NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- GFI Group Inc. , an inter-dealer brokerage, market data, trading platform and analytical software provider for global cash and derivative markets, today announced financial results for the fourth quarter and year ended December 31, 2008.
Highlights -- Total revenues for the fourth quarter of 2008 were $196.2 million, and included a $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues. Excluding this loss, non-GAAP revenues were $210.9 million for the fourth quarter of 2008. In the fourth quarter of 2007, total GAAP and non-GAAP revenues were $247.4 million and $248.0 million, respectively. -- Brokerage revenues for the fourth quarter of 2008 declined to $193.8 million from $238.2 million in the fourth quarter of 2007. While equity product revenues increased 3% over the fourth quarter of 2007, credit, financial and commodity product revenues decreased 21%, 37% and 30%, respectively. Within credit products, a 61% increase in corporate and sovereign fixed income revenues was offset by a 47% decrease in credit derivative revenues, compared with the fourth quarter of 2007. -- In the fourth quarter of 2008, compensation and employee benefits expense was 70.1% of total revenues compared with 61.1% of revenues in the fourth quarter of 2007. On a non-GAAP basis, compensation and employee benefits expense as a percentage of revenues was 65.2% in the fourth quarter of 2008 compared with 60.9% in the fourth quarter of 2007. -- Non-compensation expense as a percentage of revenues was 30.1% for the fourth quarter of 2008 compared with 24.7% in the fourth quarter of 2007. On a non-GAAP basis, non-compensation expense as a percentage of revenue was 27.3% in the fourth quarter of 2008 compared with 23.4% in the fourth quarter of 2007. -- Net income for the fourth quarter of 2008 was $0.2 million, or $0.00 per diluted share compared with net income of $25.2 million, or $0.21 per diluted share, in the fourth quarter of 2007. On a non-GAAP basis, net income for the fourth quarter of 2008 was $10.7 million, or $0.09 per diluted share, compared with $26.0 million, or $0.22 per diluted share, for the fourth quarter of 2007. -- For the full year 2008, total revenues increased 5% to $1.02 billion from $970.5 million in 2007. Net income for 2008 was $53.1 million or $0.44 per diluted share compared to $94.9 million, or $0.80 per diluted share for full year 2007. On a non-GAAP basis, total revenues for 2008 rose 7% to $1.04 billion while net income was $94.7 million or $0.79 per diluted share compared with $100.3 million or $0.84 per diluted share for full year 2007.
Michael Gooch, Chairman and Chief Executive Officer of GFI, commented: "While market volatility normally benefits GFI, the extreme market volatility and dislocation that followed the Lehman Brothers bankruptcy in September severely impacted trading conditions in our derivative markets in the fourth quarter. This period was marked by tight credit conditions, far-reaching government intervention in global banks, and contraction and deleveraging by dealers and hedge funds. Substantial declines in share prices and asset and index values reduced GFI's revenues in certain European products where our commissions are based on notional values rather than volumes. Additionally, we reduced the number of our brokerage desks and personnel in the fourth quarter due to the restructuring initiative announced in October. As a result of these and other factors, we saw reduced trading across many of our asset classes, especially in November and December. Our results were also affected by unfavorable foreign currency exchange rates. In total, our brokerage revenues in the fourth quarter of 2008 were 19% lower than the fourth quarter of 2007, although full year 2008 brokerage revenues rose 3% over 2007.
"We experienced a decline in revenues in each product category in the fourth quarter with the exception of equity products, which increased 3% over the fourth quarter of 2007, and were our largest product category at 38% of fourth quarter brokerage revenues. The growth in equity products, in which we have made a determined investment over the past few years, came from both cash equities and equity derivatives. For the year, revenues from equity products increased 22% from 2007.
"Our revenues from credit products were 21% lower than the fourth quarter of 2007, despite a 61% increase in revenues from fixed income products. This growth was more than offset by a 47% decline in credit derivative revenues. For the full year our credit product revenues were down only 4% over 2007 on a GAAP basis, and virtually even with the prior year on a non-GAAP basis.
