Month: March 2015

NEW YORK, NY – March 31, 2015 – BGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners,” “BGC,” or the “Company”), a leading global brokerage company servicing the financial and real estate markets, today announced that it has updated its consolidated outlook for the quarter ending March 31, 2015.  In addition, BGC’s majority-owned division, GFI Group Inc. (NYSE:  GFIG) (“GFI Group” or “GFI”), a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, provided its outlook for March, 2015.

Excluding the results of GFI, BGC expects its quarterly revenues for distributable earnings to be towards the low end of the range of its previously stated guidance, and its quarterly pre-tax distributable earnings to be around the mid-point.  BGC’s first quarter 2015 outlook, which was also without regard to the impact of GFI, was originally published in a press release dated February 11, 2015, as follows: 

BGC’s Original First Quarter 2015 Outlook Compared with First Quarter 2014 Results 

• The Company had expected distributable earnings revenues to increase by between approximately 10 percent and 17 percent and to be between approximately $490 million and $520 million, compared with $445.9 million.  
•  BGC had anticipated its pre-tax distributable earnings to increase by between approximately 21 percent and 42 percent and to be in the range of $68 million to $80 million, versus $56.2 million. 
• The Company had expected its effective tax rate for distributable earnings to remain unchanged at approximately 15 percent. 

Conversion of BGC’s 8.75% Convertible Senior Notes

It is the Company’s understanding that Cantor Fitzgerald, L.P. (“Cantor”) currently intends to exercise its right to convert BGC’s $150.0 million of 8.75% Convertible Senior Notes, due April 15, 2015, into approximately 24.0 million units and/or common shares by their due date.  This will have no impact on the Company’s fully diluted share count for distributable earnings, because the related share equivalents were already included in the total.  The conversion will have no impact on BGC’s liquidity or cash position.  All else being equal, the conversion is anticipated to reduce the Company’s pre-tax interest expense by $13.1 million on an annualized basis and decrease the amount of debt on its balance sheet by $150.0 million.

Expected Impact of GFI on the Company’s Consolidated Results

Because BGC owns approximately 56 percent of GFI’s common shares and nominated three-fourths of its board of directors, GFI will operate as a division of BGC.  GFI’s financial results will be consolidated with BGC from March 2, 2015 onward.  GFI is expected to generate around $60 million in revenues for distributable earnings and to have a pre-tax distributable earnings margin of between 3 percent and 5 percent for March, 2015.  With respect to BGC’s consolidated results, approximately 44 percent of GFI’s post-tax distributable earnings are expected to be attributable to noncontrolling interest in subsidiaries, while the remaining approximately 56% are expected to be attributable to BGC’s post-tax distributable earnings to fully diluted shareholders.

Distributable Earnings Defined

BGC Partners uses non-GAAP financial measures including “revenues for distributable earnings,” “pre-tax distributable earnings” and “post-tax distributable earnings,” which are supplemental measures of operating performance that are used by management to evaluate the financial performance of the Company and its consolidated subsidiaries. BGC Partners believes that distributable earnings best reflect the operating earnings generated by the Company on a consolidated basis and are the earnings which management considers available for distribution to BGC Partners, Inc. and its common stockholders, as well as to holders of BGC Holdings partnership units during any period. 

As compared with “income (loss) from operations before income taxes,” “net income (loss) for fully diluted shares,” and “fully diluted earnings (loss) per share,” all prepared in accordance with GAAP, distributable earnings calculations primarily exclude certain non-cash compensation and other expenses which generally do not involve the receipt or outlay of cash by the Company, which do not dilute existing stockholders, and which do not have economic consequences, as described below.  In addition, distributable earnings calculations exclude certain gains and charges that management believes do not best reflect the ordinary operating results of BGC.

Revenues for distributable earnings are defined as GAAP revenues excluding the impact of BGC Partners, Inc.’s non-cash earnings or losses related to its equity investments.  Revenues for distributable earnings include the collection of receivables which would have been recognized for GAAP other than for the effect of acquisition accounting.  Revenues for distributable earnings also exclude certain one-time or unusual gains that are recognized under GAAP, because the Company does not believe such gains are reflective of its ongoing, ordinary operations.  

