FTI CONSULTING, INC.
POLICY ON DISCLOSURE CONTROLS
Statement of Policy
FTI Consulting, Inc., ("FTI" or "Company") is committed to providing
consistent, full and fair public disclosure of material information pertaining
to its business, in accordance with the requirements of the Securities and
Exchange Commission (the "SEC"), the New York Stock Exchange ("NYSE") and
applicable law. It is FTI's policy that all disclosures made by FTI to its
security holders, the investment community or the press should be accurate and
complete and fairly present FTI's financial condition, results of operations and
business in all material respects, and should be made on a timely basis as
required by the SEC, the NYSE and applicable law.
FTI has adopted this disclosure policy ("Policy") to ensure that
information required to be disclosed by FTI in the reports that it files with
the SEC under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified by the SEC. In
addition, FTI has adopted this Policy in an effort to minimize the potential for
the selective disclosure of material nonpublic information and to comply with
the SEC's Regulation FD.
All employees are expected to comply with this Policy, and failure to
do so subjects an employee to disciplinary action and may be grounds for
termination.
Background
SEC Rules 13a-15 and 15d-15 require that issuers maintain disclosure
controls and procedures. The SEC defines the term, "disclosure controls" as
controls and other procedures designed to ensure that information required to be
disclosed by the issuer in all the reports that it files under the Securities
Exchange Act of 1934 is: (a) recorded, processed, summarized and reported,
within the time periods specified in the Commissions rules and forms, and (b)
accumulated and communicated to the issuer's management, as appropriate to allow
timely decisions regarding required disclosures.
Disclosure controls and procedures are designed to collect any material
information (financial or non-financial) for inclusion in Forms 10K, 10Q, 8K,
and 6K reports. Internal controls over financial reporting are part of
disclosure controls as long as the controls are relevant to the production of
financial statements.
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The SEC defines financial disclosures to encompass financial
statements, footnotes, management discussion and analysis of financial condition
and results of operations, financial reporting internal controls and any other
financial information included in the report. Non-financial disclosures include
any material information included in annual, quarterly, current reports, proxy
materials, information in registration statements, press releases, earnings
guidance, presentations to the investment community and informational statements
(e.g. material acquisitions or dispositions, changes in lines of business,
geographic expansion and changes in personnel involved with disclosure controls
and procedures). Non-financial disclosure controls and procedures must capture
information relevant to disclose new developments and risks that pertain to the
issuer's business and should ensure an issuer's systems are capable of producing
reports that are timely, accurate and reliable.
A material weakness in disclosure and internal controls is a
significant deficiency that could have a material effect on the financial
statements. Management should consult with its external auditors to determine if
a weakness is material. Management includes the Company's principal executive
officer or officers and principal financial officer or officers. A significant
deficiency occurs when the design or operations of disclosure and internal
controls adversely affects the Company's ability to record, process, summarize,
and report financial data.
Principles
FTI believes that proper disclosure controls and procedures involve the
following key components:
A. Environment. The establishment of a proper corporate environment is
essential. Proper disclosure depends on: (1) the integrity, ethical
values and competence of FTI's employees, (2) management's
philosophy and operating style, (3) the way management assigns
authority and responsibility and organizes and develops its
employees, and (4) the attention and direction provided by the
Board of Directors.
B. Risk Management. The identification, analysis and control of risks
relevant to accurate and timely disclosure.
C. Information and Communication. Timely transmission of information
and communications within the organization.
D. Monitoring. The assessment of the quality of FTI's disclosure
system over time through periodic monitoring and separate
evaluations, including regular management supervision, with reports
of deficiencies up and down through the organization.