"Financial product revenues declined 37% from the fourth quarter of 2007 due to less trading in emerging market interest rate, currency and exotic derivatives. Dealers scaled back their trading operations in Asia and other emerging markets that had been a growth area for us in past quarters. Full year revenues from financial products were down 7% from 2007 due, in part, to the transfer of our global U.S. dollar interest rate swaps business in March and the restructuring initiative implemented in the fourth quarter.
"Commodity product revenues decreased 30% from the fourth quarter of 2007, but were flat for the full year 2008 compared to the full year 2007. The fourth quarter was impacted by the significant decline of the Baltic Dry Freight Index in October, which substantially reduced our dry freight revenues in Europe and Asia compared with the fourth quarter of 2007. North American and European energy product revenues also declined due, in part, to customer deleveraging.
"Employee compensation and benefit expenses are the largest component of our costs. While they decreased 9% from the fourth quarter of 2007, they increased as a percentage of total revenues from the prior year's fourth quarter. This resulted from several factors, including substantially lower revenues, unfavorable foreign exchange rates and the $14.6 million unrealized foreign currency hedge loss. It also resulted from the continuing impact of the expense incurred earlier last year to re-staff our New York credit desks, a shift in our revenue mix to lower margin products, and the lag that occurs between rapid revenue decline and our ability to restructure operations to reduce costs. The balance of our expenses also increased as a percentage of revenues compared with the fourth quarter of 2007, mainly due to the effect of lower revenues. Although we continue to focus on controlling costs and anticipate some additional benefits from our recent restructuring initiative, we expect our clearing costs to remain at higher levels for some time as our cash equities and fixed income businesses continue to expand in relation to our other brokerage products.
"Current market conditions continue to be challenging. As a result, we expect our brokerage revenues in the first quarter of 2009 to decline by approximately 34% to 37% and total revenues to decline by approximately 32% to 35% from the record levels achieved in the first quarter of 2008.
"Global government efforts to restore faith in the financial markets may be having some beneficial effect. There are preliminary signs that some trading volumes may be stabilizing and establishing a sustainable base. It is upon that base that we expect to re-establish our growth. The diversity of our products and our global reach position us to capture market opportunities as they emerge. We have moved existing staff and added strategic hires in all regions to capitalize on the shift in market demand for cash equities and fixed income products. The recent high levels of volatility have resulted in less market liquidity and wider spreads, underscoring the value of our hybrid approach of coupling skilled voice brokerage with proprietary electronic execution. I expect that eventually the volatility levels will subside somewhat to levels that will benefit growth in overall trading volumes.
"We are closely involved in the rapid evolution of the OTC derivatives markets in the U.S. and Europe. We believe that GFI can be a beneficiary of well-crafted legislative and regulatory initiatives requiring greater transparency, appropriate centralized clearing and increased regulatory oversight and GFI supports effective legislation in furtherance of these objectives.
Mr. Gooch concluded: "Despite the substantial challenges in the second half of 2008 and the dramatic changes in our operating environment, we achieved record revenues for the full year, surpassing the billion dollar mark for the first time. We ended the year profitable, with a strong balance sheet and cash position, which increased by over $100 million. This strength and our positive cash flow will continue to support our strategy and provides us with important flexibility to respond to future challenges and opportunities. We are also pleased to declare a quarterly cash dividend of $0.05 per share and remain fully focused on restoring and building value, as we have done over the past 21 years."
Revenues
For the fourth quarter of 2008, total revenues decreased to $196.2 million, including the $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues. This compares with total revenues of $247.4 million in the fourth quarter of 2007. On a non-GAAP basis, which excludes the unrealized hedge loss, total revenues decreased to $210.9 million in the fourth quarter of 2008 from $248.0 million in the fourth quarter of 2007.
Brokerage revenues in the fourth quarter of 2008 declined 19% to $193.8 million from the fourth quarter of 2007. While equity product revenues increased 3% over the fourth quarter of 2007, credit, financial and commodity product revenues decreased 21%, 37% and 30%, respectively, compared with the prior year fourth quarter. Within credit products, a 61% increase in corporate and sovereign fixed income revenues was offset by 47% lower credit derivative revenues, compared with the 2007 fourth quarter.
