Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Global Brokerage, Inc. | v423589_8k.htm |
Exhibit 99.1
FXCM Inc. Announces Third Quarter 2015 Results
Releases October 2015 Customer Trading Metrics
Third Quarter 2015 Highlights:
| · | U.S. GAAP net revenues from continuing operations of $59.6 million |
| · | U.S. GAAP net income attributable to FXCM Inc. from continuing operations of $64.3 million or $12.10(1) per fully diluted share, including a $137.6 million gain on derivative liability |
| · | U.S. GAAP net revenues from discontinued operations of $14.8 million |
| · | U.S. GAAP net income attributable to FXCM Inc. from discontinued operations of $9.3 million or $1.76(1) per fully diluted share |
| · | Adjusted EBITDA from continuing and discontinued operations of $5.2 million |
| · | Strong combined operating cash position of $254.3 million and regulatory surplus of $85.1 million at September 30, 2015 |
October 2015 Customer Trading Metrics from Continuing Operations(2) Highlights:
| · | Retail customer trading volume(3) of $335 billion in October 2015, 3% higher than September 2015 and 25% lower than October 2014. |
| · | Institutional customer trading volume(3) of $34 billion in October 2015, 28% lower than September 2015 and 63% lower than October 2014. |
NEW YORK – November 5, 2015 – FXCM Inc. (NYSE:FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended September 30, 2015, U.S. GAAP trading revenue from continuing operations of $56.3 million, compared to $88.7 million for the quarter ended September 30, 2014. U.S. GAAP net income attributable to FXCM Inc. from continuing operations was $64.3 million for the third quarter 2015 or $12.10(1) per fully diluted share, compared to U.S. GAAP net income attributable to FXCM Inc. from continuing operations of $2.0 million or $0.45(1) per fully diluted share for the third quarter 2014.
For the nine months ended September 30, 2015, U.S. GAAP trading revenue from continuing operations was $184.7 million, compared to $245.3 million for the nine months ended September 30, 2014. U.S. GAAP net loss attributable to FXCM Inc. from continuing operations was $427.9 million for the nine months ended September 30, 2015 or $86.13(1) per fully diluted share, compared to U.S. GAAP net loss attributable to FXCM Inc. from continuing operations of $1.4 million or $0.36(1) per fully diluted share for the nine months ended September 30, 2014.
Results from operations for the quarter ended September 30, 2015 included a gain on derivative liability of $137.6 million and results from the nine months ended September 30, 2015 included a loss on derivative liability of $254.7 million. In each case, the gain/loss is a non-cash item relating to the increase/decrease in value of the Leucadia Letter Agreement. The Letter Agreement is a component of the financing package provided by Leucadia National Corp. (“Leucadia”). On January 15, 2015, FXCM’s customers suffered negative equity balances due to the unprecedented move in the Swiss Franc after the Swiss National Bank (“SNB”) discontinued its peg of the Swiss Franc to the Euro. On January 16, 2015, FXCM entered into a financing agreement with Leucadia that permitted FXCM’s regulated subsidiaries to meet their regulatory capital requirements and continue normal operations after significant losses were incurred resulting from the events of January 15, 2015.
U.S. GAAP trading revenue from discontinued operations for the quarter ended September 30, 2015 was $13.4 million, compared to $23.5 million for the quarter ended September 30, 2014. U.S. GAAP net income attributable to FXCM Inc. from discontinued operations was $9.3 million for the third quarter 2015 or $1.76(1) per fully diluted share, which includes a $12.4 million gain on the sale of FXCM Hong Kong, or $2.34(1) per fully diluted share, compared to U.S. GAAP net income attributable to FXCM Inc. from discontinued operations of $0.4 million or $0.10(1) per fully diluted share for the third quarter 2014.
U.S. GAAP trading revenue from discontinued operations for the nine months ended September 30, 2015 was $60.2 million, compared to $71.3 million for the nine months ended September 30, 2014. U.S. GAAP net loss attributable to FXCM Inc. from discontinued operations was $21.1 million for the nine months ended September 30, 2015 or $4.24(1) per fully diluted share, compared to U.S. GAAP net income attributable to FXCM Inc. from discontinued operations of $2.8 million or $0.70(1) per fully diluted share for the nine months ended September 30, 2014.
Adjusted EBITDA from continuing and discontinued operations for the three months ended September 30, 2015 was $5.2 million, compared to $28.4 million for the three months ended September 30, 2014.