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Scope
This Policy applies to all employees of the Company. This Policy covers
the Company's (1) Annual Report on Form 10-K and each Quarterly Report on Form
10-Q filed with the SEC (collectively, the "Periodic Reports"), (2) current
reports, proxy statements, information statements, registration statements and
any other information filed with the SEC, (3) press releases containing
financial information, earnings guidance, information about material
acquisitions or dispositions or other information material to the Company's
security holders, and (4) correspondence broadly disseminated to shareholders,
presentations to securities analysts and the investment community and any other
disclosures to third parties. The documents referred to in items (1), (2), (3)
and (4) are collectively referred to as the "Disclosure Statements."
Required Certifications
The Company's CEO and CFO are required to certify (the
"Certifications") in each Form 10-K and Form 10-Q that they (1) are responsible
for establishing and maintaining the Company's disclosure controls and
procedures, (2) have designed the disclosure controls and procedures to ensure
that material information relating to the Company is made known to them by
others within the Company, (3) have evaluated the effectiveness of the Company's
disclosure controls and procedures as of a date within 90 days before the date
of the Certification and (4) have presented their conclusions in the report.
The Sarbanes Oxley Act does not provide any specific procedures, but
rather states that a Company must maintain adequate procedures that are
periodically reviewed. The procedures should address whether existing controls
and procedures provide reasonable assurance that disclosure objectives can be
met and that Company information is documented, summarized and communicated to
certifying officers in a timely manner, reviewed by the CEO and CFO before
periodic reports are filed, and that: (i) Transactions are executed in
accordance with management's authorization, (ii) Transactions are recorded as
necessary to permit preparation of the financial statements in accordance with
GAAP, (iii) Access to assets is permitted only in accordance with management's
authorization.
Disclosure Committee
In order to enable the Company's CEO and CFO to make the
Certifications, they shall appoint a Disclosure Committee ("Committee"). The
Committee will review and reassess this Policy quarterly and recommend any
proposed changes to the CEO, the CFO and the Company's Audit Committee for
approval.
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Subject to the supervision and oversight of the CEO and the CFO, the
Committee shall:
A. Recommend controls and other procedures (which may include
procedures currently used by the Company) that are designed to
ensure that (1) information required by the Company to be disclosed
to the SEC and other information that the Company will disclose to
the investment community is recorded, processed, summarized and
reported accurately and on a timely basis and (2) information is
accumulated and communicated to management, including the CEO and
the CFO, as appropriate, to allow timely decisions regarding the
required disclosure (the "Disclosure Controls").
B. Monitor the integrity and effectiveness of the Company's Disclosure
Controls.
C. Review the Company's Disclosure Statements and review disclosure
policies for the Company's website.
D. Evaluate the effectiveness of the Disclosure Controls within 90
days prior to the filing of the Company's Periodic Reports, in
accordance with the procedures suggested by this Policy. A
"Disclosure Checklist" has been prepared by the Company to assist
in this process.
E. Discuss with the CEO and the CFO all relevant information with
respect to the Committee's evaluation of the effectiveness of the
Disclosure Controls.
F. Each member of the Committee will provide a certification to the
CEO and the CFO prior to the filing of each Periodic Report with
the SEC of the Committee's conclusions resulting from its
evaluation of the effectiveness of the Disclosure Controls.
G. Perform other duties as the CEO and the CFO may assign to it from
time to time.
The CEO and the CFO, at their option, may at any time assume any or all of
the responsibilities of the Committee identified in this Policy.
The Committee shall meet as frequently as circumstances dictate, but at
least once per quarter, to (1) evaluate the accuracy and completeness of the
Disclosure Statements, and (2) evaluate the Disclosure Controls and determine
whether any changes to the Disclosure Controls are necessary or advisable in
connection with the preparation of the Company's upcoming Periodic Reports or
other Disclosure Statements, taking into account developments since the most
recent meeting, including changes in the Company's organization and business
lines and any change in economic or industry conditions.
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Designated Officers
The Committee shall designate one officer (the "Disclosure Officer")
knowledgeable about SEC rules and regulations with respect to disclosure and
financial reporting. The initial Disclosure Officer shall be the Company's Chief
Financial Officer. The Disclosure Officer shall be responsible for managing the
preparation of the Disclosure Statements.