Pre-tax distributable earnings are defined as GAAP income (loss) from operations before income taxes excluding items that are primarily non-cash, non-dilutive, and non-economic, such as:

• Non-cash stock-based equity compensation charges for REUs granted or issued prior to the merger of BGC Partners, Inc. with and into eSpeed, as well as post-merger non-cash, non-dilutive equity-based compensation related to partnership unit exchange or conversion.
• Allocations of net income to founding/working partner and other limited partnership units, including REUs, RPUs, PSUs, LPUs, and PSIs.
• Non-cash asset impairment charges, if any.

Distributable earnings calculations also exclude charges related to purchases, cancellations or redemptions of partnership interests and certain unusual, one-time or non-recurring items, if any.

“Compensation and employee benefits” expense for distributable earnings will also include broker commission payouts relating to the aforementioned collection of receivables.

BGC’s definition of distributable earnings also excludes certain gains and charges with respect to acquisitions, dispositions, or resolutions of litigation. This exclusion pertains to the one-time gain related to the NASDAQ OMX transaction.  Management believes that excluding these gains and charges best reflects the operating performance of BGC. However, because NASDAQ OMX is expected to pay BGC in an equal amount of stock on a regular basis for 15 years as part of the transaction, the payments associated with BGC’s receipt of such stock are expected to be included in the Company’s calculation of distributable earnings.  To make quarter-to-quarter comparisons more meaningful, one-quarter of the annual contingent earn-out amount will be included in the Company’s calculation of distributable earnings each quarter as “other revenues.”

Since distributable earnings are calculated on a pre-tax basis, management intends to also report “post-tax distributable earnings” and “post-tax distributable earnings per fully diluted share”:

• “Post-tax distributable earnings” are defined as pre-tax distributable earnings adjusted to assume that all pre-tax distributable earnings were taxed at the same effective rate.
• “Post-tax distributable earnings per fully diluted share” are defined as post-tax distributable earnings divided by the weighted-average number of fully diluted shares for the period.

BGC’s distributable earnings per share calculations assume either that: 

• The fully diluted share count includes the shares related to the dilutive instruments, such as the Convertible Senior Notes, but excludes the associated interest expense, net of tax, when the impact would be dilutive; or
• The fully diluted share count excludes the shares related to these instruments, but includes the associated interest expense, net of tax.

Each quarter, the dividend to common stockholders is expected to be determined by the Company’s Board of Directors with reference to post-tax distributable earnings per fully diluted share.  In addition to the Company’s quarterly dividend to common stockholders, BGC Partners expects to pay a pro-rata distribution of net income to BGC Holdings founding/working partner and other limited partnership units, including REUs, RPUs, LPUs, PSUs and PSIs, and to Cantor for its noncontrolling interest.  The amount of all of these payments is expected to be determined using the above definition of pre-tax distributable earnings per share.

Certain employees who are holders of RSUs are granted pro-rata payments equivalent to the amount of dividends paid to common stockholders. Under GAAP, a portion of the dividend equivalents on RSUs is required to be taken as a compensation charge in the period paid. However, to the extent that they represent cash payments made from the prior period’s distributable earnings, they do not dilute existing stockholders and are therefore excluded from the calculation of distributable earnings.

Distributable earnings is not meant to be an exact measure of cash generated by operations and available for distribution, nor should it be considered in isolation or as an alternative to cash flow from operations or GAAP net income (loss). The Company views distributable earnings as a metric that is not necessarily indicative of liquidity or the cash available to fund its operations.

Pre- and post-tax distributable earnings are not intended to replace the Company’s presentation of GAAP financial results. However, management believes that they help provide investors with a clearer understanding of BGC Partners’ financial performance and offer useful information to both management and investors regarding certain financial and business trends related to the Company’s financial condition and results of operations. Management believes that distributable earnings and the GAAP measures of financial performance should be considered together.

Management does not anticipate providing an outlook for GAAP “revenues,” “income (loss) from operations before income taxes,” “net income (loss) for fully diluted shares,” and “fully diluted earnings (loss) per share,” because the items previously identified as excluded from pre-tax distributable earnings and post-tax distributable earnings are difficult to forecast. Management will instead provide its outlook only as it relates to revenues for distributable earnings, pre-tax distributable earnings and post-tax distributable earnings. 

For more information on this topic, please see the tables in the most recent BGC financial results press release entitled “Reconciliation of Revenues Under GAAP and Distributable Earnings,” and “Reconciliation of GAAP Income to Distributable Earnings” which provide a summary reconciliation between pre- and post-tax distributable earnings and the corresponding GAAP measures for the Company in the periods discussed in this document.  The reconciliations for prior periods do not include the results of GFI.

About BGC Partners, Inc.