Adjusted EBITDA from continuing and discontinued operations for the nine months ended September 30, 2015 was $25.6 million, compared to $66.5 million for the nine months ended September 30, 2014.
Adjusted EBITDA is a Non-GAAP financial measure. This measure does not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with U.S. GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Non-GAAP Financial Measures” beginning on A-3 of this release for additional information regarding these Non-GAAP financial measures and for reconciliations of such measures to the most directly comparable measures calculated in accordance with U.S. GAAP.
FXCM Inc. today announced certain key customer trading metrics for October 2015. Monthly activities included:
October 2015 Customer Trading Metrics from Continuing Operations (2)
Retail Customer Trading Metrics
| · | Retail customer trading volume(3) of $335 billion in October 2015, 3% higher than September 2015 and 25% lower than October 2014. |
| · | Average retail customer trading volume(3) per day of $15.2 billion in October 2015, 3% higher than September 2015 and 22% lower than October 2014. |
| · | An average of 513,724 retail client trades per day in October 2015, 9% lower than September 2015 and 3% lower than October 2014. |
| · | Active accounts(4) of 178,273 as of October 31, 2015, a decrease of 1,848, or 1%, from September 2015, and an increase of 17,222, or 11%, from October 2014. |
| · | Tradeable accounts(5) of 161,085 as of October 31, 2015, an increase of 735, or 0.5%, from September 2015, and a decrease of 16,891, or 9%, from October 2014. |
Institutional Customer Trading Metrics
| · | Institutional customer trading volume(3) of $34 billion in October 2015, 28% lower than September 2015 and 63% lower than October 2014. |
| · | Average institutional trading volume(3) per day of $1.6 billion in October 2015, 24% lower than September 2015 and 59% lower than October 2014. |
| · | An average of 28,590 institutional client trades per day in October 2015, 4% lower than September 2015 and 104% higher than October 2014. |
More information, including historical results for each of the above metrics, can be found on the investor relations page of FXCM's corporate website www.fxcm.com.
This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website www.fxcm.com.
(1) Earnings per share have been adjusted to reflect the impact of the one-for-ten reverse stock split of the Corporation’s issued and outstanding Class A common stock that became effective on October 1, 2015.
(2) Customer Trading Metrics from Continuing Operations excludes discontinued operations of FXCM Japan and FXCM Hong Kong.
(3) Volume that FXCM customers traded in period is translated into US dollars.
(4) An Active Account represents an account that has traded at least once in the previous twelve months.
(5) A Tradeable Account is an account with sufficient funds to place a trade in accordance with FXCM trading policies.
Selected Customer Trading Metrics from
Continuing Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||||||
| Total retail trading volume ($ in billions) | $ | 972 | $ | 876 | 11 | % | $ | 2,907 | $ | 2,381 | 22 | % | ||||||||||||
| Total active accounts | 180,121 | 158,237 | 14 | % | 180,121 | 158,237 | 14 | % | ||||||||||||||||
| Trading days in period | 66 | 66 | 0 | % | 194 | 194 | 0 | % | ||||||||||||||||
| Daily average trades | 563,100 | 374,026 | 51 | % | 539,153 | 354,009 | 52 | % | ||||||||||||||||
| Daily average trades per active account | 3.1 | 2.4 | 32 | % | 3.0 | 2.2 | 34 | % | ||||||||||||||||
| Retail trading revenue per million traded | $ | 56 | $ | 93 | -40 | % | $ | 59 | $ | 95 | -38 | % | ||||||||||||
| Total customer equity ($ in millions) | $ | 713.2 | $ | 878.1 | -19 | % | $ | 713.2 | $ | 878.1 | -19 | % | ||||||||||||
Conference Call
As previously announced, FXCM will host a conference call to discuss the results at 4:45 p.m. (EDT). This conference call will be available to domestic participants by dialing 877.445.4603 and 443.295.9270 for international participants. The conference ID number is 63690274.
A live audio webcast, a copy of FXCM's earnings release, and presentation slides for this conference call will be available at http://ir.fxcm.com/.
