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Exponent Reports Strong Third Quarter 2007 Results
Date:10/17/2007

MENLO PARK, Calif., Oct. 17 /PRNewswire-FirstCall/ -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the third quarter and nine months ended September 28, 2007.

For the third quarter of 2007, total revenues increased 13% to $48,904,000, as compared to $43,333,000, in the same period of 2006. Revenues before reimbursements grew 12% to $44,916,000, as compared to $40,049,000, last year. Net income increased 35% to $5,037,000, or $0.31 per diluted share, as compared to $3,743,000, or $0.22 per diluted share, in 2006.

EBITDAS(1) for the third quarter of 2007 increased 32% to $10,272,000, as compared to $7,766,000 in the same period of 2006. Exponent closed the third quarter of 2007 with $52.5 million in cash, cash equivalents and short-term investments. During the quarter, Exponent repurchased $7.7 million of common stock as part of its ongoing repurchase program.

"Our quarter was marked by double-digit revenue growth and improved margins, which contributed to strong bottom line results," commented Michael R. Gaulke, Chairman and CEO. "On the revenue side, we had notable performance in our electrical and semiconductors, thermal sciences, human factors, mechanics and materials, and ecological sciences practices, in addition to our health group. Our improved margins resulted from increased utilization and leverage of our infrastructure."

For the nine months ended September 28, 2007, revenues have grown 17% to $148,414,000, compared to $127,014,000 in the same period of 2006. Revenues before reimbursements have increased 15% to $136,165,000, compared to $118,721,000, last year. Net income increased 35% to $15,094,000, or $0.92 per diluted share, as compared to $11,215,000, or $0.64 per diluted share, in 2006. EBITDAS(1) increased 36% to $31,172,000, as compared to $22,891,000 for the same period one year ago.

"During the year we have continued to drive strong performance across a broad set of practices and are well positioned for long-term growth in many areas, including health sciences consulting, product design consulting, energy consulting, and defense technology development. Exponent remains uniquely positioned as a leading multidisciplinary engineering and scientific consulting firm dedicated to helping our clients solve their challenging technical problems," concluded Mr. Gaulke.

In a related release today, Exponent announced that it has been awarded a contract to deliver additional Rapid Deployment Integrated Surveillance Systems, (RDISS), during the next three months.

As a result of improved utilization, operating leverage, and the new RDISS contract, Exponent now expects growth in revenues before reimbursements to be in the mid-teens for 2007. In addition, the Company expects an improvement in operating income as a percentage of revenues before reimbursements of approximately 250 basis points for the full year.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, October 17, 2007, starting at 4:30 p.m. Eastern Daylight Time/1:30 p.m. Pacific Daylight Time. The audio on the conference call is available by dialing 800-366-3908. A live webcast of the call will be available on the Investor Relations section of the Company's web site at http://www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent web site, or by dialing 800-405-2236 and entering reservation #11098780.

About Exponent

Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's multidisciplinary organization of scientists, physicians, engineers, and business consultants brings together more than 90 technical disciplines to address complicated issues facing industry and government today. The firm is best known for analyzing accidents and failures to determine their causes, but in recent years it has become more active in assisting clients with their new products to help prevent problems in the future. In addition, Exponent evaluates human health and environmental concerns to find cost-effective solutions.

Exponent may be reached at (888) 656-EXPO, info@exponent.com, or http://www.exponent.com.

This news release contains, and incorporates by reference, certain "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended thereto under) that are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. When used in this document and in the documents incorporated herein by reference, the words "anticipate," "believe," "estimate," "expect" and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business, and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in our Annual Report on Form 10-K under the heading "Risk Factors" and elsewhere in the report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to release publicly any updates or revisions to any such forward-looking statements.

