SOURCE: LECG Corporation

LECG Corporation

February 16, 2010 16:00 ET

LECG Corporation Reports Fourth Quarter 2009 and Year-End Results

EMERYVILLE, CA--(Marketwire - February 16, 2010) - LECG Corporation (NASDAQ: XPRT), a global expert services firm, today reported financial results for the fourth quarter and full year ended December 31, 2009.

"Our fourth quarter performance was highlighted by improved activity across most of LECG's business sectors. However, the uncertainty associated with our industry continues to impact visibility, leaving us cautious in the near-term," said Michael Jeffery, LECG's chief executive officer.

"Longer-term we remain optimistic about LECG's future, including the pending closure of the SMART merger. We expect 2010 to be a year of important integration as we begin to capitalize on the business synergies, cross-selling potential and cost saving opportunities to position the combined company for a return to revenue growth and profitability."

Fourth Quarter 2009 Financial Results

Fourth quarter 2009 revenues increased 5.7 percent to $66.3 million, compared with $62.7 million in the third quarter of 2009, and fell 5.3 percent versus $70.0 million in the fourth quarter 2008.

Net income for the fourth quarter was $0.8 million, or $0.03 per diluted share, which included a $3.0 million tax benefit primarily related to a recent rule change in the federal net operating loss ("NOL") carry-back period. This is compared to a net loss of $64.7 million, or $2.52 per share, in the third quarter of 2009 and a net loss of $95.3 million, or $3.76 per share, in the fourth quarter of 2008. On a non-GAAP basis, the fourth quarter adjusted net loss was $0.3 million, or $0.01 per share, which excludes the tax benefit related to the NOL carry-back and pre-tax charges of $1.2 million related to acquisition and integration costs, $0.5 million of loan fee impairment charges and other net charges of $0.2 million. This is compared to an adjusted net loss of $3.6 million, or $0.14, in the third quarter of 2009 and an adjusted net loss of $6.4 million, or $0.25, in the fourth quarter of 2008.

Adjusted EBITDA for the fourth quarter of 2009 was $1.4 million, compared to a loss of $3.8 million for the third quarter of 2009, and a loss of $6.8 million for the fourth quarter of 2008.

Fourth Quarter 2009 Segment Results

Economics Services

LECG's economics services segment consists of the company's global competition, securities, regulated industries, energy and environment and labor sectors. Net fee-based revenues for this segment were $25.1 million in the quarter, up from $24.8 million in the third quarter of 2009. The improvement was driven by slight increases across most sectors, partially offset by a slight decline in regulated industries. Economics gross profit was $7.6 million, or 41.4 percent of total gross profit in the quarter. Direct profit margin was 30.0 percent, up from 25.0 percent in the third quarter of 2009. Professional staff utilization was 68.4 percent, up from 64.6 percent in the third quarter of 2009.

Finance and Accounting Services (FAS)

LECG's FAS segment consists of the company's forensic accounting, intellectual property, healthcare, higher education, international FAS, financial services and electronic discovery sectors. Net fee-based revenues for the segment were $38.7 million in the quarter, up from $35.4 million in the third quarter of 2009, as strength across sectors offset a slight decline in financial services. FAS gross profit was $10.8 million, or 58.6 percent of total gross profit in the quarter. The direct profit margin was 27.9 percent, up from 25.1 percent in the third quarter of 2009. Professional staff utilization was 71.3 percent, up from 70.1 percent in the third quarter of 2009.

Full-Year 2009 Financial Results

Revenues for the year ended December 31, 2009 decreased 21.6 percent to $263.2 million from $335.7 million for the full year of 2008.

Net loss for the year ended December 31, 2009 was $74.1 million compared to net loss of $86.7 million reported for the same period last year. Net loss per share was $2.90 for 2009 versus net loss of $3.42 per share for the prior year. During 2009, a valuation allowance was recorded against our net deferred taxes of $53.2 million in the third quarter, which drove the majority of the net loss. In 2008, the net loss was largely due to a fourth quarter goodwill impairment charge of $118.8 million. Adjusted net loss per share was $0.43 for 2009 compared with adjusted net income per diluted share of $0.10 for 2008.

Adjusted EBITDA for the year ended December 31, 2009 was a loss of $8.9 million compared to income of $12.8 million for 2008.

