Exhibit 99.1

 

 

Unaudited Pro Forma Consolidated Financial Statements

 

 

 

FXCM Inc.

 

 

As of December 31, 2014 and For the Years Ended

December 31, 2014, 2013 and 2012

 

 

 

FXCM Inc.

 

Unaudited Pro Forma Consolidated Financial Statements

  

On April 1, 2015, FXCM Holdings, LLC ("Holdings"), a majority owned, controlled and consolidated subsidiary of FXCM Inc. (the "Company"), and FXCM Newco, LLC, a wholly-owned subsidiary of Holdings, completed the previously announced sale of FXCM Japan Securities Co., Ltd ("FXCM Japan") to Rakuten Securities, Inc. for a purchase price of approximately $62.0 million (the "Transaction"). The consideration received at closing consisted of approximately $48.0 million in cash. The remaining consideration, as well as the net gain expected to be realized by the Company on the Transaction, is subject to final adjustment based on the finalization of FXCM Japan's balance sheet as of March 31, 2015.

 

The accompanying unaudited pro forma consolidated financial statements are based on the historical consolidated financial statements of the Company, after giving effect to the Transaction, and reflect the assumptions and adjustments described in the accompanying notes. The Unaudited Pro Forma Consolidated Statement of Financial Condition gives effect to the Transaction as if it had occurred on December 31, 2014. The Unaudited Pro Forma Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 give effect to the Transaction as if it had occurred on January 1, 2012.

 

The pro forma adjustments are based on information presently available and assumptions that the Company believes are reasonable under the circumstances; however, the actual amounts may differ materially from the information presented. In accordance with the regulations of the Securities and Exchange Commission, the pro forma adjustments are directly attributable to the Transaction, factually supportable and, with respect to the Unaudited Pro Forma Consolidated Statements of Operations, expected to have a continuing impact on the Company's operating results.

 

The unaudited pro forma consolidated financial statements are presented for informational purposes only and are not necessarily indicative of what the financial position and results of operations actually would have been had the Transaction been completed as of the date or for the periods presented, nor do such financial statements purport to represent the results of future periods.

 

The unaudited pro forma consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

 

FXCM Inc.

 

Unaudited Pro Forma Consolidated Statement of Financial Condition

As of December 31, 2014

(In thousands)

 

		Historical FXCM Inc.				Pro Forma Adjustments				Pro Forma FXCM Inc.
Assets
Current assets
Cash and cash equivalents		$	338,814			$	42,867		(a)	$	381,681
Cash and cash equivalents, held for customers			1,331,723				(265,180	)	(b)		1,066,543
Restricted time deposits			3,336				(3,336	)	(b)		—
Trading securities			26				—				26
Due from brokers			37,298				(111	)	(b)		37,187
Accounts receivable, net			10,481				(133	)	(b)		10,348
Deferred tax asset			9,923				(837	)	(b)		9,086
Tax receivable			2,446				(113	)	(b)		2,333
Total current assets			1,734,047				(226,843	)			1,507,204
Restricted time deposits			5,005				(5,005	)	(b)		—
Deferred tax asset			179,698				—				179,698
Office, communication and computer equipment, net			48,194				(2,891	)	(b)		45,303
Goodwill			323,887				(4,700	)	(b)		319,187
Other intangible assets, net			57,567				(3,604	)	(b)		53,963
Notes receivable			9,381				—				9,381
Other assets			29,648				(772	)	(b)		28,876
Total assets		$	2,387,427			$	(243,815	)		$	2,143,612
Liabilities and Stockholders' Equity
Current liabilities
Customer account liabilities		$	1,331,723			$	(265,180	)	(b)	$	1,066,543
Accounts payable and accrued expenses			56,039				(2,539	)	(b)		53,500
Credit agreement			25,000				—				25,000
Notes payable			—				—				—
Due to brokers			16,313				(330	)	(b)		15,983
Securities sold, not yet purchased			4,239				—				4,239
Due to related parties pursuant to tax receivable agreement			5,352				—				5,352
Total current liabilities			1,438,666				(268,049	)			1,170,617
Deferred tax liability			2,835				(1,137	)	(b)		1,698
Due to related parties pursuant to tax receivable agreement			145,224				—				145,224
Senior convertible notes			151,578				—				151,578
Other liabilities			6,108				(76	)	(b)		6,032
Total liabilities			1,744,411				(269,262	)			1,475,149
Stockholders' Equity
Class A common stock			479				—				479
Class B common stock			1				—				1
Additional paid-in-capital			273,708				—				273,708
Retained earnings			22,379				1,385		(c)		23,764
Accumulated other comprehensive loss			(11,879	)			10,716		(c)		(1,163	)
Total stockholders’ equity, FXCM Inc.			284,688				12,101				296,789
Non-controlling interests			358,328				13,346		(d)		371,674
Total stockholders’ equity			643,016				25,447				668,463
Total liabilities and stockholders’ equity		$	2,387,427			$	(243,815	)		$	2,143,612

  

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

FXCM Inc.

