Revenues: $209.7 Million; Non-GAAP Revenues: Up 9% to $214.6 Million; GAAP Net Loss: $2.5 Million or $0.02 per Diluted Share; Non-GAAP Net Income: $3.7 Million or $0.03 per Diluted Share; Quarterly Cash Dividend Declared of $0.05 per Share
NEW YORK, NY, Oct 28, 2010 (MARKETWIRE via COMTEX) —
GFI Group Inc. (NYSE: GFIG), a leading provider of wholesale brokerage, clearing services, electronic execution and trading support products for global financial markets, today announced financial results for the third quarter ended September 30, 2010.
Highlights
-- Total GAAP and non-GAAP revenues for the third quarter of 2010
increased 9% from the third quarter of 2009 to $209.7 million and
$214.6 million, respectively. GAAP revenues included $26.4 million
from Kyte Group ("Kyte") which was acquired on July 1, 2010.
-- Brokerage revenues for the third quarter of 2010 declined 5% to
$174.7 million compared with the third quarter of 2009. This included
$1.6 million in brokerage revenues from Kyte.
-- Compensation and employee benefits expense in the third quarter of 2010
was 63.6% of total GAAP revenues and 62.1% of non-GAAP revenues. This
compares with 70.3% of total revenues on a GAAP basis and 68.4% of
total revenues on a non-GAAP basis in the third quarter of 2009. The
decrease in the GAAP and non-GAAP compensation and employee benefits
expense ratios in the third quarter of 2010 was primarily due to the
addition of clearing services revenues from Kyte.
-- Non-compensation expenses were 38.0% of GAAP revenues and 35.3% of
non-GAAP revenues in the third quarter of 2010. This compares with
27.4% of total revenues on a GAAP basis and 26.0% on a non-GAAP basis
in the third quarter of 2009. The increase in the non-compensation
expense ratio was primarily due to the addition of execution, clearing,
and settlement costs from Kyte.
-- On a GAAP basis, the net loss was $2.5 million, or $0.02 per diluted
share, for the third quarter of 2010. On a non-GAAP basis, net income
was $3.7 million, or $0.03 per diluted share. In the third quarter of
2009, GFI's GAAP net income was $2.8 million, or $0.02 per diluted
share, and non-GAAP net income was $6.9 million, or $0.06 per diluted
share.
Michael Gooch, Chairman and Chief Executive Officer of GFI, commented: “Our total revenues for the third quarter of 2010 increased 9% from the third quarter of 2009 and included the first contribution from our recent acquisition of the Kyte Group. We acquired Kyte because of its expertise in listed derivative markets, its strong management team and its unique clearing, broking and investment services business model.
“Our third quarter brokerage revenues were 5% lower than the same quarter last year with strong growth in financial and commodity product revenues offset by lower revenues from fixed income and equity products. Brokerage revenues were down 10% from the second quarter of 2010, with lower revenues across all categories with the exception of financial products.
“Historically, revenues in the second half of the year are lower than in the first half. In addition, revenues in the third quarter of 2010 were affected by a combination of low trading volume and modest volatility in the fixed income and equity markets, continued uncertainty about the global economy and concerns over the impact on the swaps markets of the Dodd-Frank Act and pending European legislation.
“Our fixed income products brokerage revenues decreased 22% from the same quarter of last year as revenues from cash fixed income products declined 39% due to competitive pressures and generally poor market conditions. This was partially offset by 4% growth in fixed income derivative products, as well as our recent addition of a mortgage-backed securities brokerage business in the U.S.
“Equity product revenues were down 17% from the third quarter of 2009 due to slowness in the markets for cash equities and equity derivatives, especially in the Americas.
“In contrast, our financial product revenues continued to improve in the third quarter, increasing 20% from the same quarter of 2009. Strength in emerging markets and Asia has been the major growth driver in this category since the beginning of the year.
“Our commodity product revenues rose 17% over the third quarter of 2009 due to growth in certain energy products as well as from the contribution of new desks.