Internal Reporting
The success of this Policy and the Company's disclosure depends on the
communication of information within the Company. This involves communication,
through appropriate reporting channels, from the bottom of to the top of the
organization, as well as communication among and within practice areas. The
practice area heads shall (1) establish reporting channels and procedures within
their practice area that ensure that material information involving their
practice area is reported to them, (2) ensure that their employees understand
this Policy and the importance of full and accurate disclosure of material
information, and (3) report any material information they receive.
Preparation of Periodic Reports
At the beginning of each fiscal year, the CFO and Controller shall prepare
a timeline for the preparation of the Company's Periodic Reports for the
upcoming year. The timeline shall provide sufficient time for proper preparation
and review of the Periodic Reports. This timeline will be provided to each
employee involved in a substantial part of preparation or review of the Periodic
Reports. Before beginning preparation of each Periodic Report, the Disclosure
Officer shall identify any areas of particular risk or sensitivity that require
special attention or additional time.
The CFO and Controller shall assign drafting responsibilities for each
Periodic Report prior to the start of the year. Employees with drafting
responsibilities shall be (1) made aware of their role in the process, (2)
familiar with SEC reporting requirements in their area of responsibility, and
(3) provided with copies of the relevant sections of the SEC's disclosure rules.
In addition, employees drafting Periodic Report should:
A. provide back-up for any information they include in the Periodic
Report.
B. report information that is material to their area or department, or
to the Company taken as a whole.
C. review disclosures by peer companies.
D. consider economic and industry trends and other factors that have
affected or may affect the Company's business.
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Internal Review of Periodic Reports
After the various sections of a Periodic Report have been combined into
a single document and have been subject to initial review, the draft of the
report should be distributed to members of the Dislcosure Committee for its
review.
External Review of Periodic Reports
After review by the Committee, the Periodic Report will be distributed
to the Company's outside auditors and legal counsel. The Company's outside
auditors shall review the Management's Discussion and Analysis section and all
other financial sections of the Periodic Report. The Company's outside legal
counsel shall review the Periodic Report with particular reference to compliance
with SEC requirements, as well as any legal or regulatory matters on which such
counsel has been retained. The Disclosure Officer shall coordinate the responses
of the outside auditors and legal counsel. In addition, the Company's outside
auditors and legal counsel should be consulted in advance where the Dislcosure
Officer has identified any difficult disclosure or other issues.
Coordination with Audit Committee and Board of Directors
After the internal and external reviews described above, the Periodic
Report will be given to the Company's Audit Committee, along with an oral report
highlighting any particular issues. In connection with this presentation, the
CEO and CFO shall disclose to the Company's Audit Committee any significant
deficiencies in the design or operation of the Company's internal controls, as
well as any fraud that involves management or other employees with a significant
role in the Company's internal controls. The CEO and CFO must certify that they
have made this disclosure to the Audit Committee and outside auditors. The Audit
Committee shall review the Periodic Report and discuss any comments or issues
with the Disclosure Officer and, if they deem it necessary, the CEO, CFO or any
other employee. A Report that involves particularly difficult disclosure issues
shall also be presented to the entire Board of Directors for review and
discussion.
Certifications
After the Periodic Report has been approved by members of the Audit
Committee and the entire Board of Directors (in the case of the annual report),
members of the Committee shall certify to the CEO and the CFO that it has
complied with this Policy. Other individuals resonsible for material aspects of
the disclosure process shall also certify their compliance with this Policy and
that they have provided all information believed to be responsive. The CEO and
the CFO will rely on these certifications in making their Certifications.
Financial Internal Controls
The procedures and controls described in this Policy are in addition to
the Company's system of internal controls for financial reporting purposes. This
Policy is meant to supplement, and not replace, the Company's system of
financial controls.