Disclosure Regarding Forward-Looking Statements
In addition to historical information, this earnings release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and/or the Private Securities Litigation Reform Act of 1995, which reflect FXCM's current views with respect to, among other things, its operations and financial performance in the future. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about FXCM's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with the events that took place in the currency markets on January 15, 2015 and their impact on FXCM's capital structure, risks associated with FXCM's ability to recover all or a portion of any capital losses, risks relating to the ability of FXCM to satisfy the terms and conditions of or make payments pursuant to the terms of the credit agreement with Leucadia, risks related to FXCM's dependence on FX market makers, market conditions, risks associated with the outcome of any potential litigation or regulatory inquiries to which FXCM may become subject as a result of the cybersecurity incident that was reported in a press release on October 1, 2015, risks associated with potential reputational damage to FXCM resulting from this cybersecurity incident, the outcome of FXCM's ongoing investigation (including FXCM's potential discovery of additional information relating to this cybersecurity incident) and the extent of remediation costs and other additional expenses that may be incurred by FXCM as a result of this security incident, and those other risks described under "Risk Factors" in FXCM Inc.'s Annual Report on Form 10-K, FXCM Inc.’s latest Quarterly Report on Form 10-Q, and other reports or documents FXCM files with, or furnishes to, the SEC from time to time, which are accessible on the SEC website at sec.gov. This information should also be read in conjunction with FXCM's Consolidated Financial Statements and the Notes thereto contained in FXCM's Annual Report on Form 10-K, FXCM Inc.’s latest Quarterly Report on Form 10-Q, and in other reports or documents the FXCM files with, or furnishes to, the SEC from time to time, which are accessible on the SEC website at sec.gov.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Visit www.fxcm.com and follow us on Twitter @FXCM, Facebook FXCM, Google+ FXCM or YouTube FXCM.
About FXCM Inc.
FXCM Inc. (NYSE:FXCM) is a leading provider of online foreign exchange (FX) trading, CFD trading, spread betting and related services. Our mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market.
Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.
Trading foreign exchange and CFDs on margin carries a high level of risk, which may result in losses that could exceed your deposits, therefore may not be suitable for all investors. Read full disclaimer.
Contacts
Jaclyn Klein, 646-432-2463
Vice-President, Corporate Communications and Investor Relations
jklein@fxcm.com
ANNEX I
| Schedule | Page Number |
| U.S. GAAP Results | |
| Unaudited U.S. GAAP Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014 | A-1 |
| Unaudited U.S. GAAP Condensed Consolidated Statements of Financial Condition As of September 30, 2015 and December 31, 2014 | A-2 |
| Non-GAAP Financial Measures | A-3 |
| Reconciliation of U.S. GAAP Reported to Adjusted EBITDA | A-4 |
| Schedule of Cash and Cash Equivalents and Amounts Due to/from Brokers | A-6 |
| FXCM Inc. |
| Condensed Consolidated Statements of Operations |
| (In thousands, except per share amounts) |
| (Unaudited) |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues | ||||||||||||||||
| Trading revenue | $ | 56,247 | $ | 88,696 | $ | 184,672 | $ | 245,294 | ||||||||
| Interest income | 494 | 519 | 1,232 | 1,493 | ||||||||||||
| Brokerage interest expense | (212 | ) | (174 | ) | (589 | ) | (370 | ) | ||||||||
| Net interest revenue | 282 | 345 | 643 | 1,123 | ||||||||||||
