FD: Agency Business Report 2007

With the FTI acquisition, FD is the only major PR firm to be owned by a consulting company, and Declan Kelly, US CEO, says this structure had been his goal for some time.

With the FTI acquisition, FD is the only major PR firm to be owned by a consulting company, and Declan Kelly, US CEO, says this structure had been his goal for some time.

FD is "well on the road" to total integration with FTI's global offices, he says, and is already pitching for business and developing practices with FTI and Dittus.

FD (formerly Financial Dynamics)

Staff
FD's US headcount is 178, up from 167 in 2005. Senior hires include Ellen Barry, MD in New York, and Ruby Walia, global CIO. MD Jordan Goldstein left the firm.

Structural changes
FD was acquired by FTI Consulting in 2006, becoming the management consultant's fifth arm. FD also acquired or signed partnerships with firms in South Africa, China, and the Netherlands, and opened offices in Hong Kong and Dubai.

Regional performance
The US, UK, and Russian markets were strong. FD's global footprint has also increased by working with FTI offices in more than 20 new locations.

Practice areas
Four - corporate communications, public affairs, IR, and business consulting. The former two were strong growth areas in the US, with life sciences as the strongest growing industry sector.

Accounts
Key wins include AXA Equitable, HSBC, AIG, and Siemens Business Services. Coca- Cola and HSBC expanded their accounts. Led by IR at 29%, accounts are spread generally evenly across practice areas.

Financial performance
Global 2006 revenue was $140 million (which includes Dittus revenues).

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)
FTI Consulting (NYSE: FCN)

Name of subsidiary companies
FD Dittus - US
FD Tamesis - UK
FD-LLM - UK
FD Beachead- South Africa

Has your ownership status changed in the past year? If yes, please explain
FD was acquired by FTI Consulting, a leading global management consulting firm, in October 2006, marking a major new stage in the firm's growth and development.

Since our MBO in July 2003, a key part of our strategy has been to position FD as a high added-value consulting business and widen the gap between ourselves and our more commoditized traditional competitors. Joining forces with a leader in the consulting world is the ultimate validation of this strategy and marks a landmark for our business and our industry, being the first time that a major international consulting firm and a global business communications company have joined forces to provide such a unique combination.

FTI is a well respected and highly successful US-based international business consulting company whose shares are listed on the New York Stock Exchange with a market value of $1.3 billion. Their strategy is focused on providing solutions to critical issues impacting the boardrooms of major organizations. FTI is already a market leader in a number of businesses including corporate restructuring, economic consulting (around situations such as M&A anti-trust issues) and forensic & litigation consulting (where they work closely with major investment banks and law firms).

In joining forces with FD, FTI has added a major new core business capable of providing world class communications solutions around the critical issues affecting companies' brands, reputations and stock market valuations. FD has now become a fifth key business segment for FTI - strategic communications - and our team around the world now has the privilege of being part of a network of 2,000 professionals representing thousands of clients from 44 offices around the world.

Both FD and FTI operate in many of the same markets where both firms share numerous relationships and interests in common, and both provide highly complementary, but non-competing, services -sharing the common denominator of providing solutions to those critical issues which impact our clients' businesses.

Name of global CEO and US CEO (or most senior equivalent)
Charles Watson -
group chief executive
Declan Kelly - CEO, FD US

Name of person, if any, the most senior person named above reports to
Jack Dunn, CEO, FTI Consulting

What is your current headcount?
As of January 31, 2007: 178 US staff.

How has your headcount changed since FY 2005?
Total headcount at the end of 2005 was 167 employees.