Revenues from analytics, software, trading platform and data products for the fourth quarter of 2008 increased 164% to $12.8 million from the same period of 2007 and included a $7.3 million contribution from Trayport Limited, acquired by the Company on January 31, 2008.
By geographic region, fourth quarter 2008 brokerage revenue decreased 23% in EMEA, 8% in the Americas and 44% in Asia-Pacific compared with the fourth quarter of 2007.
Expenses
For the fourth quarter of 2008, compensation and employee benefit expense decreased 9% to $137.6 million, or 70.1% of total revenues. For the fourth quarter of 2007, compensation and employee benefit expense was $151.0 million, or 61.1% of total revenues. On a non-GAAP basis, compensation and employee benefits expense was 65.2% of total revenues in the fourth quarter of 2008 compared with 60.9% in the fourth quarter of 2007.
Non-compensation expense for the fourth quarter of 2008 declined 3% to $59.0 million or 30.1% of total revenues compared with $61.0 million or 24.7% of total revenues in the fourth quarter of 2007. On a non-GAAP basis, non-compensation expense was 27.3% of total revenue in the fourth quarter of 2008 versus 23.4% in the fourth quarter of 2007.
The effective tax rate for 2008 was 36.0% compared to 38.0% for 2007, excluding the one time benefit of $1.4 million related to a non-operating adjustment for the recognition of a tax benefit.
Earnings
Net income for the fourth quarter of 2008 was $0.2 million, or $0.00 per diluted share on a GAAP basis, which includes the mark-to-market unrealized loss on forward foreign currency hedges in the quarter equivilent to $0.08 per diluted share. This compares with net income of $25.2 million, or $0.21 per diluted share, in the fourth quarter of 2007. On a non-GAAP basis, net income for the fourth quarter of 2008 was $10.7 million, or $0.09 per diluted share, compared with $26.0 million or $0.22 for the fourth quarter of 2007. Per share amounts for the fourth quarter of 2007 have been adjusted to reflect the Company's 4-for-1 stock split effective March 31, 2008.
Full Year Results
Total revenues for the year ended December 31, 2008 increased 5% to $1.02 billion from $970.5 million for 2007. Net income for the full year 2008 was $53.1 million, or $0.44 per diluted share, compared with $94.9 million, or $0.80 per diluted share, for 2007. On a non-GAAP basis, revenues for 2008 increased 7% to $1.04 billion, while net income was $94.7 million, or $0.79 per diluted share, compared with non-GAAP revenues of $971.1 million and net income of $100.3 million, or $0.84 per diluted share, for 2007.
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 net income and non-GAAP diluted earnings per share. 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 fourth quarter of 2008, the difference between GAAP and non-GAAP revenue was $14.6 million and the difference between GAAP and non-GAAP net income was $10.5 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of a $14.6 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; -- The effect of adjusting for these items would increase the Company's income tax expense by $5.5 million.
For full year 2008, the difference between GAAP and non-GAAP revenues was $24.2 million and the difference between GAAP and non-GAAP net income was $41.6 million and reflected for non-GAAP purposes:
-- The exclusion from revenues of a $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues; -- The exclusion from revenues of a $9.6 million charge for unsettled trades directly related to the Lehman Brothers bankruptcy; -- The exclusion of $5.3 million of amortization on all acquired intangible assets; -- The exclusion of $1.8 million in expenses related to discontinued merger discussions; -- The exclusion of items related to the relocation of the Company's New York offices to larger premises completed in third quarter of 2008, including: -- $2.5 million of duplicate rent expense, -- $2.7 million of accelerated depreciation expense related to assets to be abandoned, and -- $7.8 million of costs related to the abandonment of and move from our previous headquarters -- The exclusion of $3.5 million of reduced compensation expenses related to the Lehman Brothers bankruptcy; -- The exclusion of $20.9 million related to the Company's restructuring initiatives, including: -- $14.5 million for costs relating to desk closings and other restructuring charges, and -- $6.4 million adjustment related to deferred compensation expense; -- The exclusion of a $3.1 million write-off of an investment in an unconsolidated affiliate; and -- The effect of adjusting for these items would increase the Company's income tax expense by $23.4 million. -- In the fourth quarter of 2007, the difference between GAAP and non-GAAP revenues was $0.6 million and the difference between GAAP and non-GAAP net income was $0.8 million and reflected for non-GAAP purposes: -- The exclusion from revenues of a $0.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues; -- The exclusion of $0.7 million of amortization on all acquired intangible assets; -- The exclusion of items related to the planned relocation of the Company's New York offices to larger premises scheduled for the third quarter of 2008, including: -- $0.8 million of duplicate rent expense; and -- $1.4 million of accelerated depreciation expense related to assets to be abandoned; -- The effect of adjusting for these items would increase the Company's income tax expense by $1.3 million; and -- Income tax expense was also increased an additional $1.4 million in order to exclude the recognition of a tax benefit for which a reserve was previously established.