| Other income | 3,053 | 2,344 | 149,969 | 2,889 | ||||||||||||
| Total net revenues | 59,582 | 91,385 | 335,284 | 249,306 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Compensation and benefits | 23,948 | 23,317 | 72,444 | 72,680 | ||||||||||||
| Referring broker fees | 13,032 | 20,735 | 43,702 | 55,652 | ||||||||||||
| Advertising and marketing | 4,116 | 4,067 | 10,416 | 16,226 | ||||||||||||
| Communication and technology | 7,312 | 10,451 | 26,072 | 28,446 | ||||||||||||
| Trading costs, prime brokerage and clearing fees | 847 | 2,394 | 2,947 | 5,946 | ||||||||||||
| General and administrative | 12,861 | 14,872 | 39,234 | 41,678 | ||||||||||||
| Bad debt expense | - | - | 257,303 | - | ||||||||||||
| Depreciation and amortization | 7,316 | 7,917 | 21,136 | 20,506 | ||||||||||||
| Goodwill impairment loss | - | - | 9,513 | - | ||||||||||||
| Total operating expenses | 69,432 | 83,753 | 482,767 | 241,134 | ||||||||||||
| Operating (loss) income | (9,850 | ) | 7,632 | (147,483 | ) | 8,172 | ||||||||||
| Other Income (expense) | ||||||||||||||||
| Gain (loss) on derivative liability — Letter Agreement | 137,566 | - | (254,730 | ) | - | |||||||||||
| Loss on equity method investments, net | 111 | 137 | 299 | 304 | ||||||||||||
| Interest on borrowings | 28,974 | 3,028 | 103,824 | 9,121 | ||||||||||||
| Income (loss) from continuing operations before income taxes | 98,631 | 4,467 | (506,336 | ) | (1,253 | ) | ||||||||||
| Income tax provision | 295 | 1,350 | 181,616 | 1,366 | ||||||||||||
| Income (loss) from continuing operations | 98,336 | 3,117 | (687,952 | ) | (2,619 | ) | ||||||||||
| Income (loss) from discontinued operations, net of tax | 18,018 | (357 | ) | (74,915 | ) | 69 | ||||||||||
| Net income (loss) | 116,354 | 2,760 | (762,867 | ) | (2,550 | ) | ||||||||||
| Net income (loss) attributable to non-controlling interest in FXCM Holdings, LLC | 39,038 | 1,538 | (274,650 | ) | 1,756 | |||||||||||
| Net income (loss) attributable to other non-controlling interests | 3,667 | (1,170 | ) | (39,238 | ) | (5,697 | ) | |||||||||
| Net income (loss) attributable to FXCM Inc. | $ | 73,649 | $ | 2,392 | $ | (448,979 | ) | $ | 1,391 | |||||||
| Income (loss) from continuing operations attributable to FXCM Inc. | $ | 64,302 | $ | 1,956 | $ | (427,909 | ) | $ | (1,431 | ) | ||||||
| Income (loss) from discontinued operations attributable to FXCM Inc. | 9,347 | 436 | (21,070 | ) | 2,822 | |||||||||||
| Net income (loss) attributable to FXCM Inc. | $ | 73,649 | $ | 2,392 | $ | (448,979 | ) | $ | 1,391 | |||||||
| Weighted average shares of Class A common stock outstanding:(1) | ||||||||||||||||
| Basic | 5,313 | 4,296 | 4,968 | 4,011 | ||||||||||||
| Diluted | 5,313 | 4,382 | 4,968 | 4,011 | ||||||||||||
| Net income (loss) per share attributable to stockholders of Class A common stock of FXCM Inc.:(1) | ||||||||||||||||
| Basic: | ||||||||||||||||
| Continuing operations | $ | 12.10 | $ | 0.46 | $ | (86.13 | ) | $ | (0.36 | ) | ||||||
| Discontinued operations | 1.76 | 0.10 | (4.24 | ) | 0.70 | |||||||||||
| Basic net income (loss) attributable to FXCM Inc. | $ | 13.86 | $ | 0.56 | $ | (90.37 | ) | $ | 0.34 | |||||||
| Net income (loss) per share attributable to stockholders of Class A common stock of FXCM Inc.: (1) | ||||||||||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | 12.10 | $ | 0.45 | $ | (86.13 | ) | $ | (0.36 | ) | ||||||
| Discontinued operations | 1.76 | 0.10 | (4.24 | ) | 0.70 | |||||||||||
| Diluted net income (loss) attributable to FXCM Inc. | $ | 13.86 | $ | 0.55 | $ | (90.37 | ) | $ | 0.34 | |||||||
| Dividends declared per common share(1) | $ | - | $ | 0.60 | $ | - | $ | 1.80 | ||||||||
| (1) | Adjusted to reflect the impact of the one-for-ten reverse stock split of the Corporation’s issued and outstanding Class A common stock that became effective on October 1, 2015. |
A-1
| FXCM Inc. |