Conference Call Webcast Information

LECG Corporation will host a conference call and live webcast to discuss these results at 5:00 p.m. Eastern time today. Domestic callers may access this conference call by dialing 888-213-3920. International callers may access the call by dialing 913-312-0969. For a replay of the teleconference, please call 888-203-1112 or 719-457-0820, and enter the pass code 6068074. The replay will be available through February 22, 2010. The webcast will be accessible through the investor relations section of the company's website, www.lecg.com.

About LECG

LECG, a global expert services and consulting firm, with approximately 700 experts and professionals in 32 offices around the world, provides independent expert testimony, financial advisory services, original authoritative studies, and strategic advisory services to clients including Fortune Global 500 corporations, major law firms, and local, state, and federal governments and agencies worldwide. LECG's highly credentialed experts and professional staff conduct economic and financial analyses to provide objective opinions and advice regarding complex disputes and inform legislative, judicial, regulatory, and business decision makers. LECG's experts are renowned academics, former senior government officials, experienced industry leaders, and seasoned consultants.

Forward-Looking Statements

Statements concerning future business, operating and financial condition of the company and the pending SMART merger and related equity financing transactions, including expectations regarding the timing or completion of the transactions, and statements using the terms "believes," "expects," "will," "could," "plans," "anticipates," "estimates," "predicts," "intends," "potential," "continue," "should," "may," or the negative of these terms or similar expressions are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expectations. The earnings per share for the fourth quarter and year ended December 31, 2009 are preliminary and subject to adjustment. Risks that may affect actual performance include the ongoing economic downturn and adverse economic conditions, the availability and terms of bank credit facilities, dependence on key personnel, the cost and contribution of acquisitions, risks inherent in international operations, management of professional staff, dependence on growth of the company's service offerings, the company's ability to integrate new experts and practice areas successfully, intense competition, and potential professional liability, the company's ability to integrate the operations of SMART, the failure to achieve the costs savings and other synergies LECG expects to result for the transactions, the outcome of any legal proceedings instituted against the company, SMART and others in connection with the transactions, the failure of the transactions to close for any reason, the amount of the costs, fees, expenses and charges relating to the transactions, business uncertainty and contractual restrictions prior to the closing of the transactions, the effect of war, terrorism or catastrophic events, stock price, foreign currency exchange and interest rate volatility. Various factors could cause the closing of the transaction to be delayed from the company's current expectations, such as difficulties in arranging the necessary bank financing, or conditions in the credit markets. Further information on these and other potential risk factors that could affect the company's financial results is included in the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to update any of its forward-looking statements after the date of this press release.



                  LECG CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except per share data)
                            (unaudited)

                                 Three months ended      Year ended 
                                    December 31,         December 31,
                                --------------------  --------------------  
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  --------- 
Fee-based revenues, net         $  63,798  $  66,963  $ 253,376  $ 322,714
Reimbursable revenues               2,501      3,085      9,820     12,965
                                ---------  ---------  ---------  --------- 
      Revenues                     66,299     70,048    263,196    335,679
Direct costs                       45,475     51,547    188,319    221,476
Reimbursable costs                  2,460      3,270     10,163     13,339
                                ---------  ---------  ---------  --------- 
      Cost of services             47,935     54,817    198,482    234,815
Gross profit                       18,364     15,231     64,714    100,864
Operating expenses:
  General and administrative
   expenses                        18,133     22,224     73,258     88,021
  Depreciation and amortization     1,148      1,480      4,997      5,939
  Goodwill impairment                   -    118,800          -    118,800
  Other impairments                   132      5,358     10,071      5,358
  Restructuring charges               180      6,437      5,659      5,937
  Divestiture (income) charges        (63)     3,136      1,800      3,136
                                ---------  ---------  ---------  --------- 
Operating loss                     (1,166)  (142,204)   (31,071)  (126,327)
Interest income                        38         95        160        445
Interest expense                   (1,063)      (103)    (2,680)      (636)
Other income (expense), net            10       (616)      (571)    (1,849)
                                ---------  ---------  ---------  --------- 
Loss before income taxes           (2,181)  (142,828)   (34,162)  (128,367)
Income tax (benefit) expense       (2,991)   (47,550)    39,957    (41,680)
                                ---------  ---------  ---------  --------- 
Net income (loss)               $     810  $ (95,278) $ (74,119) $ (86,687)
                                =========  =========  =========  ========= 