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Testing and Evaluation
The CEO and CFO shall test and evaluate the effectiveness of this
Policy at such times as appropriate, but at least on a quarterly basis. They
shall:
A. Plan the evaluation, taking into account those areas that are
most sensitive or risky and merit particular attention.
B. Ensure that the members of the Committee understand the
Disclosure Controls being used.
C. Evaluate whether the design of the Disclosure Controls is
appropriate, taking into account any changes in the Company's
organization or business, such as new personnel or significant
acquisitions or dispositions, as well as evolving regulatory
developments and changing industry practices.
D. Consider (1) whether additional participants should be
included in the disclosure process, (2) whether adequate
staffing is being provided, (3) whether sufficient time is
being allotted to discuss and resolve any disclosure issues
and to review Periodic Reports and (4) whether participants
should receive any additional training.
E. Meet with internal and outside auditors and outside counsel to
discuss their conclusions and concerns about the Disclosure
Controls, internal controls and general corporate compliance
with applicable legal requirements.
Continuous Reporting
The preparation of Periodic Reports is only one aspect of the Company's
disclosure obligation. In addition to the regular gathering of information for
Periodic Reports, participants in the drafting process and other appropriate
Company employees shall notify the Dislcosure Officer as soon as material
developments occur to ensure that other Disclosure Statements, including
earnings releases and guidance, reflect the Company's current situation. For
Current Reports on Form 8-K and press releases, the Dislcosure Officer may use a
modified process that reflects the shorter time period for preparation and
review prior to public dissemination. In connection with the preparation of each
Periodic Report, drafters and reviewers of the Periodic Reports will be required
to certify that they have properly and timely reported all material information
since the date of the preceding Periodic Report as to which they have provided a
certification.
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Spokespersons
It is the Company's intent to limit the number of Spokespersons
authorized to speak on the Company's behalf. Accordingly, the Company has
authorized the following representatives to act as Spokespersons in discussing
the Company's financial performance or corporate activities:
. CEO
. President
. CFO
Additional representatives may be authorized by the Spokespersons to
act as Company Spokespersons to make presentations at industry or investor
conferences or to respond to specific inquiries as appropriate.
The CEO and CFO shall be integrally involved in scheduling and
developing presentations for all meetings and other communications with
financial analysts, institutional investors and shareholders. They shall also be
involved in arranging appropriate meetings or interviews with the Company's
management and responding to all inquiries from the public or the media for
additional information. After public dissemination of news, all coverage of the
Company's disclosure shall be monitored by the Company Spokespersons to ensure
accurate reporting and to take corrective measures if and when necessary.
Employees who are not authorized Spokespersons shall refer all calls
and e-mail messages from outside parties, such as the financial community,
shareholders and business and industry media, to the Company's authorized
Spokespersons.
News Releases
The Company will issue quarterly financial news releases, as well as
other news releases pertaining to the full and fair disclosure of material
information. Material news releases should be prepared for distribution as soon
as it has been determined that a public disclosure of that information is
reqruired or appropriate, given the circumstances.
All corporate news releases must be reviewed and approved by at least
two of the Company's CEO, President, CFO or the Disclosure Officer. Upon
approval, the Company will notify the NYSE of its intention to distribute the
news release. The news release will be distributed to a news wire service, which
will then make it available to the general public. Promptly after a material
news release has been made available to the general public, it will be posted on
the Company's website.
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Responding to Market Rumors
As long as representatives of the Company are not the source of market
rumors, the Company's policy is to respond consistently to questions about
rumors in the following manner: "It is our policy not to comment about market
rumors or speculation." In addition, it is the Company's policy not to issue
news releases, without the approval of the Independent Directors, that deny or
confirm a market rumor unless it has been determined that the Company is the
source of the rumor.
Forward-looking Information
The Company may make forward-looking statements in relation to its
earnings, business and performance outlook and its policy is to provide
investors with forward-looking information and guidance in conformity with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995.