For full year 2007, the difference between GAAP and non-GAAP revenues was $0.6 million, and the difference between GAAP and non-GAAP net income was $5.5 million for the period and reflected the exclusion for non-GAAP purposes of:
-- The exclusion from revenues of a $0.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues; -- The exclusion of $3.3 million of amortization on all acquired intangible assets; -- The exclusion of $0.8 million of payroll-related taxes in the UK on the exercise of stock options by a former Company executive in connection with his departure from the Company; -- The exclusion of items related to the planned relocation of the Company's New York offices, including: -- $1.6 million accrual for lease termination costs; -- $1.9 million of duplicate rent expense; and -- $2.9 million of accelerated depreciation expense related to assets to be abandoned; -- The effect of adjusting for these items would increase the Company's income tax expense by $4.3 million; and -- Income tax expense was also increased an additional $1.4 million in order to exclude the recognition of a tax benefit for which a reserve was previously established. Dividend Declaration
The Board of Directors of GFI Group has declared a quarterly cash dividend of $0.05 per share payable on March 31, 2009 to shareholders of record on March 17, 2009.
Conference Call
GFI has scheduled an investor conference call at 8:30 a.m. (Eastern Time) on Friday, February 20, 2009 to review its fourth quarter 2008 financial results and business outlook. Those wishing to listen to the live conference call via telephone should dial 800-295-4740 in North America, passcode 73245214 and +1 617-614-3925 in Europe, same passcode. A live audio web cast of the conference call will be available on the Investor Relations section of GFI's Web site. For web cast registration information, please visit the Investor Relations page at 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.
About GFI Group Inc.
GFI Group Inc. (http://www.gfigroup.com/) is a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. GFI Group Inc. provides brokerage services, market data, trading platform and analytics software products to institutional clients in markets for a range of credit, financial, equity and commodity instruments.
Headquartered in New York, GFI was founded in 1987 and employs more than 1,700 people with additional offices in London, Paris, Hong Kong, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Dubai, Tel Aviv, Calgary, Englewood (NJ) and Sugar Land (TX). GFI provides services and products to over 2,100 institutional clients, including leading investment and commercial banks, corporations, insurance companies and hedge funds. Its brands include GFI(TM), GFInet(R), CreditMatch(R), GFI ForexMatch(R), EnergyMatch(R), FENICS(R), Starsupply(R), Amerex(R), and Trayport(R).