| Condensed Consolidated Statements of Financial Condition |
| As of September 30, 2015 and December 31, 2014 |
| (Amounts in thousands except share data) |
| (Unaudited) |
September 30, 2015 | December 31, 2014 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 186,369 | $ | 256,887 | ||||
| Cash and cash equivalents, held for customers | 713,204 | 901,227 | ||||||
| Due from brokers | 24,007 | 9,772 | ||||||
| Accounts receivable, net | 13,894 | 7,209 | ||||||
| Deferred tax asset | - | 9,065 | ||||||
| Tax receivable | 2,626 | 1,381 | ||||||
| Current assets held for sale | 357,894 | 548,506 | ||||||
| Total current assets | 1,297,994 | 1,734,047 | ||||||
| Deferred tax asset | - | 172,619 | ||||||
| Office, communication and computer equipment, net | 37,335 | 39,028 | ||||||
| Goodwill | 28,656 | 39,242 | ||||||
| Other intangible assets, net | 15,787 | 15,338 | ||||||
| Notes receivable | 7,881 | 9,381 | ||||||
| Other assets | 17,512 | 14,829 | ||||||
| Noncurrent assets held for sale | - | 362,943 | ||||||
| Total assets | $ | 1,405,165 | $ | 2,387,427 | ||||
| Liabilities and Stockholders' (Deficit) Equity | ||||||||
| Current liabilities | ||||||||
| Customer account liabilities | $ | 713,204 | $ | 901,227 | ||||
| Accounts payable and accrued expenses | 48,635 | 35,189 | ||||||
| Revolving credit agreement | - | 25,000 | ||||||
| Due to brokers | 60 | 15,983 | ||||||
| Due to related parties pursuant to tax receivable agreement | - | 5,352 | ||||||
| Current liabilities held for sale | 84,057 | 455,915 | ||||||
| Total current liabilities | 845,956 | 1,438,666 | ||||||
| Deferred tax liability | 944 | 1,698 | ||||||
| Senior convertible notes | 155,758 | 151,578 | ||||||
| Credit agreement | 145,330 | - | ||||||
| Due to related parties pursuant to tax receivable agreement | - | 145,224 | ||||||
| Derivative liability — Letter Agreement | 348,531 | - | ||||||
| Other liabilities | 16,294 | 5,957 | ||||||
| Noncurrent liabilities held for sale | - | 1,288 | ||||||
| Total liabilities | 1,512,813 | 1,744,411 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ (Deficit) Equity | ||||||||
| Class A common stock, par value $0.01 per share; 3,000,000,000 shares authorized, 5,372,666(1) and 4,788,996(1) shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 54 | 48 | ||||||
| Class B common stock, par value $0.01 per share; 1,000,000 shares authorized, 27 and 34 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 1 | 1 | ||||||
| Additional paid-in capital(1) | 273,313 | 274,139 | ||||||
| (Accumulated deficit) retained earnings | (426,600 | ) | 22,379 | |||||
| Accumulated other comprehensive income (loss) | 570 | (11,879 | ) | |||||
| Total stockholders’ (deficit) equity, FXCM Inc. | (152,662 | ) | 284,688 | |||||
| Non-controlling interests | 45,014 | 358,328 | ||||||
| Total stockholders’ (deficit) equity | (107,648 | ) | 643,016 | |||||
| Total liabilities and stockholders’ (deficit) equity | $ | 1,405,165 | $ | 2,387,427 | ||||
| (1) | Adjusted to reflect the impact of the one-for-ten reverse stock split of the Corporation’s issued and outstanding Class A common stock that became effective on October 1, 2015. |
A-2
Non-GAAP Financial Measures
We use Non-GAAP financial measures to evaluate our operating performance, as well as the performance of individual employees. Management believes that the disclosed Non-GAAP measures when presented in conjunction with comparable U.S. GAAP measures are useful to investors to compare FXCM's results across several periods and facilitate an understanding of FXCM's operating results. These measures do not represent and should not be considered as a substitute for, or superior to, net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for, or superior to, cash flow from operating activities, each as determined in accordance with U.S. GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies.