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company
Ellen Barry - MD, New York (Brunswick Group)
Michael McGrath - SVP, Chicago (H&K)
David Press - SVP, New York (Director, Brunswick Group)
Pat Keough - SVP, New York (WPP/ McCann Erickson)
Gary Quackenbush - VP, San Francisco (VP, FinemanPR)
Jeannine Lewan - VP, New York (Dir, Corp Comm, Radian Group)
Ruby Walia - Global CIO (CIO, NBC Universal)

What senior staff have departed the firm? Please state name and previous title
Jordan Goldstein - MD
CharlieArmistead - SVP (transferred back to London)
Erik Smith - SVP
Tom Gentile - SVP
Duane Coda - VP
Quynh Nguyen - VP
Torie Pennington - VP
Jeff Saper - CIO

Please list any other senior management changes, including restructures and significant, senior-level promotions
Mark McCall
, Claudine Cornelis and Andy Maas became Managing Directors and members of the board
James Ratchford, Jeff Levine and John Robbins were elevated to SVPs

Have you made any acquisitions in the past year, or merged with another agency?
FD acquired a majority stake in Beachhead Media and Investor Relations, South Africa's leading independent strategic communications consultancy. With offices in both Cape Town and Johannesburg, Beachhead advise a number of South Africa's leading corporations, and their addition to the FD group effectively made FD one of the largest specialist communications consultancies in Africa. They have now been rebranded as FD Beachead.

We also signed a new a joint venture agreement with one of China's leading strategic communications consultancies, Eastwei Relations which gives FD an on-the-ground presence of 60 consultants located in Beijing, Shanghai and Guangzhou and will significantly strengthen the execution capability of FD's team in Hong Kong.

We also signed a joint venture partnership with leading Netherlands strategic communications consultancy, Boer & Croon Corporate Communication. This latest joint venture is the second that FD has established in Europe - the first being with Hallvarsson & Halvarsson in Scandinavia. Boer & Croon Corporate Communication is the 15 strong communications operating company of the Boer & Croon Strategy and Management Group - the Netherlands' leading independent management consultancy practice. FD and Boer and Croon Corporate Communication have enjoyed a long standing relationship, sharing numerous common client assignments in recent years.

How many wholly owned offices do you have globally? Please list with agency names and cities under the following headings. Add majority-owned offices in parentheses.

  • North America: New York, Boston, Washington DC (two), Chicago, Salt Lake City, San Francisco, Los Angeles
  • Europe: London, Paris, Dublin, Manchester, (Frankfurt), Moscow
  • Africa: Johannesburg, Cape Town
  • Middle East: Bahrain, Dubai
  • Asia Pacific: Hong Kong

As part of FTI Consulting, FD now has access to an additional 20+ locations in which FTI has a presence.

How many partly owned offices or affiliates do you operate globally? Please list agency names and cities under the following headings.
Asia Pacific: FD has affiliates in several major business centers including Beijing, Shanghai, Guangzhou, New Delhi, Mumbai and Bangalore.

What offices opened in 2006 or early 2007? (State when)
Hong Kong and Dubai.

What offices closed in 2006 or early 2007? (State when)
None

Which regions, US and globally, are growing, and why?
From a network perspective, the US, UK and Russian markets are particularly strong for FD. We can provide more context in conversation.

Practice areas

How many practice areas do you have? Please list.
FD's services have expanded and diversified over the past several years. Not only have we preserved and strengthened our historical focus on financial communications, but we have also developed new and complementary global service offerings in the areas of corporate communications, public affairs, crisis and litigation consulting, branding and marketing, and business consulting.

In this regard, FD is structured around four core practices that together provide clients with a comprehensive business communications and consulting offer that is unique in the market, organized around:

  • Corporate Communications
  • Investor Relations
  • Public Affairs
  • Business Consulting

Our mission is to help clients effectively and persuasively influence key stakeholders in the financial community, media, halls of government and industry trade groups with strategic counsel and results that positively impact their business performance.

Within these communications disciplines, FD is uniquely organized by specialist teams covering all major industries, including basic industries, financial services, life sciences, property, retail/consumer, and technology/telecommunications. Specialist teams for transactions/IPOs, litigation communications and a robust marketing communications group round out the FD offer.

21) Which ones are new?
These core offers are unchanged however the scope and depth of services provided within each continues to expand. For instance, on the public affairs side, we forged an exclusive partnership with former Democratic Majority Leader Dick Gephardt, which is opening new doors for FD globally as Dick helps our clients strategize in the critical areas of government, public policy, employee and labor relations and international affairs. He also has become a consultant to FTI Consulting and has joined FD's international advisory board.