Forward-looking statements
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 the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: acquisitions by us of businesses or technologies; 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; and uncertainties relating to litigation. 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 Income (unaudited) (In thousands except share and per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- REVENUES: Brokerage revenues: Agency commissions $143,556 $186,827 $757,310 $749,223 Principal transactions 50,272 51,366 206,669 188,254 ------ ------ ------- ------- Total brokerage revenues 193,828 238,193 963,979 937,477 Software, analytics and market data 12,800 4,850 51,250 19,522 Contract revenue 28 - 86 215 Interest income 1,669 2,726 8,617 9,714 Other income/(loss) (12,089) 1,590 (8,429) 3,613 ------- ----- ------ ----- Total revenues 196,236 247,359 1,015,503 970,541 ------- ------- --------- ------- EXPENSES: Compensation and employee benefits 137,583 151,020 665,973 604,847 Communications and market data 12,245 11,538 47,810 44,622 Travel and promotion 8,897 13,057 45,756 41,992 Rent and occupancy 5,363 6,132 33,705 23,661 Depreciation and amortization 7,827 6,992 31,390 24,686 Professional fees 6,081 5,539 26,200 17,899 Clearing fees 9,706 10,200 43,420 32,732 Interest 3,993 1,522 14,334 7,076 Other expenses 4,847 6,023 23,870 22,155 Contract costs 46 - 68 133 -- --- -- --- Total expenses 196,588 212,023 932,526 819,803 ------- ------- ------- ------- (LOSS)/INCOME BEFORE (BENEFIT FROM)/PROVISION ---- ------ ------ ------- FOR INCOME TAXES (352) 35,336 82,977 150,738 ---- ------ ------ ------- (BENEFIT FROM)/PROVISION FOR INCOME TAXES (544) 10,128 29,871 54,480 ---- ------- ------- ------- NET INCOME $192 $25,208 $53,106 $96,258 ==== ======= ======= ======= Basic earnings per share $0.00 $0.21 $0.45 $0.81 ===== ===== ===== ===== Diluted earnings per share $0.00 $0.21 $0.44 $0.80 ===== ===== ===== ===== Weighted average shares outstanding - basic 118,425,796 117,656,483 117,966,596 116,595,920 Weighted average shares outstanding - diluted 119,604,529 120,078,634 119,743,693 119,180,791 GFI Group Inc. and Subsidiaries Consolidated Statements of Income (unaudited) As a Percentage of Total Revenues Three Months Twelve Months Ended Ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- REVENUES: Brokerage revenues: Agency commissions 73.2% 75.5% 74.6% 77.2% Principal transactions 25.6% 20.8% 20.4% 19.4% ---- ---- ---- ---- Total brokerage revenues 98.8% 96.3% 94.9% 96.6% Software, analytics and market data 6.5% 2.0% 5.0% 2.0% Contract revenue 0.0% 0.0% 0.0% 0.0% Interest income 0.9% 1.1% 0.8% 1.0% Other income/(loss) -6.2% 0.6% -0.8% 0.4% ---- ---- ---- ---- Total revenues 100.0% 100.0% 100.0% 100.0% ----- ----- ----- ----- EXPENSES: Compensation and employee benefits 70.1% 61.1% 65.6% 62.3% Communications and market data 6.2% 4.7% 4.7% 4.6% Travel and promotion 4.5% 5.3% 4.5% 4.3% Rent and occupancy 2.7% 2.5% 3.3% 2.4% Depreciation and amortization 4.0% 2.8% 3.1% 2.5% Professional fees 3.1% 2.2% 2.6% 1.8% Clearing fees 4.9% 4.1% 4.3% 3.4% Interest 2.0% 0.6% 1.4% 0.7% Other expenses 2.5% 2.4% 2.4% 2.3% Contract costs 0.0% 0.0% 0.0% 0.0% --- --- --- --- Total expenses 100.2% 85.7% 91.8% 84.5% ----- ---- ---- ---- (LOSS)/INCOME BEFORE (BENEFIT FROM)/PROVISION ---- ---- --- ---- FOR INCOME TAXES -0.2% 14.3% 8.2% 15.5% ---- ---- --- ---- (BENEFIT FROM)/PROVISION FOR INCOME TAXES -0.3% 4.1% 2.9% 5.6% --- ---- --- --- NET INCOME 0.1% 10.2% 5.2% 9.9% === ==== === === GFI Group Inc. and Subsidiaries Selected Financial Data (unaudited) (Dollars in thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Brokerage Revenues by Product Categories: Credit $57,439 $72,632 $304,438 $317,724 Financial 28,051 44,540 171,935 184,704 Equity 72,891 70,712 291,184 239,534 Commodity 35,447 50,309 196,422 195,515 ------ ------ ------- ------- Total brokerage revenues $193,828 $238,193 $963,979 $937,477 ======== ======== ======== ======== Brokerage Revenues by Geographic Region: Americas $88,646 $95,976 $385,854 $401,897 Europe, Middle East, and Africa 92,050 118,737 489,517 449,949 Asia-Pacific 13,132 23,480 88,608 85,631 ------ ------ ------ ------ Total brokerage revenues $193,828 $238,193 $963,979 $937,477 ======== ======== ======== ======== December 31, December 31, 2008 2007 ---- ---- Consolidated Statement of Financial Condition Data: Cash and cash equivalents $342,375 $240,393 Total assets (1) 1,085,911 975,814 Total debt, including current portion 223,823 55,291 Stockholders' equity 476,963 452,193 Selected Statistical Data: Brokerage personnel headcount (2) 1,037 1,037 Employees 1,740 1,599 Broker productivity for the period (3) $184 $226 (1) Total assets include receivables from brokers, dealers and clearing organizations of $149.7 million and $317.8 million at December 31, 2008 and December 31, 2007, 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. These receivables are substantially offset by corresponding payables to brokers, dealers and clearing organizations for these unsettled transactions. (2) Brokerage personnel headcount includes brokers, 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 Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- GAAP revenues $196,236 $247,359 $1,015,503 $970,541 Net charge related to Lehman unsettled trades (a) - - 9,586 - Mark-to-market loss on forward hedges of future foreign currency revenues (a) 14,645 605 14,645 605 ------ --- ------ --- Total Revenues $210,881 $247,964 $1,039,734 $971,146 GAAP expenses 196,588 212,023 932,526 819,803 Non-operating adjustments: Amortization of intangibles (1,373) (675) (5,282) (3,332) Tax on former executive stock option exercise - - - (840) Discontinued merger discussion costs - - (1,832) - Desk closings and other restructuring - - (14,541) - Adjustment related to deferred compensation expense - - (6,408) - Duplicate rent - (849) (2,547) (1,921) Accelerated depreciation on 100 Wall Street - (1,365) (2,730) (2,872) Lease termination on 100 Wall Street - - - (1,591) Abandonment of 100 Wall Street - - (7,830) - Reduction in compensation related to Lehman - - 3,469 - Write-off investment in unconsolidated affiliate - - (3,071) - - - ------ - Total Non-GAAP adjustments (a) (1,373) (2,889) (40,772) (10,556) ------ ------ ------- ------- Non-GAAP operating expenses 195,215 209,134 891,754 809,247 GAAP (loss) income before income tax (benefit) provision (352) 35,336 82,977 150,738 Sum of Non-GAAP items = (a) 16,018 3,494 65,003 11,161 ------ ----- ------ ------ Non-GAAP income before tax provision 15,666 38,830 147,980 161,899 GAAP (benefit from)/ provision for income tax (544) 10,128 29,871 54,480 Income tax impact on Non- GAAP items (b) 5,545 1,328 23,401 4,297 ----- ----- ------ ----- Non-operating adjustment for the recognition of a tax benefit (c) - 1,400 - 1,400 --- ----- --- ----- Total 5,545 2,728 23,401 5,697 ----- ----- ------ ----- Non-GAAP (benefit from)/ provision for income taxes 5,001 12,856 53,272 60,177 GAAP net income 192 25,208 53,106 96,258 Sum of Non- GAAP adjustments [ (a) - (b) - (c)] 10,473 766 41,602 5,464 ------ --- ------ ----- Non-GAAP net income $10,665 $25,974 $94,708 $101,722 ======= ======= ======= ======== GAAP basic net income per share $- $0.21 $0.45 $0.81 Basic non- operating income per share 0.09 0.01 0.35 0.06 ---- ---- ---- ---- Non-GAAP basic net income per share $0.09 $0.22 $0.80 $0.87 ===== ===== ===== ===== GAAP diluted net income per share $- $0.21 $0.44 $0.80 Diluted non- operating income per share 0.09 0.01 0.35 0.05 ---- ---- ---- ---- Non-GAAP diluted net income per share $0.09 $0.22 $0.79 $0.85 ===== ===== ===== ===== Weighted average Non-GAAP shares outstanding - basic 118,425,796 117,656,483 117,966,596 116,595,920 Weighted average Non-GAAP shares outstanding - diluted 119,604,529 120,078,634 119,743,693 119,180,791