“Our technological capabilities and ongoing development efforts continue to create an important foundation for our future growth. We have now rolled out hybrid electronic trading capabilities in all regions of the world, with signs of electronic traction continuing in the Americas and Asia-Pacific, while remaining strong in Europe. We estimate that approximately 50% of our overall brokerage revenues are derived from desks with hybrid electronic brokerage capabilities. Moreover, we estimate approximately 60% of our brokerage revenues are derived from markets which are supported by central counterparty clearing houses. We expect these trends to continue to grow, particularly in light of the regulations evolving across the financial markets in the U.S. and Europe.
“Our proven technology combined with our product expertise underlies our optimism that we will operate as a swap execution facility under the Dodd-Frank Act, further positioning us for new market opportunities resulting from the legislation.
“Looking at our preliminary brokerage revenues, excluding Kyte, for October, revenues are tracking down approximately 6% compared with brokerage revenues for the same month last year.”
Mr. Gooch concluded: “Despite current market conditions and challenges, we have achieved $30 million in non-GAAP earnings year to date, generated $139 million in adjusted EBITDA over the trailing twelve month period and ended the third quarter with balance sheet cash of $2.93 per share. We plan to continue to build upon our product and geographic diversity, our technology advantages and our solid balance sheet. We are pleased to declare a quarterly cash dividend of $0.05 per share to our shareholders.”
Revenues
For the third quarter of 2010, total revenues were $209.7 million on a GAAP basis. This included revenues from Kyte totaling $26.4 million, which consisted of $21.6 million of clearing services revenues, $1.6 million of brokerage revenues, $1.6 million in equity in earnings of unconsolidated brokerage businesses, $0.9 million of other income and $0.7 million of interest income.
On a non-GAAP basis, total revenues for the third quarter of 2010 were $214.6 million. This excludes mark-to-market unrealized losses on forward hedges of future foreign currency revenues of $4.1 million, as well as a $0.8 million fair value mark-to-market adjustment of a future purchase commitment related to the Kyte transaction.
In the third quarter of 2009, total revenues were $192.2 million on a GAAP basis and $197.5 million on a non-GAAP basis. The non-GAAP amount excludes a mark-to-market unrealized loss on forward hedges of future foreign currency revenues of $5.2 million.
Brokerage revenues in the third quarter of 2010 were $174.7 million (including $1.6 million from Kyte) compared with $184.4 million in the third quarter of 2009. Revenues from financial products and commodity products increased 20% and 17% respectively, while revenues from fixed income products and equity products decreased 22% and 17%, respectively, from the third quarter of 2009. By geographic region, brokerage revenues for the third quarter of 2010 increased 21% in Asia-Pacific but decreased 10% in EMEA and 5% in the Americas compared with the third quarter of 2009.
Revenues from trading software, analytics and market data products for the third quarter of 2010 were $14.9 million, an increase of 9% from the third quarter of 2009.
Expenses
For the third quarter of 2010, compensation and employee benefits expense was $133.3 million compared with $135.1 million in the third quarter of 2009, both on a GAAP and non-GAAP basis. The third quarter of 2010 included $2.9 million of compensation and employee benefits expense for Kyte.
Non-compensation expenses for the third quarter of 2010 were $79.8 million on a GAAP basis and $75.7 million on a non-GAAP basis. This included non-compensation expenses for Kyte of $25.5 million on a GAAP basis, with execution, clearing and settlement costs accounting for $21.0 million. In the third quarter of 2009, GFI’s non-compensation expenses were $52.7 million on a GAAP basis and $51.3 million on a non-GAAP basis.
The effective tax rate for the first nine months of 2010 was 31% on a GAAP and non-GAAP basis compared with 37% in the same period of 2009. The reduction in the effective tax rate in comparison to the first nine months of 2009 is due to a shift in the geographic mix of earnings towards jurisdictions with lower tax rates.