 

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2014

(In thousands, except per share data)

 

		Historical FXCM Inc.				Pro Forma Adjustments				Pro Forma FXCM Inc.
Revenues
Retail trading revenue		$	338,035			$	(19,900	)	(e)	$	318,135
Institutional trading revenue			103,199				—				103,199
Trading revenue			441,234				(19,900	)			421,334
Interest income			2,525				(71	)	(e)		2,454
Brokerage interest expense			(714	)			1		(e)		(713	)
Net interest revenue			1,811				(70	)			1,741
Other income			20,712				(289	)	(e)		20,423
Total net revenues			463,757				(20,259	)			443,498
Operating Expenses
Compensation and benefits			111,716				(4,908	)	(e)		106,808
Allocation of income to Lucid members for services provided			9,406				—				9,406
Total compensation and benefits			121,122				(4,908	)			116,214
Referring broker fees			80,850				(1,055	)	(e)		79,795
Advertising and marketing			22,666				(975	)	(e)		21,691
Communication and technology			48,396				(366	)	(e)		48,030
Trading costs, prime brokerage and clearing fees			33,828				(580	)	(e)		33,248
General and administrative			62,808				(4,500	)	(e)		58,308
Depreciation and amortization			54,945				(2,609	)	(e)		52,336
Total operating expenses			424,615				(14,993	)			409,622
Operating income			39,142				(5,266	)			33,876
Other Expense
Loss on equity method investments, net			1,308				—				1,308
Interest on borrowings			12,186				—				12,186
Income before income taxes			25,648				(5,266	)			20,382
Income tax provision			6,001				(1,883	)	(f)		4,118
Net income			19,647				(3,383	)			16,264
Net income attributable to non-controlling interest in FXCM Holdings, LLC			8,960				(1,648	)	(g)		7,312
Net loss attributable to other non-controlling interests			(6,464	)			—				(6,464	)
Net income attributable to FXCM Inc.		$	17,151			$	(1,735	)		$	15,416
Weighted average shares of Class A common stock outstanding:
Basic			41,637				—				41,637
Diluted			44,010				—				44,010
Net income per share attributable to stockholders of Class A common stock of FXCM Inc.:
Basic		$	0.41				—			$	0.37
Diluted		$	0.39				—			$	0.35

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

FXCM Inc.

 

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2013

(In thousands, except per share data)

 

		Historical FXCM Inc.				Pro Forma Adjustments				Pro Forma FXCM Inc.
Revenues
Retail trading revenue		$	365,285			$	(22,980	)	(e)	$	342,305
Institutional trading revenue			103,994				—				103,994
Trading revenue			469,279				(22,980	)			446,299
Interest income			2,614				(111	)	(e)		2,503
Brokerage interest expense			(258	)			4		(e)		(254	)
Net interest revenue			2,356				(107	)			2,249
Other income			17,953				—				17,953
Total net revenues			489,588				(23,087	)			466,501
Operating Expenses
Compensation and benefits			105,470				(4,962	)	(e)		100,508
Allocation of income to Lucid members for services provided			21,290				—				21,290
Total compensation and benefits			126,760				(4,962	)			121,798
Referring broker fees			84,231				(1,336	)	(e)		82,895
Advertising and marketing			27,091				(481	)	(e)		26,610
Communication and technology			38,441				(1,017	)	(e)		37,424
Trading costs, prime brokerage and clearing fees			30,821				(324	)	(e)		30,497
General and administrative			68,230				(5,635	)	(e)		62,595
Depreciation and amortization			53,729				(2,967	)	(e)		50,762
Total operating expenses			429,303				(16,722	)			412,581
Operating income			60,285				(6,365	)			53,920
Other Expense
Loss on equity method investments, net			752				—				752
Interest on borrowings			7,673				—				7,673
Income before income taxes			51,860				(6,365	)			45,495
Income tax provision			17,024				(3,006	)	(f)		14,018
Net income			34,836				(3,359	)			31,477
Net income attributable to non-controlling interest in FXCM Holdings, LLC			24,850				(1,659	)	(g)		23,191
Net loss attributable to other non-controlling interests			(4,846	)			—				(4,846	)
Net income attributable to FXCM Inc.		$	14,832			$	(1,700	)		$	13,132
Weighted average shares of Class A common stock outstanding:
Basic			32,789				—				32,789
Diluted			33,957				—				33,957
Net income per share attributable to stockholders of Class A common stock of FXCM Inc.:
Basic		$	0.45				—			$	0.40
Diluted		$	0.44				—			$	0.39

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

FXCM Inc.