Earnings per share:
     Basic                      $    0.03  $   (3.76) $   (2.90) $   (3.42)
     Diluted                    $    0.03  $   (3.76) $   (2.90) $   (3.42)

Shares used in calculating
 earnings per share
     Basic                         25,745     25,373     25,583     25,330
     Diluted                       25,782     25,373     25,583     25,330




              LECG CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED BALANCE SHEETS
              (in thousands, except share data)
                          (unaudited)

                                                          December 31,
                                                      --------------------  
 Assets                                                 2009       2008
                                                      ---------  --------- 
 Current assets:
  Cash and cash equivalents                           $  13,044  $  19,510
  Accounts receivable, net                               85,451     87,122
  Prepaid expenses                                        4,981      5,996
  Deferred tax assets, net - current portion                  -     14,123
  Signing, retention and performance bonuses -
   current portion                                       14,046     15,282
  Income taxes receivable                                13,498      7,662
  Other current assets                                    1,660      2,447
  Note receivable - current portion                         547        518
                                                      ---------  --------- 
   Total current assets                                 133,227    152,660
 Property and equipment, net                              7,814     11,011
 Goodwill                                                 1,800          -
 Other intangible assets, net                             3,078      3,790
 Signing, retention and performance bonuses              20,293     34,976
 Deferred compensation plan assets                       10,017      9,684
 Note receivable                                          1,351      1,946
 Deferred tax assets, net                                 5,500     36,952
 Other long-term assets                                   7,500      5,188
                                                      ---------  --------- 
 Total assets                                         $ 190,580  $ 256,207
                                                      =========  ========= 

 Liabilities and stockholders' equity
 Current liabilities:
  Accrued compensation                                $  45,363  $  49,313
  Accounts payable and other accrued liabilities          8,823     11,493
  Payable for business acquisitions - current portion     1,055      3,846
  Borrowings under line of credit                        12,000          -
  Deferred revenue                                        3,052      2,450
  Deferred tax liabilities, net - current portion         5,500          -
  Liability associated with divestiture                       -      2,642
                                                      ---------  --------- 
   Total current liabilities                             75,793     69,744
 Payable for business acquisitions                          100      1,055
 Deferred compensation plan obligations                  10,163      9,632
 Deferred rent                                            6,156      6,601
 Other long-term liabilities                                252        569
                                                      ---------  --------- 
   Total liabilities                                     92,464     87,601
                                                      ---------  --------- 

 Commitments and contingencies                                -          -

 Stockholders' equity
 Common stock, $.001 par value, 200,000,000 shares
  authorized, 25,895,679 and 25,559,253 shares
  outstanding at December 31, 2009 and 2008,
  respectively                                               26         26
 Additional paid-in capital                             174,917    172,005
 Accumulated other comprehensive loss                      (690)    (1,407)
 Accumulated deficit                                    (76,137)    (2,018)
                                                      ---------  --------- 
   Total stockholders' equity                            98,116    168,606
                                                      ---------  --------- 
Total liabilities and stockholders' equity            $ 190,580  $ 256,207
                                                      =========  ========= 

  

                 LECG CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (in thousands)
                          (unaudited)