Earnings
On a GAAP basis, GFI’s net loss for the third quarter of 2010 was $2.5 million, or $0.02 per diluted share (including a loss before taxes and non-controlling interests of $2.0 million for Kyte). On a non-GAAP basis, there was net income of $3.7 million, or $0.03 per diluted share. In the third quarter of 2009, GFI’s net income was $2.8 million on a GAAP basis, or $0.02 per diluted share, and non-GAAP net income was $6.9 million on a non-GAAP basis, or $0.06 per diluted share.
Nine-Month Results
For first nine months of 2010, total GAAP revenues were $640.1 million (including $26.4 million of total revenues from Kyte) compared with $633.1 million for same period of 2009. GAAP net income for the first nine months of 2010 was $21.3 million or $0.17 per diluted share. For the first nine months of 2009, GAAP net income was $30.7 million or $0.25 per diluted share. On a non-GAAP basis, total revenues for the first nine months of 2010 were $644.0 million compared with $630.2 million for the first nine months of 2009. Net income for the first nine months of 2010 on a non-GAAP basis was $30.1 million or $0.24 per diluted share. For first nine months of 2009, GFI’s non-GAAP net income was $34.5 million or $0.28 per diluted share.
Non-GAAP Financial Measures
To supplement GFI’s unaudited financial statements presented in accordance with GAAP, the Company uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by GFI include non-GAAP revenues, non-GAAP operating expenses, non-GAAP net income, non-GAAP diluted earnings per share, and adjusted EBITDA. These non-GAAP financial measures currently exclude amortization of acquired intangibles and certain other items that management views as non-operating or non-recurring from the Company’s statement of income as detailed below.
In addition, GFI may consider whether other significant non-operating or non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses. The non-GAAP financial measures also take into account income tax adjustments with respect to the excluded items.
GFI believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook. GFI’s management uses, and believes that investors benefit from referring to these non-GAAP financial measures in assessing the Company’s operating results, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods.
In addition to the reasons stated above, which are generally applicable to each of the items GFI excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude amortization of acquired intangibles because when analyzing the operating performance of an acquired business, GFI’s management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any charges for allocations made for accounting purposes. Further, because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets, when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of acquired intangible assets on its financial results. GFI believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.
Set forth below is specific detail regarding items excluded in our non-GAAP financial measures. A reconciliation of the non-GAAP to GAAP figures follows this press release.
In the third quarter of 2010, the difference between GAAP and non-GAAP revenues was $4.9 million and the difference between the GAAP net loss and the non-GAAP net income was $6.2 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of a $4.1 million mark-to-market unrealized
loss on forward hedges of future foreign currency revenues;
-- The exclusion from revenues of a $0.8 million fair value mark-to-market
adjustment on the future purchase commitment related to the Kyte
transaction;
-- The exclusion of $2.1 million of amortization on all acquired
intangible assets;
-- The exclusion of $2.0 million of professional and other non-recurring
fees related to the Kyte acquisition and integration and other business
development projects; and
-- The effect of adjusting for these items would increase the Company's
income tax expense by $2.8 million.
In the third quarter of 2009, the difference between GAAP and non-GAAP revenues was $5.2 million and the difference between GAAP and non-GAAP net income was $4.1 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of a $5.2 million mark-to-market unrealized
loss on forward hedges of future foreign currency revenues;
-- The exclusion of $1.4 million of amortization on all acquired
intangible assets; and
-- The effect of adjusting for these items would increase the Company's
income tax expense by $2.4 million.
In the first nine months of 2010, the difference between GAAP and non-GAAP revenue was $3.9 million and the difference between GAAP and non-GAAP net income was $8.8 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of a $3.1 million mark-to-market unrealized
loss on forward hedges of future foreign currency revenues;
-- The exclusion from revenues of a $0.8 million fair value mark-to-market
adjustment on the future purchase commitment related to the Kyte
transaction;
-- The exclusion of $4.9 million of amortization on all acquired
intangible assets;
-- The exclusion of $3.9 million of professional and other fees related to
the Kyte acquisition and integration and, other business development
projects; and
-- The effect of adjusting for these items would increase the Company's
income tax expense by $3.9 million.