(1) EBITDAS is a non-GAAP financial measure defined by the Company as net

income before income taxes, interest income, depreciation and

amortization, and stock-based compensation. The Company regards

EBITDAS as a useful measure of operating performance and cash flow to

complement operating income, net income and other GAAP financial

performance measures. Additionally, management believes that EBITDAS

provides meaningful comparisons of past, present and future operating

results. 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. A

reconciliation of EBITDAS to GAAP is set forth below.

EXPONENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Quarters Ended September 28, 2007 and September 29, 2006

(in thousands, except per share data)

Quarter Ended Nine Months Ended

September September September September

28, 29, 28, 29,

2007 2006 2007 2006

Revenues

Revenues before reimbursements $44,916 $40,049 $136,165 $118,721

Reimbursements 3,988 3,284 12,249 8,293

Revenues 48,904 43,333 148,414 127,014

Operating expenses

Compensation and related

expenses 29,268 26,881 89,497 79,671

Other operating expenses 5,484 4,870 15,926 14,602

Reimbursable expenses 3,988 3,284 12,249 8,293

General and administrative

expenses 2,701 2,695 8,760 8,127

41,441 37,730 126,432 110,693

Operating income 7,463 5,603 21,982 16,321

Other income

Interest income, net 407 430 1,351 1,461

Miscellaneous income, net 433 378 1,636 879

840 808 2,987 2,340

Income before income taxes 8,303 6,411 24,969 18,661

Income taxes 3,266 2,668 9,875 7,446

Net income $5,037 $3,743 $15,094 $11,215

Net income per share:

Basic $0.34 $0.24 $1.00 $0.69

Diluted $0.31 $0.22 $0.92 $0.64

Shares used in per share

computations:

Basic 14,902 15,570 15,048 16,141

Diluted 16,163 16,837 16,372 17,428

EXPONENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 28, 2007 and December 29, 2006

(in thousands)

September 28, December 29,

2007 2006

Assets

Current assets:

Cash and cash equivalents $8,689 $5,238

Short-term investments 43,857 52,844

Accounts receivable, net 62,824 48,208

Prepaid expenses and other assets 6,289 3,484

Deferred income taxes 3,571 2,232

Total current assets 125,230 112,006

Property, equipment and leasehold

improvements, net 28,984 29,577

Goodwill 8,607 8,607

Other assets 11,285 11,026

$174,106 $161,216

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued

liabilities $7,315 $4,887

Accrued payroll and employee

benefits 26,087 21,773

Deferred revenues 4,230 4,066

Total current liabilities 37,632 30,726

Other liabilities 4,400 5,088

Deferred rent 1,853 1,097

Total liabilities 43,885 36,911

Stockholders' equity:

Common stock 16 16

Additional paid-in capital 58,584 50,799

Accumulated other comprehensive

income 267 93

Retained earnings 108,579 101,226

Treasury stock, at cost (37,225) (27,829)

Total stockholders'

equity 130,221 124,305

$174,106 $161,216

EXPONENT, INC.

EBITDAS (1)

For the Quarters Ended September 28, 2007 and September 29, 2006

(in thousands)

Quarter Ended Nine Months Ended

September September September September

28, 29, 28, 29,

2007 2006 2007 2006

Net Income $5,037 $3,743 $15,094 $11,215

Add back (subtract):

Income taxes 3,266 2,668 9,875 7,446

Interest income, net (407) (430) (1,351) (1,461)

Depreciation and amortization 1,002 920 2,888 2,700

Stock-based compensation 1,374 865 4,666 2,991

EBITDAS (1) $10,272 $7,766 $31,172 $22,891

(1) EBITDAS is a non-GAAP financial measure defined by the Company as net

income before income taxes, interest income, depreciation and

amortization, and stock-based compensation. The Company regards

EBITDAS as a useful measure of operating performance and cash flow to

compliment operating income, net income and other GAAP financial

performance measures. Additionally, management believes that EBITDAS

provides meaningful comparisons of past, present and future operating

results. 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.


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SOURCE Exponent, Inc.
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