We have also begun developing company-wide practices together with FTI to leverage the institutional knowledge and experience of our professional staff and truly assist our clients in a vertically integrated manner though unparalleled expertise, thoughtful counsel, and expert insight. For instance, our new Oversight & Investigations offering uniquely ties together and packages the key specializations of FTI, FD and Dittus for facing congressional state or federal regulatory inquiries.

Of those, which ones are part of the core strategy of the agency?
FD's integrated business communications offer equally weights the four pillars of our offer in the market. Importantly, our Business Consulting practice, which was formed in mid-2005 as a result of FD's acquisition of Westhill Partners, has been a significant success as we provide a broader scope of strategic consulting and advisory solutions to clients and thus the ability to tackle broader, more sophisticated assignments.

Which practice areas have been phased out in the past year?
None.

What practice areas showed the most growth? Please elucidate.
We have seen the highest growth levels in the Corporate Communications and Public Affairs practices in the US. On an industry sector level, Life Sciences experienced the greatest growth in 2006. Financial services was one sector that was especially strong, as was our transaction/assignments team; however, all of our specialist teams' business grew in 2006.

We see sustainable growth levels in all of these areas for the next several years, reflective of growing demand for integrated communications and consulting services resulting from an increasingly-complex business environment.

We also see significant opportunity resulting from our partnership with FTI whereby FD senior staff is working closely with its FTI counterparts to develop opportunities with both existing and new clients across the organization.

Which practice areas showed the least growth? Please elucidate.
All of our practice areas grew significantly in 2006.

What is the distribution of accounts across practice areas?
Following is an estimated breakdown of FD-US accounts across practice areas by revenue:
Investor Relations: 29%
Corporate Communications: 21%
Public Affairs: 24%
Business Consulting: 26%
TOTAL: 100%

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
FD's sector-focused strategy has driven significant growth in new retained clients across all of our key sectors. Major new client wins include the list below.

  • AXA Equitable
  • HSBC
  • AIG
  • K&F Industries
  • Cambridge Display Technology
  • Siemens Business Services
  • Independent News & Media
  • British Telecom/Radianz

We also handled the $400 million NYMEX Holdings offering and continue to rank among the top M&A advisory firms, working on such high profile transactions as the list below:

  • Nationwide Mutual's spinoff of Gartmore Global Investments - $700M
  • Health Care REIT/Windrose Medical Properties merger, transaction valued at $877 million
  • AIG: Advanced Disposal recapitalization, transaction valued at $470 million
  • Tata Corporation: Acquired 30% stake in Glacéau - $677 million
  • Fortis: Cinergy Marketing and Trading - EUR 315 million

Other key client assignments included a significant expansion in the scope of our work with HSBC and Coca-Cola.

Of your 2006 wins, how many were across three or more countries?
10%

Did you expand any existing accounts into new domestic or international markets or sectors? Please elucidate.
There are too many to list.

What proportion of your clients are on a retainer?
80%

Has this changed over the past year?
Decreased slightly.

Performance

What was your 2006 global (including US) revenue?
US $140M

Did you experience top-line or bottom-line growth in the past year, or both? Please elucidate.
We grew both top and bottom line in 2006.

How did your performance, in terms of revenue and growth, meet expectations you had for the year?
We are very pleased with our results. We have expanded our service offer to provide a full-service approach to business communications and consulting that has attracted a new clientele of global brand leaders that understand the strategic value that our approach can bring to bear for their businesses

Please briefly outline any initiatives undertaken in 2006 that add to your agency's story, such as staff development/training, fundraising/charitable initiatives, community programs, business partnerships, etc.

FD has a robust year-long staff training program across all levels of the firm hosted by senior executives and outside specialists to ensure staff on every level receive the training and experience they need to thrive at the firm. We also participate in many charitable initiatives that are of personal interest to our staff and handle several pro-bono assignments such as our work with the Chicago Holocaust Museum. Our Meet the Media program is a major success that brings key journalists to meet with the entire firm as a means to build media expertise amongst the staff.