In the first nine months of 2009, the difference between GAAP and non-GAAP revenue was $2.9 million and the difference between GAAP and non-GAAP net income was $3.7 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of:
-- $2.2 million mark-to-market unrealized gains on forward hedges of
future foreign currency revenues; and
-- a $0.7 million gain on the Company's exchange of its investment
in The Clearing Corporation for an investment in a holding
company of ICE Trust;
-- The exclusion of $4.1 million of amortization on all acquired
intangible assets;
-- The exclusion of $4.6 million related to severance and other
restructuring initiatives, including an $0.8 million charge relating to
the termination of a joint venture; and
-- The effect of adjusting for these items would increase the Company's
income tax expense by $2.1 million.
Dividend Declaration
The Board of Directors of GFI Group has declared a quarterly cash dividend of $0.05 per share payable on November 30, 2010 to shareholders of record on November 15, 2010.
Conference Call
GFI has scheduled an investor conference call to discuss the results at 8:30 a.m. (Eastern Time) on Friday, October 29. Those wishing to listen to the live conference call via telephone should dial 800-510-0219 in North America, passcode 22534621; and +1 617-614-3451 in Europe, same passcode.
A live audio web cast of the conference call will be available on the Investor Relations section of GFI’s Website. For web cast registration information, please visit: http://www.gfigroup.com. Following the conference call, an archived recording will be available at the same site.
Supplementary Financial Information
GFI Group has posted details of its historical monthly brokerage revenues on the Investor Relations page of its web site under the heading Supplementary Financial Information. The Company currently plans to post this information quarterly in conjunction with its announcement of earnings, but does not undertake a responsibility to continue to provide or update such information.
In addition, the Company has posted selected financial data for Kyte for the third quarter of 2010 on the Investor Relations page of its web site also under Supplementary Financial Information. It is being provided at this time to assist analysts and investors in assessing the impact of Kyte on GFI’s financial statements. The Company does not undertake a responsibility to continue to provide or update such information.
About GFI Group Inc. www.GFIgroup.com
GFI Group Inc. (NYSE: GFIG) is a leading provider of wholesale brokerage, clearing services, electronic execution and trading support products for global financial markets. GFI Group Inc. provides brokerage services, market data, trading platform and analytics software products to institutional clients in markets for a range of fixed income, financial, equity and commodity instruments.
Headquartered in New York, GFI was founded in 1987 and employs more than 1,900 people with additional offices in London, Paris, Hong Kong, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Dubai, Dublin, Tel Aviv, Calgary, Los Angeles, Englewood (NJ) and Sugar Land (TX). GFI Group Inc. provides services and products to over 2,400 institutional clients, including leading investment and commercial banks, corporations, insurance companies and hedge funds. Its brands include GFI(SM), GFInet(R), CreditMatch(R), GFI ForexMatch(R), EnergyMatch(R), FENICS(R), Starsupply(R), Amerex(R), Trayport(R) and Kyte(R).
