Pre-tax Distributable Earnings up 146.8%
GAAP net income for fully diluted shares up 137.7%
Expects Post-tax Distributable Earnings to be up
50%-80%Year-on-Year in Third Quarter
Declares Quarterly Cash Dividend of $0.13 per Common Share
NEW YORK--(Business Wire)--
BGC Partners, Inc. (Nasdaq: BGCP) ("BGC Partners" or "the
Company"), a leading global inter-dealer broker of financial
instruments, today reported its financial results for the second
quarter ended June 30, 2008(1).
BGC Partners Second Quarter Financial Summary
-- Pre-tax distributable earnings(2) increased by 146.8 percent
to $42.3 million in the second quarter of 2008, compared to
$17.1 million in the second quarter of 2007;
-- Pre-tax distributable earnings per share more than doubled to
$0.22 in the second quarter of 2008, compared to $0.09 in the
second quarter of 2007;
-- Post-tax distributable earnings increased by 70.2 percent in
the second quarter of 2008 to $32.2 million, compared to $18.9
million in the second quarter of 2007;
-- Post-tax distributable earnings per share were up by
approximately 70 percent in the second quarter of 2008 to
$0.17, compared to $0.10 per fully diluted share in the second
quarter of 2007;
-- The pre-tax distributable earnings margin expanded to 13.8
percent of revenues while the post-tax distributable earnings
margin increased to 10.5 percent, both of which were
significant improvements when compared to 6.3 percent and 6.9
percent, respectively, in the prior-year quarter;
-- Income before minority interest and taxes, calculated in
accordance with U.S. Generally Accepted Accounting Principles
("GAAP"), increased by 196.2 percent in the second quarter of
2008 to $32.1 million, compared to $10.8 million in the
year-earlier period;
-- GAAP net income for fully diluted shares increased by 137.7
percent in the second quarter of 2008 to $30.1 million,
compared to $12.7 million in the year-earlier period;
-- GAAP earnings per fully diluted share more than doubled to
$0.16 compared to $0.07 in the year earlier quarter;
-- Revenues increased by 11.9 percent in the second quarter of
2008 to $305.5 million, compared to $273.0 million in the
second quarter of 2007;
-- BGC Partners' Board of Directors declared a quarterly cash
dividend of $0.13 per share payable on September 30, 2008 to
Class A and Class B common stockholders of record as of
September 15, 2008.
"We continued to experience double-digit revenue growth in the
second quarter, although industry-wide volumes in Rates were slower
during the last three weeks of June as compared to those seen in April
and May. However, our scale, built and paid for technology, and
improved operating efficiencies helped us to achieve significant
year-over-year increases in quarterly distributable earnings," said
Howard W. Lutnick, Chairman and co-Chief Executive Officer of BGC
Partners, Inc. "We are proud to have delivered such dramatic
improvements in profitability, and are delighted to announce that we
will pay our dividend to common shareholders on a quarterly rather
than a semi-annual basis."
"BGC Partners had strong organic growth in our Equities and Credit
businesses, and saw improvements in revenues and volumes from new
fully electronic products, particularly in credit default swaps and
foreign exchange options, where fully electronic revenues in the
second quarter of 2008 exceeded the total for all of 2007," added Lee
M. Amaitis, Co-Chief Executive Officer. "We continue to hire new
brokers, who will add to our profitability, and our broker
productivity continued to grow by double digits year over year in the
quarter. We are also evaluating accretive acquisition opportunities,
investing in our world-class technology, and taking other steps that
will best position the Company for top- and bottom-line growth in 2009
and beyond."
Detailed Second Quarter Results
For the second quarter of 2008, BGC Partners' revenues were $305.5
million, up 11.9 percent compared to the prior year quarter's $273.0
million. Brokerage revenues were $278.6 million, up 11.9 percent
compared to $249.0 million in the prior year quarter. The increase was
driven primarily by gains in voice, hybrid and electronic brokerage
revenues from Credit and by voice/hybrid revenues from Foreign
Exchange and Other Asset Classes.
For the second quarter of 2008, Rates revenues increased by 1.8
percent to $143.1 million, reflecting lower volumes in June when
compared to the year-earlier period, while Credit revenues increased
by 23.7 percent to $69.1 million, Foreign Exchange revenues increased
by 5.7 percent to $34.0 million, and Other Asset Classes revenues
increased by 59.4 percent to $32.3 million, all compared to the
prior-year quarter. The increase in Other Asset Classes was driven
primarily by strong organic growth in equity derivatives and the
acquisition of energy broker Radix.
In the second quarter of 2008, Rates represented 46.8 percent of
BGC Partners' total revenues, Credit 22.6 percent, Foreign Exchange
11.1 percent, and Other Asset Classes 10.6 percent.
