773 46,708
Prepaid expenses 2,360 2,708
Deferred taxes 9,802 9,802
Other 7,109 3,868
------------ ------------
Total current assets 107,109 130,263
Property and equipment, net 4,322 4,506
Goodwill 44,132 23,976
Other intangible assets 433 533
Other assets 11,270 3,864
------------ ------------
Total assets $167,266 $163,142
============ ============
Liabilities and shareholders' equity
Liabilities $39,490 $39,155
Shareholders' equity (21,744,232 and
21,693,156 common shares outstanding at
March 31, 2004 and December 31, 2003,
respectively) 127,776 123,987
------------ ------------
Total liabilities and shareholders' equity $167,266 $163,142
============ ============
LECG Corporation
CONDENSED CONSOLIDATED
STATEMENTS OF CASHFLOWS
(dollars in thousands, except per share data)
For the quarter ended
March 31, March 31,
2004 2003
---------- ----------
Cash flows from operating activities
Net income $3,251 $2,839
Adjustments to reconcile net income to net
cash provided by operating activities:
Bad debt expense 55 -
Depreciation and amortization of property and
equipment 577 766
Amortization of deferred lease credits and
other intangibles 178 375
Equity-based compensation (171) 61
Equity investment loss 4 -
Interest rate swap expense (income) - (132)
Amortization of transition adjustment - 23
Changes in assets and liabilities:
Accounts receivable (5,120) (3,149)
Other current assets (2,893) (1,301)
Accounts payable and other accrued
liabilities (1,138) (530)
Accrued compensation 962 (175)
Deferred revenue 28 (81)
Signing bonuses and other assets (7,326) 132
Other liabilities - 24
---------- ----------
Net cash used in operating activities (11,593) (1,148)
---------- ----------
Cash flows from investing activities
Business acquisitions (19,156) -
Purchase of property and equipment (394) (273)
Deposits (85) (64)
---------- ----------
Net cash used in investing activities (19,635) (337)
---------- ----------
Cash flows from financing activities
Borrowings under revolving credit facility - 11,000
Repayments of long term debt - (800)
Repayments under revolving credit facility - (5,000)
Payment of loan fees - (746)
Exercise of options 1 -
Distributions to common shareholders - (1,095)
---------- ----------
Net cash provided by financing activities 1 3,359
---------- ----------
Effect of exchange rates on changes in cash 115 39
---------- ----------
Increase (decrease) in cash and cash
equivalents (31,112) 1,913
Cash and cash equivalents, beginning of period 67,177 2,576
---------- ----------
Cash and cash equivalents, end of period $36,065 $4,489
========== ==========
Supplemental disclosure:
Cash paid for interest $11 $940
Cash paid for income taxes $74 $11
EBITDA (1)
(dollars in thousands)
Quarter ended
March 31,
2004 2003
-------- --------
Net income attributable to common shares $3,251 $1,825
Add back (subtract):
Accrued preferred dividends and accretion of
preferred shares - 1,014
Provision for income taxes 2,202 -
Interest, net (44) 842
Depreciation and amortization 755 1,231
-------- --------
EBITDA $6,164 $4,912
======== ========
(1) EBITDA is a non-GAAP financial measure defined by the Company as
net income attributable to common shareholders before interest,
taxes, depreciation and amortization and accrued preferred
dividends and accretion. The Company believes that EBITDA is a
useful measure of financial performance of the business and
facilitates comparison of financial results for periods before and
after its initial public offering and conversion to a taxable C
corporation. 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.
Pro forma earnings per share(2)
(dollars in thousands, except per share data)
Quarter ended
March 31,
2004 2003
----------- -----------
Actual Pro Forma
Net income attributable to common shares $3,251 $1,825
===========
Accrued dividends and accretion of
preferred stock 1,014
Pro forma provision for income taxes (3) (1,153)
-----------
Pro forma net income $1,686
===========
Net income per share, as reported:
Basic $0.15 $0.15
Diluted $0.14 $0.12
Pro forma net income per share:
Basic $0.14
Diluted $0.11
Shares used in calculating net income per
share, as reported:
Basic 21,406,061 12,466,280
Diluted 23,345,878 14,992,622
Shares used in calculating pro forma net
income per share:
Basic 12,466,280
Diluted 14,992,622
(2) Pro forma adjusted net income and earnings per share are non-GAAP
financial measure defined by the Company as net income
attributable to common shareholders plus accrued preferred
dividends and accretion of preferred units, less an income tax
provision calculated at the estimated 2004 effective tax rate of
40.6%. The Company believes that pro forma adjusted net income and
earnings per share are useful measures of the financial results of
the business and facilitate comparison of periods before and after
its initial public offering and conversion to a taxable C
corporation. The shares used in calculating the pro forma adjusted
earnings per share do not include the issuance of common shares
necessary to redeem the preferred units. 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, net
income, cash flows or other measures of financial performance
prepared in accordance with GAAP.
(3) LECG was a limited liability company ("LLC") in the quarter ending
March 31, 2003. Consequently, the provision for income taxes as
calculated above is pro forma based on an effective tax rate of
40.6%.
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