Forward-looking statement
Certain matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 or achievements 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 Group Inc. (the “Company”) 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 the Company’s brokerage services; competition from current and new competitors; the Company’s ability to attract and retain key personnel, including highly-qualified brokerage personnel; the Company’s ability to identify and develop new products and markets; changes in laws and regulations governing the Company’s business and operations or permissible activities; the Company’s ability to manage its international operations; financial difficulties experienced by the Company’s customers or key participants in the markets in which the Company focuses its brokerage services; the Company’s ability to keep up with technological changes; uncertainties relating to litigation and the Company’s ability to assess and integrate acquisition prospects. Further information about factors that could affect the Company’s financial and other results is included in the Company’s filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
GFI Group Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In thousands except share and per share data)
------------------------ ------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
----------- ----------- ----------- ------------
REVENUES:
Brokerage revenues:
Agency commissions $ 125,011 $ 119,396 $ 406,465 $ 366,283
Principal
transactions 49,677 64,989 166,499 216,770
----------- ----------- ----------- ------------
Total brokerage
revenues 174,688 184,385 572,964 583,053
Clearing services
revenue 21,553 - 21,553 -
Equity in earnings
of unconsolidated
brokerage businesses 1,632 - 1,632 -
Software, analytics
and market data 14,905 13,627 44,324 39,698
Interest income 914 172 1,231 895
Other (loss) income (3,945) (5,938) (1,594) 9,501
----------- ----------- ----------- ------------
Total revenues 209,747 192,246 640,110 633,147
----------- ----------- ----------- ------------
EXPENSES:
Compensation and
employee benefits 133,345 135,139 419,117 427,262
Execution, clearing
and settlement fees 26,616 7,153 41,594 23,366
Communications and
market data 13,788 11,661 36,369 34,399
Travel and promotion 8,665 8,280 26,899 24,310
Rent and occupancy 5,867 5,470 16,553 14,982
Depreciation and
amortization 8,851 7,680 24,879 23,534
Professional fees 7,055 4,508 19,899 13,728
Interest 3,204 2,769 8,509 7,895
Other expenses 5,741 5,170 15,183 14,880
----------- ----------- ----------- ------------
Total expenses 213,132 187,830 609,002 584,356
----------- ----------- ----------- ------------
(LOSS) INCOME BEFORE
(BENEFIT FROM)
PROVISION FOR ----------- ----------- ----------- ------------
INCOME TAXES (3,385) 4,416 31,108 48,791
----------- ----------- ----------- ------------
(BENEFIT FROM) PROVISION
FOR INCOME TAXES (1,050) 1,633 9,643 18,052
NET (LOSS) INCOME
BEFORE ATTRIBUTION TO
NON-CONTROLLING ----------- ----------- ----------- ------------
SHAREHOLDERS (2,335) 2,783 21,465 30,739
----------- ----------- ----------- ------------
Less: Net income
attributable to
non-controlling
interests 151 - 151 -
----------- ----------- ----------- ------------
GFI's NET (LOSS) INCOME $ (2,486) $ 2,783 $ 21,314 $ 30,739
=========== =========== =========== ============
Basic (loss) earnings
per share $ (0.02) $ 0.02 $ 0.18 $ 0.26
=========== =========== =========== ============
Diluted (loss) earnings
per share $ (0.02) $ 0.02 $ 0.17 $ 0.25
=========== =========== =========== ============
Weighted average shares
outstanding - basic 121,943,158 118,062,749 120,059,960 118,117,384
Weighted average shares
outstanding - diluted 121,943,158 122,552,882 124,665,379 121,382,317
GFI Group Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
As a Percentage of Total Revenues