| 1. | Compensation Expense. Adjustments have been made to eliminate expense relating to stock based compensation relating to the Company’s IPO as well as costs associated with the acquisition of V3 Markets, LLC. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses. |
| 2. | Compensation Expense / Lucid Minority Interest. Our reported U.S. GAAP results reflect the portion of the 49.9% of Lucid earnings allocated among the non-controlling members of Lucid based on services provided as a component of compensation expense under Allocation of income to Lucid members for services provided. Adjustments have been made to eliminate this allocation of Lucid's earnings attributable to non-controlling members. The Company's management believes that this adjustment provides a more meaningful view of the Company's operating expenses and the Company's economic arrangement with Lucid's non-controlling members. This adjustment has no impact on net income as reported by the Company. |
| 3. | Acquisition Costs/Income. Adjustments have been made to eliminate certain acquisition related costs/income. Given the nature of these items, they are not viewed by management as expenses/income incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these items. |
| 4. | Regulatory Costs. Adjustments have been made to eliminate certain costs (including client reimbursements and professional fees) associated with ongoing discussions and settling certain regulatory matters. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses. |
| 5. | SNB Costs. Adjustments have been made to eliminate certain costs/income (including the net losses associated with client debit balances, costs related to the implementation of a Stockholder Rights Plan and adjustments to the Company’s tax receivable agreement contingent liability) associated with the January 15, 2015 SNB event. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses. |
| 6. | Cyber Security Incident: An adjustment has been made to eliminate certain costs related to investigative and other professional services, costs of communications with customers and remediation activities associated with the incident. Given the nature of these expenses, management believes it is useful to provide the effects of eliminating these expenses. |
A-3
| Reconciliation of U.S. GAAP Reported to Non-GAAP Adjusted Measures(1) | ||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||
| Continuing Ops | Disc Ops | Combined | Continuing Ops | Disc Ops | Combined | |||||||||||||||||||
| Net income (loss) | $ | 98,336 | $ | 18,018 | $ | 116,354 | $ | 3,117 | $ | (357 | ) | $ | 2,760 | |||||||||||
| EBITDA and Other Adjustments | ||||||||||||||||||||||||
| Depreciation and amortization | 7,316 | - | 7,316 | 7,917 | 7,124 | 15,041 | ||||||||||||||||||
| Interest on borrowings | 28,974 | - | 28,974 | 3,028 | - | 3,028 | ||||||||||||||||||
| MTM (gain) loss on derivatives | (137,566 | ) | - | (137,566 | ) | - | - | - | ||||||||||||||||
| Goodwill and held for sale impairment | - | (979 | ) | (979 | ) | - | - | - | ||||||||||||||||
| Gain on completed dispositions | - | (12,449 | ) | (12,449 | ) | - | - | - | ||||||||||||||||
| Income tax provision (benefit) | 295 | (306 | ) | (11 | ) | 1,350 | (206 | ) | 1,144 | |||||||||||||||
| EBITDA and Other Adjustments | (2,645 | ) | 4,284 | 1,639 | 15,412 | 6,561 | 21,973 | |||||||||||||||||
| Adjustments | ||||||||||||||||||||||||
| Net Revenues(2) | - | - | - | (360 | ) | - | (360 | ) | ||||||||||||||||
| Compensation and benefits(3) | - | - | - | 2,232 | - | 2,232 | ||||||||||||||||||
| Allocation of net income to Lucid members for services provided(4) | - | 2,249 | 2,249 | - | 1,483 | 1,483 | ||||||||||||||||||
| General and administrative(5) | 1,306 | - | 1,306 | 3,116 | - | 3,116 | ||||||||||||||||||
| Adjusted EBITDA | $ | (1,339 | ) | $ | 6,533 | $ | 5,194 | $ | 20,400 | $ | 8,044 | $ | 28,444 | |||||||||||
(1) The presentation includes Non-GAAP financial measures. These Non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles, and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with U.S. GAAP.
(2) Represents the elimination of a $0.4 million benefit in Q3 2014 attributable to the remeasurement of our tax receivable agreement liability to reflect a revised effective tax rate
(3) Represents the elimination of stock-based compensation associated with the IPO of $2.2 million in Q3 2014.
(4) Represents the elimination of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes.
(5) Represents regulatory and professional fees of $1.3 million in Q3 2015 including $0.2 million of costs related to the cyber security incident, the net expense relating to pre-August 2010 trade execution practices and other regulatory fees and fines of $0.8 million in Q3 2014 and the $2.3 million charge related to a put option payment for Online Courses in Q3 2014.