                                                          Year ended
                                                          December 31,
                                                      --------------------  
                                                        2009       2008
                                                      ---------  --------- 
Cash flows from operating activities
Net loss                                              $ (74,119) $ (86,687)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
 Bad debt expense                                         1,032        132
 Depreciation and amortization of property and
  equipment                                               4,285      4,489
 Amortization of intangible assets                          712      1,450
 Goodwill impairment                                          -    118,800
 Other impairments                                       10,071      5,358
 Amortization of signing, retention and performance
  bonuses                                                17,767     16,522
 Deferred taxes                                          49,707    (44,708)
 Equity-based compensation                                3,967      6,778
 Excess tax benefits from equity-based compensation           -        (41)
 Non cash restructuring charges                           1,150      2,441
 Divestiture charges                                      1,739      3,136
 Other                                                        -         71
Changes in assets and liabilities:
 Accounts receivable                                     (1,267)     9,258
 Signing, retention and performance bonuses paid        (10,552)   (17,397)
 Prepaid and other current assets                         5,007        (57)
 Accounts payable and other accrued liabilities          (3,736)     4,969
 Income taxes                                            (5,485)    (4,485)
 Accrued compensation                                    (5,155)    (4,260)
 Deferred revenue                                           671       (348)
 Deferred compensation plan assets, net of
  liabilities                                               197        415
 Deferred rent                                           (1,154)      (947)
 Other assets                                            (1,438)    (3,646)
 Other liabilities                                         (337)       870
                                                      ---------  --------- 
  Net cash (used in) provided by operating activities    (6,938)    12,113
                                                      ---------  --------- 
Cash flows from investing activities
 Business acquisitions earn out payments                 (5,585)    (9,736)
 Divestiture payments                                    (3,210)         -
 Purchase of property and equipment                      (1,381)    (3,217)
 Proceeds from note receivable                              566        536
 Proceeds from divestiture                                  619          -
 Other                                                        -       (177)
                                                      ---------  --------- 
  Net cash used in investing activities                  (8,991)   (12,594)
                                                      ---------  --------- 
Cash flows from financing activities
 Borrowings under revolving credit facility              45,000     61,000
 Repayments under revolving credit facility             (33,000)   (61,000)
 Proceeds from exercise or issuance of stock to
  employee and other                                          -         46
 Excess tax benefits from equity-based compensation           -         41
 Proceeds from issuance of stock -  employee stock
  purchase plan                                              40         85
 Payment of loan fees                                    (2,692)         -
 Other                                                        -          1
                                                      ---------  --------- 
  Net cash provided by financing activities               9,348        173
                                                      ---------  --------- 
Effect of exchange rates on changes in cash                 115     (1,784)
                                                      ---------  --------- 
Decrease in cash and cash equivalents                    (6,466)    (2,092)
Cash and cash equivalents, beginning of year             19,510     21,602
                                                      ---------  --------- 
Cash and cash equivalents, end of year                $  13,044  $  19,510
                                                      =========  ========= 




                          LECG CORPORATION AND SUBSIDIARIES
                             SEGMENT OPERATING RESULTS
                         ($ in thousands, except rate amounts)
                                      (unaudited)

                              Three months ended December 31,
                ----------------------------------------------------------  
                             2009                        2008
                ----------------------------  ---------------------------- 
                          Finance                       Finance
                            and                           and
               Economics Accounting   Total  Economics Accounting   Total
                --------  --------  --------  --------  --------  -------- 
  Fee-based
  revenues,
   net          $ 25,086  $ 38,712  $ 63,798  $ 28,015  $ 38,948  $ 66,963
  Reimbursable
   revenues          844     1,657     2,501       932     2,153     3,085
                --------  --------  --------  --------  --------  -------- 
    Revenues    $ 25,930  $ 40,369  $ 66,299  $ 28,947  $ 41,101  $ 70,048

  Direct costs  $ 17,552  $ 27,923  $ 45,475  $ 20,989  $ 30,558  $ 51,547
  Reimbursable
   costs             783     1,677     2,460     1,152     2,118     3,270
                --------  --------  --------  --------  --------  -------- 
    Gross
     profit     $  7,595  $ 10,769  $ 18,364  $  6,806  $  8,425  $ 15,231

Direct profit
 margin (1)         30.0%     27.9%     28.7%     25.1%     21.5%     23.0%
Gross margin        29.3%     26.7%     27.7%     23.5%     20.5%     21.7%

Operating statistics
Paid days             66        66        66        65        65        65
Billable headcount,
 period end          227       415       642       287       496       783
Billable headcount,
 period average      228       420       648       295       502       797
Billable FTEs,
 period average (2)  184       349       533       234       398       633
Average
 billable rate  $    360  $    304  $    323  $    361  $    300  $    323
Paid utilization
 rate of billable
 FTEs(3)            71.6%     69.3%     70.1%     63.7%     62.6%     63.0%

Expert headcount,
 period end           98       192       290       122       221       343
Expert FTEs,
 period average (2)   56       127       183        62       130       192
Jr/Sr staff
 paid utilization
 rate (3)           68.4%     71.3%     70.3%     60.7%     63.5%     62.4%




                            LECG CORPORATION AND SUBSIDIARIES
                            SEGMENT OPERATING RESULTS (CONTINUED)
                           ($ in thousands, except rate amounts)
                                         (unaudited)