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
------- ------- ------- -------
REVENUES:
Brokerage revenues:
Agency commissions 59.6% 62.1% 63.5% 57.9%
Principal transactions 23.7% 33.8% 26.0% 34.2%
------- ------- ------- -------
Total brokerage revenues 83.3% 95.9% 89.5% 92.1%
Clearing services revenue 10.3% - 3.4% -
Equity in earnings of unconsolidated
brokerage businesses 0.8% - 0.3% -
Software, analytics and market data 7.1% 7.1% 6.9% 6.3%
Interest income 0.4% 0.1% 0.2% 0.1%
Other (loss) income -1.9% -3.1% -0.3% 1.5%
------- ------- ------- -------
Total revenues 100.0% 100.0% 100.0% 100.0%
------- ------- ------- -------
EXPENSES:
Compensation and employee benefits 63.6% 70.3% 65.5% 67.5%
Execution, clearing and settlement
fees 12.7% 3.7% 6.5% 3.7%
Communications and market data 6.6% 6.1% 5.7% 5.4%
Travel and promotion 4.1% 4.3% 4.2% 3.8%
Rent and occupancy 2.8% 2.8% 2.6% 2.4%
Depreciation and amortization 4.2% 4.0% 3.9% 3.7%
Professional fees 3.4% 2.3% 3.1% 2.2%
Interest 1.5% 1.4% 1.3% 1.2%
Other expenses 2.7% 2.7% 2.4% 2.4%
------- ------- ------- -------
Total expenses 101.6% 97.6% 95.2% 92.3%
------- ------- ------- -------
(LOSS) INCOME BEFORE (BENEFIT FROM) ------- ------- ------- -------
PROVISION FOR INCOME TAXES -1.6% 2.4% 4.8% 7.7%
------- ------- ------- -------
(BENEFIT FROM) PROVISION FOR INCOME
TAXES -0.5% 0.8% 1.5% 2.9%
NET (LOSS) INCOME BEFORE ATTRIBUTION ------- ------- ------- -------
TO NON-CONTROLLING SHAREHOLDERS -1.1% 1.6% 3.3% 4.8%
------- ------- ------- -------
Less: Net income attributable to
non-controlling interests 0.1% - 0.0% -
------- ------- ------- -------
GFI's NET (LOSS) INCOME -1.2% 1.6% 3.3% 4.8%
======= ======= ======= =======
GFI Group Inc. and Subsidiaries
Selected Financial Data (unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Brokerage Revenues by
Product Categories:
Fixed Income $ 52,975 $ 68,235 $ 185,269 $ 223,727
Financial 39,731 33,166 116,964 97,662
Equity 37,172 44,673 131,325 146,920
Commodity 44,810 38,311 139,406 114,744
----------- ----------- ----------- -----------
Total brokerage
revenues $ 174,688 $ 184,385 $ 572,964 $ 583,053
=========== =========== =========== ===========
Brokerage Revenues by
Geographic Region:
Americas $ 71,224 $ 74,986 $ 221,108 $ 253,034
Europe, Middle
East, and Africa 84,078 93,406 293,417 282,616
Asia-Pacific 19,386 15,993 58,439 47,403
----------- ----------- ----------- -----------
Total brokerage
revenues $ 174,688 $ 184,385 $ 572,964 $ 583,053
=========== =========== =========== ===========
September 30, December 31,
2010 2009
----------- -----------
Consolidated Statement of
Financial Condition Data:
Cash and cash
equivalents $ 318,026 $ 342,379
Deposits at clearing
organizations 38,908 11,065
----------- -----------
Total Balance sheet
cash on hand 356,934 353,444
Balance sheet cash
per share 2.93 2.98
Total assets (1) 1,421,147 952,094
Total debt, including
current portion 189,361 173,688
Stockholders' equity 522,615 484,102
Selected Statistical Data:
Brokerage personnel
headcount (2) 1,152 1,082
Employees 1,968 1,768
Broker productivity
for the period (3) $ 150 $ 155
(1) Total assets include receivables from brokers, dealers and clearing
organizations of $401.8 million and $87.7 million at September 30, 2010
and December 31, 2009, respectively. These receivables primarily
represent securities transactions entered into in connection with our
matched principal business which have not settled as of their stated
settlement dates, as well as balances with clearing organizations.
These receivables are substantially offset by corresponding payables to
brokers, dealers and clearing organizations for these unsettled
transactions.
(2) Brokerage personnel headcount includes brokers, traders, trainees and
clerks.
(3) Broker productivity is calculated as brokerage revenues divided by
average monthly brokerage personnel headcount for the quarter.