A-4
| Reconciliation of U.S. GAAP Reported to Non-GAAP Adjusted Measures(1) | ||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||
Continuing Ops | Disc Ops | Combined | Continuing Ops | Disc Ops | Combined | |||||||||||||||||||
| Net (loss) income | $ | (687,952 | ) | $ | (74,915 | ) | $ | (762,867 | ) | $ | (2,619 | ) | $ | 69 | $ | (2,550 | ) | |||||||
| EBITDA and Other Adjustments | ||||||||||||||||||||||||
| Depreciation and amortization | 21,136 | 12,359 | 33,495 | 20,506 | 20,287 | 40,793 | ||||||||||||||||||
| Interest on borrowings | 103,824 | - | 103,824 | 9,121 | - | 9,121 | ||||||||||||||||||
| MTM loss on derivatives | 254,730 | - | 254,730 | - | - | - | ||||||||||||||||||
| Goodwill and held for sale impairment | 9,513 | 82,685 | 92,198 | - | - | - | ||||||||||||||||||
| Gain on completed dispositions | - | (14,427 | ) | (14,427 | ) | - | - | - | ||||||||||||||||
| Income tax provision | 181,616 | 5,321 | 186,937 | 1,366 | 282 | 1,648 | ||||||||||||||||||
| EBITDA and Other Adjustments | (117,133 | ) | 11,023 | (106,110 | ) | 28,374 | 20,638 | 49,012 | ||||||||||||||||
| Adjustments | ||||||||||||||||||||||||
| Net Revenues(2) | (145,224 | ) | - | (145,224 | ) | (360 | ) | (3,672 | ) | (4,032 | ) | |||||||||||||
| Compensation and benefits(3) | - | - | - | 6,367 | 272 | 6,639 | ||||||||||||||||||
| Allocation of net income to Lucid members for services provided(4) | - | 6,916 | 6,916 | - | 6,771 | 6,771 | ||||||||||||||||||
| Communication and technology(5) | - | - | - | - | 206 | 206 | ||||||||||||||||||
| General and administrative(6) | 4,341 | - | 4,341 | 7,697 | 163 | 7,860 | ||||||||||||||||||
| Bad debt expense(7) | 257,303 | 8,408 | 265,711 | - | - | - | ||||||||||||||||||
| Adjusted EBITDA | $ | (713 | ) | $ | 26,347 | $ | 25,634 | $ | 42,078 | $ | 24,378 | $ | 66,456 | |||||||||||
(1) The presentation includes Non-GAAP financial measures. These Non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles, and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with U.S. GAAP.
(2) Represents the elimination of a $145.2 million benefit in Q1 2015 attributable to the reduction of our tax receivable agreement contingent liability to zero and the elimination of a $0.4 million benefit in Q3 2014 attributable to the remeasurement of our tax receivable agreement liability to reflect a revised effective tax rate and the elimination of a $3.7 million benefit recorded to reduce the contingent consideration related to the Faros acquisition in Q1 2014.
(3) Represents the elimination of stock-based compensation associated with the IPO of $6.4 million in the Nine Months Ended September 30, 2014 and the elimination of V3 acquisition costs of $0.3 million in Q1 2014.
(4) Represents the elimination of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes.
(5) Represents the elimination of V3 acquisition costs in Q1 2014.
(6) Represents the elimination of the expense related to the Stockholders Rights Plan, legal fees resulting from the January 15, 2015 SNB event and regulatory and other professional fees of $4.3 million, including $0.2 million of costs related to the cyber security incident, in the Nine Months Ended September 30, 2015, the net expense relating to pre-August 2010 trade execution practices and other regulatory fees and fines of $3.5 million in the Nine Months Ended September 30, 2014 and the elimination of V3 acquisition costs of $0.5 million in continuing ops and $0.2 million in discontinued ops in Q1 2014 and the $3.6 million of charges related to put option payments for Online Courses in Q2 & Q3 2014.
(7) Represents the net bad debt expense related to client debit balances associated with the January 15, 2015 SNB event.
A-5
Schedule of Cash and Cash Equivalents and Due to/from Brokers
| September 30, 2015 | December 31, 2014 | |||||||||||||||||||||||
Continuing Ops | Disc Ops | Combined | Continuing Ops | Disc Ops | Combined | |||||||||||||||||||
| Cash & Cash Equivalents | $ | 186,369 | $ | 23,422 | $ | 209,791 | $ | 256,887 | $ | 85,263 | $ | 342,150 | ||||||||||||
| Due From Brokers | 24,007 | 20,595 | 44,602 | 9,772 | 27,552 | 37,324 | ||||||||||||||||||
| Due to Brokers | (60 | ) | (21 | ) | (81 | ) | (15,983 | ) | (330 | ) | (16,313 | ) | ||||||||||||
| Operating Cash | $ | 210,316 | $ | 43,996 | $ | 254,312 | $ | 250,676 | $ | 112,485 | $ | 363,161 | ||||||||||||
A-6