BGC Partners is a leading global brokerage company servicing the financial and real estate markets.  Products include fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commercial real estate, commodities, futures, and structured products. BGC also provides a wide range of services, including trade execution, broker-dealer services, clearing, processing, information, and other back-office services to a broad range of financial and non-financial institutions.  Through its BGC Trader and BGC Market Data brands, BGC offers financial technology solutions, market data, and analytics related to numerous financial instruments and markets.  Through the Newmark Grubb Knight Frank brand, BGC offers a wide range of commercial real estate services, including leasing and corporate advisory, investment sales and financial services, consulting, project and development management, and property and facilities management. BGC’s customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, property owners, real estate developers, and investment firms. BGC’s common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP).  BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA).  BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com.   

BGC, BGC Trader, Newmark, Grubb & Ellis, and Grubb are trademarks and service marks of BGC Partners, Inc. and/or its affiliates.  Knight Frank is a service mark of Knight Frank (Nominees) Limited.

About GFI Group Inc.

GFI is majority-owned by, and operates as a division of, BGC Partners, Inc. GFI Group Inc. is a leading intermediary in the global OTC and Listed markets offering an array of sophisticated trading technologies and products to a broad range of financial market participants.  More than 2,500 institutional clients benefit from GFI’s know-how and experience in operating electronic and hybrid markets for cash and derivative products across multiple asset classes, including fixed income, interest rates, foreign exchange, equities, energy and commodities.  GFI’s brands include Trayport®, a leading provider of trading solutions for energy markets worldwide and FENICS ®, a market leader in FX options software.

Founded in 1987 and headquartered in New York, GFI employs over 2,000 people globally, with additional offices in London, Paris, Brussels, Nyon, Dublin, Madrid, Sugar Land (TX), Hong Kong, Tel Aviv, Dubai, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Bogota, Buenos Aires, Lima and Mexico City.

Discussion of Forward-Looking Statements About BGC Partners and GFI 

Statements in this document regarding BGC Partners’ and GFI Group’s businesses that are not historical facts are “forward-looking statements” that involve risks and uncertainties. Except as required by law, BGC and GFI undertake no obligation to release any revisions to any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC’s and GFI’s respective Securities and Exchange Commission filings, including, but not limited to, the risk factors set forth in their respective public filings, including their  most recent Forms 10-K and any updates to such risk factors contained in subsequent Forms 10-Q or Forms 8-K filings. 

BGC Media Contacts: 
Hannah Sloane 
+1 212-294-7938     
Sarah Laufer 
+1 212-915-1008

BGC Investor Contacts:     
Jason McGruder 
+1 212-829-4988     
Jason Chryssicas 
+1 212-915-1987

GFI Investor and Media Contact: 
Mark Brazier – GFI
+1 212-968-6905

NEW YORK, NY – March 19, 2015 – GFI Group Inc. (NYSE: GFIG) (“GFI Group,” “GFI” or the “Company”), a leading intermediary and provider of trading technologies and support services to the global over-the-counter (“OTC”) and listed markets, today announced that it intends to voluntarily delist and deregister its common stock (the “common stock”).

Reasons for, and Timing of, Delisting and Deregistering
The Company has submitted written notice to the New York Stock Exchange (the “NYSE”) of its intention to voluntarily delist and deregister the common stock under the Securities Exchange Act of 1934, as amended.  The delisting is expected to become effective 10 days after the filing of the required Form 25 with the Securities and Exchange Commission (the “SEC”).  GFI subsequently expects to no longer have obligations to file SEC reports with respect to its common stock.  However, the Company intends to make voluntary SEC filings with respect to its 8.375% Senior Notes due July 2018 (the “Senior Notes”) in compliance with its obligations under the related indenture. 

Approximately 56% of the outstanding shares of the common stock are held by BGC Partners, Inc. or its affiliates (NASDAQ: BGCP) (“BGC Partners” or “BGC”), and approximately 38% of the outstanding shares are held by Jersey Partners Inc. (“JPI”) as well as by certain members of GFI’s management team and their respective affiliates.  

GFI will operate as a consolidated subsidiary of BGC.  Given these circumstances, GFI’s Board of Directors has concluded that the added costs of compliance, the demands of management’s time, and the resources required to maintain GFI’s NYSE listing and to continue its SEC reporting obligations are greater than the benefits received by the Company and its stockholders.