                                 Year ended December 31,
                 ----------------------------------------------------------  
                             2009                          2008
                ----------------------------  ---------------------------- 
                          Finance                       Finance
                            and                           and
               Economics Accounting   Total  Economics Accounting   Total
                --------  --------  --------  --------  --------  -------- 
Fee-based
 revenues, net  $106,186  $147,190  $253,376  $142,295  $180,419  $322,714
Reimbursable
 revenues          3,223     6,597     9,820     4,490     8,475    12,965
                --------  --------  --------  --------  --------  -------- 
  Revenues      $109,409  $153,787  $263,196  $146,785  $188,894  $335,679

Direct costs    $ 75,945  $112,374  $188,319  $ 95,546  $125,930  $221,476
Reimbursable
 costs             3,390     6,773    10,163     4,970     8,369    13,339
                --------  --------  --------  --------  --------  -------- 
  Gross profit  $ 30,074  $ 34,640  $ 64,714  $ 46,269  $ 54,595  $100,864

Direct profit
 margin (1)         28.5%     23.7%     25.7%     32.9%     30.2%     31.4%
Gross margin        27.5%     22.5%     24.6%     31.5%     28.9%     30.0%

Operating statistics
Paid days            261       261       261       260       260       260
Billable headcount,
 period end          227       415       642       287       496       783
Billable
 headcount,
 period average      253       458       711       299       490       789
Billable FTEs,
 period average (2)  205       372       577       246       390       636
Average
 billable rate  $    355  $    288  $    313  $    364  $    315  $    335
Paid utilization
 rate of
 billable FTEs (3)  69.9%     65.7%     67.2%     76.5%     70.5%     72.8%

Expert headcount,
 period end           98       192       290       122       221       343
Expert FTEs,
 period average (2)   61       132       193        66       116       183
Jr/Sr staff
 paid utilization
 rate (3)           67.1%     69.2%     68.4%     73.6%     70.0%     71.4%



                    LECG CORPORATION AND SUBSIDIARIES
                  RECONCILIATION OF NON-GAAP MEASURES 
                  (in thousands, except per share data)


                                 Three months ended      Year ended 
                                    December 31,         December 31,
                                --------------------  --------------------  
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  --------- 
Fee-based revenues, net         $  63,798  $  66,963  $ 253,376  $ 322,714

 Direct costs                      45,475     51,547    188,319    221,476
                                ---------  ---------  ---------  --------- 

Direct profit                   $  18,323  $  15,416  $  65,057  $ 101,238
                                =========  =========  =========  ========= 
Direct profit margin (1)             28.7%      23.0%      25.7%      31.4%


                                  Three months ended      Year ended
                                      December 31,        December 31,
                                --------------------  -------------------- 
                                   2009       2008      2009       2008
                                ---------  ---------  ---------  --------- 
Net income (loss)               $     810  $ (95,278) $ (74,119) $ (86,687)

Adjustments to net income
 (loss)
  Goodwill impairment                   -    118,800          -    118,800
  Other impairments                   132      5,358     10,071      5,358
  Restructuring charges               180      6,437      5,659      5,937
  Divestiture (income) charges        (63)     3,136      1,800      3,136
  Acquisition costs                 1,152          -      2,094          -
  Integration costs                    75          -         75          -
  Loan fees impairment                484          -        484          -
  Deferred compensation plan          (22)       765        297      1,763
  Equity-based compensation
   benefit (8)                          -          -     (2,210)         -
  Deferred tax valuation
   allowance                       (2,682)     3,500     50,511      3,500
  Income tax provision (4)           (374)   (49,160)    (5,703)   (49,358)
                                ---------  ---------  ---------  --------- 

Adjusted income (loss) (5)      $    (308) $  (6,442) $ (11,041) $   2,449
                                =========  =========  =========  ========= 

 Adjusted income (loss) per
  diluted share (5)(7)          $   (0.01) $   (0.25) $   (0.43) $    0.10

Shares used in calculating
 earnings per share
  Diluted                          25,745     25,373     25,583     25,513

                        LECG CORPORATION AND SUBSIDIARIES
                   RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)
                                ($ in thousands)

                                    Three months ended      Year ended
                                       December 31,        December 31,
                                    ------------------  ------------------  
                                      2009      2008      2009      2008
                                    --------  --------  --------  -------- 
Net income (loss)                   $    810  $(95,278) $(74,119) $(86,687)
Income tax (benefit) expense          (2,991)  (47,550)   39,957   (41,680)
Interest expense, net                  1,025         7     2,520       191
Depreciation and amortization          1,148     1,480     4,997     5,939
                                    --------  --------  --------  -------- 
EBITDA (6)                                (8) (141,341)  (26,645) (122,237)