 

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2012

(In thousands, except per share data)

 

		Historical FXCM Inc.				Pro Forma Adjustments				Pro Forma FXCM Inc.
Revenues
Retail trading revenue		$	339,685			$	(26,925	)	(e)	$	312,760
Institutional trading revenue			62,033				—				62,033
Trading revenue			401,718				(26,925	)			374,793
Interest income			3,571				(129	)	(e)		3,442
Brokerage interest expense			(277	)			41		(e)		(236	)
Net interest revenue			3,294				(88	)			3,206
Other income			12,303				(156	)	(e)		12,147
Total net revenues			417,315				(27,169	)			390,146
Operating Expenses
Compensation and benefits			105,779				(6,196	)	(e)		99,583
Allocation of income to Lucid members for services provided			—				—				—
Total compensation and benefits			105,779				(6,196	)			99,583
Referring broker fees			76,585				(2,319	)	(e)		74,266
Advertising and marketing			30,860				(654	)	(e)		30,206
Communication and technology			37,113				(2,901	)	(e)		34,212
Trading costs, prime brokerage and clearing fees			16,935				(68	)	(e)		16,867
General and administrative			63,043				(13,038	)	(e)		50,005
Depreciation and amortization			36,773				(3,003	)	(e)		33,770
Total operating expenses			367,088				(28,179	)			338,909
Operating income			50,227				1,010				51,237
Other Expense
Loss on equity method investments, net			—				—				—
Interest on borrowings			2,763				—				2,763
Income before income taxes			47,464				1,010				48,474
Income tax provision			8,986				(423	)	(f)		8,563
Net income			38,478				1,433				39,911
Net income attributable to non-controlling interest in FXCM Holdings, LLC			23,131				1,302		(g)		24,433
Net income attributable to other non-controlling interests			6,389				—				6,389
Net income attributable to FXCM Inc.		$	8,958			$	131			$	9,089
Weighted average shares of Class A common stock outstanding:
Basic			24,086				—				24,086
Diluted			24,086				—				24,086
Net income per share attributable to stockholders of Class A common stock of FXCM Inc.:
Basic		$	0.37				—			$	0.38
Diluted		$	0.37				—			$	0.38

 

 

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

 

 

FXCM Inc.

 

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

 

Pro Forma Adjustments

 

Adjustments included in the column under the heading "Pro Forma Adjustments" represent the following:

 

(a) Estimated cash proceeds of $61.8 million expected to be received from the sale, less transaction costs of $2.5 million, less FXCM Japan cash of $16.4 million held at December 31, 2014.

 

(b) Adjustments to reflect the elimination of assets and liabilities of FXCM Japan.

 

(c) The estimated net gain recognized upon the sale of FXCM Japan was calculated as follows:

 

($ in thousands)
Cash proceeds						$	61,756
Less:   Carrying value of FXCM Japan							(33,781	)
Transaction costs							(2,528	)
Realization of cumulative translation adjustment:
Controlling interest			(10,716	)
Non-controlling interests			(12,348	)
Total realization of cumulative translation adjustment							(23,064	)
Estimated gain before taxes							2.383
Estimated taxes on gain (1)							—
Estimated gain net of taxes						$	2,383
Estimated gain attributable to non-controlling interest in FXCM Holdings, LLC							998
Estimated gain attributable to FXCM Inc.						$	1,385

 

⁽¹⁾ For tax purposes, the sale of FXCM Japan is expected to generate a capital loss that is not expected to be realizable. Therefore, a full valuation allowance against the capital loss will be recorded, resulting in no tax impact from the sale.

 

(d) Adjustment is comprised of the non-controlling interests' portions of the realized cumulative translation adjustment ($12.3 million) and the estimated net gain recognized on the sale ($1.0 million).

 

(e) Adjustments to reflect the elimination of revenues and expenses of FXCM Japan.

 

(f) Estimated tax effect of the pro forma adjustments calculated using the local statutory tax rate for FXCM Japan, and the U.S. statutory tax rate for FXCM Inc., reduced by the portion allocated to the non-controlling interests in FXCM Holdings, LLC.

 

(g) Effect of the pro forma adjustments on Net Income attributable to non-controlling interest in FXCM Holdings, LLC.