Dittus Communications
The first full year of Dittus' ownership by FD was made even more interesting by the latter's acquisition by FTI. Its new parent company specializes in areas that fit well with Dittus' specializations, such as forensic analysis, investigation, economic analysis, restructuring, due diligence, strategic communication, and technology.

Gloria Dittus, CEO, says her firm's energy and environment practice was hot last year, as Congress increasingly pressured oil companies over large profits and high prices. The energy practice is run by a former aide to Rep. John Dingell (D-MI), now chairman of the Committee on Energy and Commerce.

Staff
Headcount at the firm has held steady at about 50. Key hires include Peggy Binzel, SVP; Peter Holran, VP of crisis and issues management; and Michael Waldron, VP and chief of staff. SVP Kevin Walker left the agency.

Practice areas
Dittus boasts seven practice areas, including two new ones, executive communications and corporate oversight and investigations. Core to the agency's strategy are energy and environment; technology and communications; food, health, and nutrition; nonprofit advocacy; public affairs and crisis communications; and its executive communications center.

Accounts
Key account wins include Shell Exploration and Production, FutureGen Alliance, Nationwide Mutual, the United Methodist Church, the Evangelical Lutheran Church, the High-Tech DTV Coalition, and Fluor Corporation.

Financial performance
Dittus' revenue was not broken out, but the agency states that it experienced both top- and bottom-line growth.

Agency's full questionnaire follows below:

Name of parent division/company (enter both where applicable)
FD (Financial Dynamics) and FTI Consulting

Has your ownership status changed in the past year? If yes, please explain
Yes, our parent company FD was acquired by FTI Consulting, FTI Consulting, a leading global firm with a network of 2,000 professionals in offices in every major business center in the world that specializes in the areas of forensic analysis, investigation, economic analysis, restructuring, due diligence, strategic communication, financial communication and technology.

5) Name of global CEO and US CEO (or most senior equivalent)
Gloria Dittus, Dittus Communications

Name of person, if any, the most senior person named above reports to
Jack Dunn, CEO, FTI Consulting
Declan Kelly, CEO, FD

What is your current headcount?
50

How has your headcount changed since FY 2005?
None [we generally replace departures, so our employee numbers generally remain around 50]

Did you make any senior hires in 2006 (VP and higher)? Please state name, title (and unique responsibilities, if applicable), and previous company

Peggy Binzel, Senior Vice President, Technology and Communications Practice. Peggy brings over 25 years of front-line experience in developing solutions for complex public affairs, crisis management, and political challenges. Peggy most recently served as CEO of CoreNet Global, the world's premier association for corporate real estate and related professionals. She also served on the board of directors for the National Association of Broadcasters and the Cable and Telecommunications Association for Marketing.

Peter Holran, Vice President of the Crisis and Issues Management Practice. Prior to joining Dittus Communications, Mr. Holran was senior director of Wexler & Walker Public Policy Associates, where he focused on general transportation, aviation and homeland security issues, with an emphasis on technology and non-lethal weapon solutions. He also worked on developing and implementing public policy strategies on aerospace, technology and energy issues, committing significant time and effort to the promotion of hydrogen as an alternative energy source.

Michael Waldron serves Vice President and Chief of Staff reporting directly to the President and CEO. In this role, Mr. Waldron is responsible for providing strategic counsel to some of the Dittus' largest clients, setting strategic direction and developing new profit centers for the company. Prior to joining Dittus, Mr. Waldron served as spokesman and advisor to U.S. Energy Secretaries Samuel W. Bodman and Spencer Abraham.

What senior staff have departed the firm? Please state name and previous title
Kevin Walker
, SVP of Public Policy
Stacy Morton, VP, Marketing

Practice areas

How many practice areas do you have? Please list.
Energy & Environment
Technology & Communications
Food, Health & Nutrition
Nonprofit Advocacy
Public Affairs & Crisis Communications
Executive Communications Center
Corporate Oversight & Investigations

Which ones are new?
Executive Communications Center
Corporate Oversight & Investigations

Of those, which ones are part of the core strategy of the agency?
Energy & Environment
Technology & Communications
Food, Health & Nutrition
Nonprofit Advocacy
Public Affairs & Crisis Communications
Executive Communications Center