All public disclosures by the Company in the form of news releases,
conference calls and investor presentations containing financial information
shall be accompanied by a "safe harbor" discussion that reviews or refers to
specific risk factors that could cause actual results to differ materially from
those projected in the statement.
Conference Calls, Analyst Meetings and Media Interviews
If management determines that it will conduct a conference call to
discuss its earnings, the conference call shall be simultaneously Webcast after
advance public notice. Earnings calls shall be made available for replay on the
Company's website for an appropriate period after the call.
When practical, the Company should encourage investor and analyst
conferences to be open to the public. The planned portion of any conference
presentation should be reviewed in advance by the Company's CEO, CFO and the
Disclosure Officer. If the conference is not open to the public, consideration
should be given to both publishing the planned presentation on the Company's
website simultaneously with the conference and making other appropriate public
disclosure. Special care should be given to statements made during informal or
one-on-one meetings with analysts or institutional investors in order to avoid
the inadvertent disclosure of material nonpublic information and to comply with
SEC Regulation FD.
Forecasts of the Company's financial performance should be disclosed,
if at all, by press release during earnings calls or, where appropriate, other
recognized methods of public dissemination, and, thereafter, the need to update
this information should be regularly considered. Selective disclosure rules
place a "high degree of risk" on private discussions with analysts or others
about whether "the Company's anticipated earnings will be higher than, lower
than, or even the same as what analysts have been forecasting. Depending on the
circumstances, Company Spokespersons should decline to comment.
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The Company should anticipate and provide during earnings calls or
other public disclosures the information that analysts need to build their
financial models. The Company should not comment privately on analyst reports or
financial models other than to provide non-material factual information or to
point out inaccuracies relating to historical information or omissions of
publicly disclosed information.
In all venues not open to the public, Company Spokespersons should
avoid disclosing material, non-public information. However, should material,
non-public information be disclosed inadvertently, the Company shall either
receive assurances that the recipient will refrain from repeating the
information and trading in the Company's securities or issue publicly a news
release detailing and clarifying such information in accordance with the
requirements of SEC Regulation FD.
The "Quiet Period"
To facilitate compliance with the Federal securities laws, the Company
has adopted a quiet period applicable to all external comunications regarding
quarterly results, which begins after the 15/th/ day of the last month of each
fiscal quarter and extends until the third day after the public release of
earnings for that quarter.
. Communications: During the quiet period, the Company should not
comment on quarterly results or otherwise discuss material nonpublic
information.
. Reviewing Analyst's Reports: The Company should not review or
otherwise comment upon analyst's reports or financial models during
the quiet period.
Communication List
The Company will maintain a list of investors, analysts and members of
the media for dissemination of pubicly-released information by e-mail or fax.
Notice of this list may be posted on the Company's website and investors given
the opportunity to subscribe.
Website Policy
The Company maintains its own corporate website, on which it offers
updated, timely information such as news releases, SEC filings and shareholder
reports. Information intended for inclusion in the Company's website must be
reviewed and approved by the CEO, the CFO or the Disclosure Officer prior to
posting.
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Internet Chat Rooms and Bulletin Boards
Company employees are prohibited from posting any information about the
Company, its business or future performance on the Internet, including posting
in chat rooms or on bulletin boards. Any such posting, even though
well-intentioned, may be damaging to the Company and its interests. This policy
will be strictly enforced and may result in disciplinary action up to and
including termination.
Requests for Information
The Company's policy is to respond to all legitimate requests from
investors, securities anaylsts and the media for information about the Company.
The Disclosure Officer will oversee maintenance of an investor kit and its
contents. Upon legitimate request, an investor kit will be sent within one week
of the request. Any request for material, non-public information will be denied.
Legitimate telephone inquiries about the Company will be returned by an
authorized Company Spokesperson within a reasonable period of time.
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