Trading of GFI Group Common Stock After Delisting and Deregistering
GFI has no intention to arrange for the listing of and/or registration of the common stock on another securities exchange.  The common stock may, however, be quoted in one or more OTC markets, but there can be no assurance that trading in the common stock will continue OTC or otherwise.  Moreover, the common stock may become more illiquid once it is no longer traded on the NYSE, and may no longer be a margin security, which could negatively impact market prices for the common stock and make it more difficult for GFI stockholders to sell their shares.  Prior to the completion of the full merger of BGC and GFI, BGC may purchase shares of GFI common stock in either open market or privately negotiated transactions.

GFI does not currently intend to hold its 2015 annual general meeting of stockholders in June as it has in past years. 

About GFI Group Inc.
GFI Group Inc. (NYSE: GFIG) is a leading intermediary in the global OTC and listed markets offering an array of sophisticated trading technologies and products to a broad range of financial market participants.  More than 2,500 institutional clients benefit from GFI’s know-how and experience in operating electronic and hybrid markets for cash and derivative products across multiple asset classes, including fixed income, interest rates, foreign exchange, equities, energy and commodities.  GFI’s brands include Trayport®, a leading provider of trading solutions for energy markets worldwide, and FENICS®, a market leader in FX options software.

Founded in 1987 and headquartered in New York, GFI employs over 2,000 people globally, with additional offices in London, Paris, Brussels, Nyon, Dublin, Madrid, Sugar Land (TX), Hong Kong, Tel Aviv, Dubai, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Bogota, Buenos Aires, Lima and Mexico City. For more information, please visit http://www.gfigroup.com.

GFI is majority-owned by, and will operate as a division of, BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC Partners’ Class A common stock trades on the NASDAQ Global Select Market (NASDAQ: BGCP). BGC Partners also has outstanding Senior Notes due June 15, 2042, which trade on the New York Stock Exchange (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick.  For more information, please visit http://www.bgcpartners.com.

Cautionary Statement Regarding Forward-Looking Statements by GFI Group
Certain matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements include information concerning future financial performance, business strategy, plans, goals and objectives.  When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “might,” “intend,” “expect” and similar expressions identify such forward-looking statements.  Actual results, performance, achievements or events could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein.  These forward-looking statements are based largely on the expectations of GFI and are subject to a number of risks and uncertainties.  These include, but are not limited to, risks and uncertainties associated with: economic, political and market factors affecting trading volumes; securities prices or demand for GFI’s brokerage services; competition from current and new competitors; GFI’s ability to attract and retain key personnel, including highly-qualified brokerage personnel; GFI’s ability to identify and develop new products and markets; changes in laws and regulations governing GFI’s business and operations or permissible activities; GFI’s ability to manage its international operations; financial difficulties experienced by GFI’s customers or key participants in the markets in which GFI focuses its brokerage services; GFI’s ability to keep up with technological changes; uncertainties relating to litigation; and GFI’s ability to assess and integrate acquisition prospects.  Further information about factors that could affect GFI’s financial and other results is included in GFI’s filings with the SEC.  GFI does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

LONDON, March 11, 2015 /PRNewswire/ — R.J. O’Brien & Associates (RJO), the oldest and largest independent futures brokerage and clearing firm in the United States, and GFI Group (NYSE:GFIG), a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, today announced that RJO’s affiliate, R.J. O’Brien Europe Limited (RJO Europe), will acquire GFI’s subsidiary, The Kyte Group Limited (Kyte).  Terms of the transaction were not disclosed. The UK Financial Conduct Authority (FCA) has approved the transaction, which is expected to close no later than March 17. After closing of the transaction, Kyte will operate under the name “R.J. O’Brien Limited”.

Kyte is one of the largest derivatives clearing agents in Europe, offering risk management, trade settlement and exchange connectivity via Direct Market Access to proprietary traders, brokers, market makers and hedge funds.  An independent clearing firm, Kyte has consistently ranked among the top 10 firms by volume on Liffe and ICE Futures Europe and among the top 20 firms by volume on Eurex.

David Mudie, CEO of RJO Europe’s regulated subsidiary R.J. O’Brien (UK) Limited (RJO UK), will also serve as CEO of the acquired entity.  Long-time Kyte executive Thomas Texier will lead operations at both RJO UK subsidiaries.  Peter Green, who has served as Kyte CEO, will stay on as a consultant and remain on the Board as a non-executive director.   