ACCOUNTS

What key account wins did you have in 2006? If based outside the US, or are global, please state regions.
Shell Exploration & Production
FutureGen Alliance (Southern Company, Peabody Coal, PPL Corporations, American Electric Power, Rio Tinto, Anglo American Foundation Coal and the China Huangeng Group)
Nationwide Mutual
Bond Companies and The Abraham Group
Metro Jackson
United Methodist Church
Evangelical Lutheran Church
Cyren Call
High-Tech DTV Coalition
Fluor Corporation

Performance

Did you experience top-line or bottom-line growth in the past year, or both? Please elucidate.
We experienced both top-line and bottom-line growth.

Please briefly outline any initiatives undertaken in 2006 that add to your agency's story, such as staff development/training, fundraising/charitable initiatives, community programs, business partnerships, etc.

Dittus participated in a number of charitable and fundraising initiatives this past year.

Friends of New Orleans (FONO)
Started in July 2006, Friends of New Orleans is a private, nonprofit, nonpartisan, membership organization for people in the United States and abroad who care about New Orleans and the surrounding region. Its purpose is to build legislative and national support for the rebuilding and restoration efforts of areas devastated by Hurricane Katrina by explaining the issues. The goals are: 1) A long-term plan for major hurricane protection for the region, which includes the restoration of coastal wetlands and improved levees and storm surge barriers; 2) Private and government sector assistance to rebuild Louisiana's devastated communities; and 3) A fair share of gas and oil revenues from Louisiana's continental shelf for use by the state as needed.

Dittus was integral to the launch and initial strategic plan of this organization. Gloria Dittus serves as the chairwoman and sits on the board. Dittus' work included branding, Web site creation, and messaging. We also helped the organization gain exposure through media outreach in both print and radio.

Bryce Harlow Foundation
For the second consecutive year, The Bryce Harlow Foundation has engaged Dittus on a pro-bono basis to assist them with the Bryce Harlow Foundation Annual Award Dinner. For background, the Bryce Harlow Foundation awards scholarships to graduate students who are pursuing careers in business-government relations and public policy (i.e. lobbying). The advocacy community gathers for an evening of celebration and camaraderie as it honors a distinguished public official who has contributed to the building of strong business-government relations. Since 1982, the Foundation has awarded the prestigious Bryce Harlow Award to an individual who has worked to advance business-government relations and whose integrity, dedication, and professionalism echo the work and life of the late Bryce Harlow. Through the years the notable list of honorees has grown to include such distinguished individuals as founding EPA Administrator William D. Ruckelshaus, Congressman/Minority Leader Bob Michel, and Vice President Dick Cheney.

Dittus has supported the Foundation in producing a 5-6 minute video which is shown at the awards dinner. The video features the Bryce Harlow recipients and underscores the ideals and goals of the foundation. Additionally, Dittus oversees the media relations, outreach, and media follow-up surrounding the awards dinner.

Peace X Peace
Peace X Peace is a nonprofit, international organization with the goal of bringing women together from around the world to build sustainable peace locally and globally through online communication. The organization, though well-regarded, had little public profile and no internal structure to permit it to increase its membership and outside support or to raise money to help fund its causes.

Dittus Communication offered its services to help Peace X Peace (pronounced "Peace By Peace") increase its public exposure; design and distribute materials, invitations, and Web sites for the organization; craft public relations; build a media list; instruct Peace X Peace volunteers in the basics of public relations and building media contacts; and organize and run events. The signature event was the first fundraising dinner for Peace X Peace and the launch of will be annual awards recognizing those who have worked to help achieve Peace X Peace's goals. The dinner drew a maximum crowd at the Kuwaiti embassy, raised more than $90,000 in clear profits for Peace X Peace, and garnered the group widespread publicity.

The year working with Dittus Communications ensured that Peace X Peace, for the first time in its history, was financially able to continue as an organization and invest in the activities needed to further its goals. It also ensured that a professional structure was now an integral part of the group to help its day-to-day operations, its media outreach, and its efforts to broaden individual and corporate support.

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