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Press
Karen Laureano-Rikardsen
+1 212 829 4975
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
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