GFI Group Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
(In thousands except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
GAAP revenues $ 209,747 $ 192,246 $ 640,110 $ 633,147
Gain on exchange of
cost-method
investments (a) - - - (697)
Fair value
mark-to-market on
future purchase
commitment (a) 809 - 809 -
Mark-to-market loss
(gain) on forward
hedges of future foreign
currency revenues (a) 4,078 5,218 3,081 (2,202)
----------- ----------- ----------- -----------
Total Non-GAAP
Revenues 214,634 197,464 644,000 630,248
GAAP expenses 213,132 187,830 609,002 584,356
Non-operating adjustments:
Amortization of
intangibles (2,114) (1,356) (4,941) (4,084)
Professional and other
fees for business
development
activities (2,011) - (3,871) -
Severance and other
restructuring - - - (4,644)
Total Non-GAAP
adjustments (a) (4,125) (1,356) (8,812) (8,728)
----------- ----------- ----------- -----------
Non-GAAP operating
expenses 209,007 186,474 600,190 575,628
GAAP (loss) income
before (benefit from)
provision for income
taxes and non-controlling
interests (3,385) 4,416 31,108 48,791
Sum of Non-GAAP
items = (a) 9,012 6,574 12,702 5,829
----------- ----------- ----------- -----------
Non-GAAP income before
tax provision and
non-controlling
interests 5,627 10,990 43,810 54,620
GAAP (benefit from)
provision for income
taxes (1,050) 1,633 9,643 18,052
Income tax impact on
Non-GAAP items (b) 2,794 2,432 3,937 2,116
----------- ----------- ----------- -----------
Non-GAAP provision for
income taxes 1,744 4,065 13,580 20,168
Net income attributable
to non-controlling
interests 151 - 151 -
GAAP net (loss) income (2,486) 2,783 21,314 30,739
Sum of Non-GAAP
Adjustments
[ (a) - (b) ] 6,218 4,142 8,765 3,713
----------- ----------- ----------- -----------
Non-GAAP net income $ 3,732 $ 6,925 $ 30,079 $ 34,452
=========== =========== =========== ===========
GAAP basic net (loss)
income per share $ (0.02) $ 0.02 $ 0.18 $ 0.26
Basic non-operating
income per share 0.05 0.04 0.07 0.03
----------- ----------- ----------- -----------
Non-GAAP basic net
income per share $ 0.03 $ 0.06 $ 0.25 $ 0.29
=========== =========== =========== ===========
GAAP diluted net (loss)
income per share $ (0.02) $ 0.02 $ 0.17 $ 0.25
Diluted non-operating
income per share 0.05 0.04 0.07 0.03
----------- ----------- ----------- -----------
Non-GAAP diluted net
income per share $ 0.03 $ 0.06 $ 0.24 $ 0.28
=========== =========== =========== ===========
Weighted average
Non-GAAP shares
outstanding - basic 121,943,158 118,062,749 120,059,960 118,117,384
Weighted average
Non-GAAP shares
outstanding - diluted 127,334,469 122,552,882 124,665,379 121,382,317
GFI Group Inc.
Adjusted EBITDA
Last
twelve
months
($ '000's) 3Q09 4Q09 1Q10 2Q10 3Q10 (LTM)
------- -------- ------- ------- ------- --------
Net income (loss)
per U.S. GAAP
before attribution
to non-controlling
interests $ 2,783 $(14,451) $13,376 $10,424 $(2,335)
Plus/Less:
Extraordinary and
other non-recurring
(gains) and losses
(i.e., non-GAAP
adjustments) 6,574 31,359 1,495 2,195 9,012
Plus: Interest
expense 2,769 2,645 2,575 2,730 3,204
Less: Interest
income (172) (148) (240) (77) (914)
Plus: Income tax
expense (benefit) 1,633 (11,070) 6,738 3,955 (1,050)
Plus: Depreciation
and amortization
expense (excluding
intangibles) 6,324 6,578 6,787 6,414 6,737
Plus: Amortization
of RSU's 7,339 6,256 6,784 6,511 6,894
Plus: Amortization
of cash sign-on
bonuses 9,184 7,852 5,192 8,344 5,070
Plus: Net (income)
loss attributable
to non-controlling
interests - - - - (151)
------- -------- ------- ------- ------- --------
Adjusted EBITDA $36,434 $ 29,021 $42,707 $40,496 $26,467 $138,691
------- -------- ------- ------- ------- --------
SOURCE: GFI Group
http://www2.marketwire.com/mw/emailprcntct?id=2727EDAB58747CB8
http://www2.marketwire.com/mw/emailprcntct?id=403C80FD95275C42
http://www2.marketwire.com/mw/emailprcntct?id=9C0B1CC7AA98DCCA
http://www2.marketwire.com/mw/emailprcntct?id=743EC6CB0D180F64
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