Adjustments to EBITDA
 Goodwill impairment                       -   118,800         -   118,800
 Other impairments                       132     5,358    10,071     5,358
 Restructuring charges                   180     6,437     5,659     5,937
 Divestiture charges                     (63)    3,136     1,800     3,136
 Acquisition costs                     1,152         -     2,094         -
 Integration costs                        75         -        75         -
 Deferred compensation plan              (22)      765       297     1,763
 Equity-based compensation
  benefit(8)                               -         -    (2,210)        -
                                    --------  --------  --------  -------- 

Adjusted EBITDA (6)                 $  1,446  $ (6,845) $ (8,859) $ 12,757
                                    ========  ========  ========  ======== 



(1) Fee-based revenues, net less direct costs as a percentage of fee-based 
    revenues, net.
(2) Full Time Equivalents (FTEs) are calculated by dividing actual total 
    paid hours in the period by the number of paid days in the period times
    eight hours per day, assuming a forty-hour work week or 2,080 paid 
    hours per year.
(3) Paid utilization rate is calculated by dividing the actual number of 
    billed hours in the period by the actual number of paid hours in the
    period, assuming a forty-hour work week or 2,080 paid hours per year.
(4) Assumes a marginal tax rate of 39.4% and 39.9% in the quarter and year
    ended December 31, 2009 and 2008, respectively. The tax benefit for
    2009 excludes non-deductible divestiture and merger-related charges.
    The tax benefit for 2008 excludes non-deductible goodwill impairment
    of approximately $12 million.
(5) Adjusted income (loss) and adjusted income (loss) per diluted share are
    non-GAAP financial measures. Adjusted income (loss) excludes goodwill
    impairment, other impairments, restructuring charges, divestiture
    charges, acquisition costs, integration costs, loan fees impairment,
    charges related to market fluctuations in the value of deferred
    compensation plan investments, equity-based compensation benefit and
    deferred tax valuation allowance. Adjusted income (loss) per diluted
    share is calculated using adjusted income (loss) divided by diluted
    shares. The Company regards adjusted income (loss) and adjusted income
    (loss) per diluted share as useful measures of financial performance of
    the business. Generally, a non-GAAP financial measure is a numerical 
    measure of a company's performance, financial position or cash flow 
    that either excludes or includes amounts that are not normally excluded
    or included in the most directly comparable measure calculated and
    presented in accordance with GAAP. This measure, however, should be
    considered in addition to, and not as a substitute or superior to,
    operating loss, cash flows, or other measures of financial performance
    prepared in accordance with GAAP.
(6) EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA is
    defined as earnings before provision for income tax, interest, and 
    depreciation and amortization. Adjusted EBITDA excludes goodwill
    impairment, other impairments, restructuring charges, divestiture
    charges, acquisition costs, integration costs, charges related to 
    market fluctuations in the value of deferred compensation plan
    investments and equity-based compensation benefit. The Company regards
    EBITDA and Adjusted EBITDA as useful measures of financial performance
    of the business. Generally, a non-GAAP financial measure is a numerical
    measure of a company's performance, financial position or cash flow
    that either excludes or includes amounts that are not normally excluded
    or included in the most directly comparable measure calculated and 
    presented in accordance with GAAP. This measure, however, should be 
    considered in addition to, and not as a substitute or superior to, 
    operating loss, cash flows, or other measures of financial performance
    prepared in accordance with GAAP.
(7) Diluted earnings per share and diluted shares are equal to basic
    earnings per share and basic shares, respectively, for all periods 
    presented except the year ended December 31, 2008, as the effect on net
    loss would be anti-dilutive if common stock equivalent shares were 
    included in the weighted average number of common shares outstanding
    during the period.
(8) Equity-based compensation benefit consists of approximately $2.8 
    million of stock-based compensation expense recovery related to 
    previously recognized expense on the unvested portion of 7-year
    cliff-vesting options of a terminated employee, offset by approximately
    $0.6 million of accelerated expense related to the voluntary surrender 
    of approximately 192,000 shares of stock options previously granted.

Contact Information

  • Investor Contacts
    Steven R. Fife
    Chief Financial Officer
    510-985-6700

    Annie Leschin
    Investor Relations
    415-775-1788
    investor@lecg.com