Gerald F. Corcoran, Chairman and Chief Executive Officer of RJO, said: “We’ve made a strategic decision to expand significantly in the UK and Europe, and we are truly thrilled to bring Kyte’s impressive operation and talented team of high-caliber, seasoned employees into the RJO family.  We also look forward to getting to know the great clients of Kyte, who will continue to experience the high level of service offered by both RJO and Kyte, along with new access and capabilities that we can now provide. The acquisition will immediately add value, enabling us to accelerate our growth plans and to benefit from robust infrastructure enhancements in Europe that would have taken us several years to build from the ground up.  This move will help us further capitalize on our recent success in the EMEA region, where David has forged a strong team and greatly enhanced our institutional reach.”

Colin Heffron, Chief Executive Officer of GFI, said:  “We have reflected on our position across GFI’s various business lines and decided Kyte is not part of our long-term strategic plan.  This transaction better enables GFI to focus on our leading wholesale financial brokerage, software and market data businesses.  Going forward, we expect to become a more focused and efficient company as we work on reducing costs by integrating our back office and technology functions with those of our parent company, BGC Partners.  As this integration progresses, we believe that GFI will be in an even stronger position to provide world-class wholesale brokerage and technology solutions to our global customer base.”

Kyte has multiple co-location facilities, including in London and Frankfurt. RJO’s European clients will gain access to multiple trading platforms that Kyte provides for its clients. Clients of Kyte will be able to access markets in Asia once the acquisition is complete.  RJO has offices in Beijing and Hong Kong that leverage its expertise in agricultural markets and middle market clients.

Established in 2011, the regulated RJO UK operation serves Europe, the Middle East and Africa. The firm has been steadily investing in infrastructure and growing its institutional presence in the region, continuing to add experienced institutional sales professionals to its team.

David Mudie said: “We see tremendous synergies between the two organisations, and this is a fantastic opportunity for our respective clients and staff. We have a shared commitment to superior client service and strong relationships, and clients can expect continuity of service throughout and after the integration. In addition to the many mutual benefits, Kyte clients can enjoy RJO’s vast reach, global clearing arrangements, extensive operations in North America as well as Asia, and 100-year history of excellence in the futures markets.”

Peter Green added:  “This is a terrific opportunity for Kyte clients and employees, and I’m delighted that we will be part of an organization like RJO, where clients and employees are treated with the utmost respect.”

About R.J. O’Brien

Founded in 1914, Chicago-based R.J. O’Brien & Associates is the largest independent futures brokerage firm in the United States, serving institutional, commercial and individual clients globally, in addition to a network of 400 introducing brokers (IBs). Clearing more than 100,000 client accounts, RJO services the industry’s most expansive global network of IBs, a vast array of middle market firms and many of the world’s largest financial, industrial and agricultural institutions. The firm offers state-of-the-art electronic trading and 24-hour trade execution on every major futures exchange worldwide.

About The Kyte Group Limited

Kyte has evolved from the open outcry pits of LIFFE into a major force in today’s exchange-traded cash and derivatives arena, covering equities, CFDs, equity indices, fixed-income derivatives, short-term interest rate products, commodity futures and options, cash bonds and spot foreign exchange (FX). Kyte provides clearing and settlement services to professional traders who transact business on the world’s leading exchanges. The Kyte Group Limited is authorized and regulated in the UK by the Financial Conduct Authority.

About GFI Group Inc.

GFI Group Inc. (NYSE: GFIG) is a leading intermediary in the global OTC and Listed markets offering an array of sophisticated trading technologies and products to a broad range of financial market participants.  More than 2,500 institutional clients benefit from GFI’s know-how and experience in operating electronic and hybrid markets for cash and derivative products across multiple asset classes, including fixed income, interest rates, foreign exchange, equities, energy and commodities.  GFI’s brands include Trayport®, a leading provider of trading solutions for energy markets worldwide and FENICS ®, a market leader in FX options software.

Founded in 1987 and headquartered in New York, GFI employs over 2,000 people globally, with additional offices in London, Paris, Brussels, Nyon, Dublin, Madrid, Sugar Land (TX), Hong Kong, Tel Aviv, Dubai, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Bogota, Buenos Aires, Lima and Mexico City.

GFI is majority-owned by, and operates as a division of, BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC Partners’ common stock trades on the NASDAQ Global Select Market (NASDAQ: BGCP). BGC Partners also has outstanding Senior Notes due June 15, 2042, which trade on the New York Stock Exchange (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com.  

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/rj-obrien-to-acquire-the-kyte-group-from-gfi-group-300048730.html

SOURCE GFI Group Inc.; R.J. O’Brien & Associates