The Company recorded increases in volumes and revenues from the
fully electronic trading of new products, especially credit default
swaps and foreign exchange options. As the percentage of fully
electronic brokerage revenues from new products rises, the Company
expects this to have a meaningful and positive impact on distributable
earnings margins. Overall quarterly revenues related to fully
electronic trading(3) remained flat year-over-year on an absolute
basis, and represented 6.9 percent of total Company revenues in the
second quarter of 2008 versus 8.0 percent in the prior year period.
The Company's compensation and employee benefits were 57.9 percent
of total revenues on a GAAP basis and 57.2 percent on a distributable
earnings basis in the second quarter of 2008, compared to 58.5 percent
in the second quarter of 2007 on both a GAAP and distributable
earnings basis. Other expenses were 29.1 percent of revenue in the
second quarter of 2008 on a GAAP basis and 29.0 percent on a
distributable earnings basis, versus 37.5 percent and 35.3 percent,
respectively, in the prior-year period.
The Company recorded GAAP net income from continuing operations
before minority interest and taxes of $32.1 million and GAAP net
income for fully diluted shares of $30.1 million or $0.16 per fully
diluted share in the second quarter of 2008. This compares to GAAP net
income from continuing operations before minority interest and taxes
of $10.8 million and GAAP net income for fully diluted shares of $12.7
million or $0.07 per fully diluted share recorded in the second
quarter of 2007.
In the second quarter of 2008, BGC Partners' pre-tax distributable
earnings were $42.3 million or $0.22 per fully diluted share, compared
to $17.1 million or $0.09 per fully diluted share in the second
quarter of 2007. BGC Partners recorded post-tax distributable earnings
of $32.2 million or $0.17 per fully diluted share in the second
quarter of 2008 compared to $18.9 million or $0.10 per fully diluted
share in the second quarter of 2007.
The effective tax rate for distributable earnings was 22.1 percent
in the second quarter of 2008 versus a tax benefit of 15.7 percent in
the prior year's June quarter. The Company had a fully diluted
weighted average share count of 190.1 million for the second quarter
of 2008, compared to 185.3 million in the year earlier period. At of
the end of June, 2008, the Company had a fully diluted share count of
199.9 million, including in-the-money options.
As of June 30, 2008, BGC Partners had 1,281 voice/hybrid brokers,
versus 1,204 voice/hybrid brokers as of June 30, 2007. Average
voice/hybrid brokerage revenue per voice/hybrid broker increased by
11.3 percent to approximately $211,000 in the second quarter of 2008
compared to approximately $189,000 in the year-earlier quarter.
Cash Position
As of June 30, 2008, the Company's cash and cash equivalents and
reverse repurchase agreements were $482.7 million while long-term debt
was $150.0 million. In comparison, as of December 31, 2007, the
Company's cash and cash equivalents, reverse repurchase agreements,
and secured loan receivable from Cantor were $490.5 million and BGC
Partners' long-term debt was $196.8 million.
Third Quarter Outlook
The Company expects to generate revenues of between $280 million
and $300 million in the third quarter of 2008, compared with $299.4
million in the prior year period. This revenue outlook incorporates
the approximately 10 percent increase in BGC Partners' monthly revenue
in July of 2008 and a return to normal seasonality for August of 2008.
The Company expects third quarter 2008 pre-tax distributable earnings
of approximately $33 million to $40 million, which would be an
increase of approximately 50 to 80 percent compared to the
year-earlier quarter. The Company expects third quarter 2008 post-tax
distributable earnings to increase by approximately 50 to 80 percent
compared to the prior-year period and to be in the range of $26
million to $31 million.
The Company's compensation and employee benefits are expected to
remain between 55 and 60 percent of total revenues for the full year
2008, exclusive of the previously disclosed first quarter non-cash
compensation charges of $86.8 million.(4)
The Company still anticipates having an effective tax rate for
distributable earnings of approximately 22 percent in 2008 and
approximately 27 percent for 2009 and thereafter.
The outlook for BGC Partners contained in this release does not
include the potentially positive impact of any accretive acquisitions,
any significant increase in brokerage headcount, or a material change
in the percentage of revenues from or related to fully electronic
trading, Software Solutions, and Market Data. The Company intends to
pursue these developments, which could have a significant beneficial
effect on its revenues and distributable earnings margins were they to
occur.
Quarterly Dividend
BGC Partners intends to pay not less than 75 percent of its
post-tax distributable earnings per fully diluted share as cash
dividends to all common stockholders. Under this policy, the Company's
Board of Directors has declared a quarterly cash dividend of $0.13 per
share payable on September 30, 2008 to Class A and Class B
stockholders of record as of September 15, 2008. The Company plans to
use the balance of its second quarter of 2008 post-tax distributable
earnings, after distributions to all partnership units and dividend
payments to common stockholders, to buy back shares or partnership
units before the end of 2008. Given the Company's outlook, BGC
Partners expects to pay another quarterly cash dividend of $0.13 per
share for the third quarter of 2008 to all Class A and Class B
stockholders in December, 2008.
Conference Call
BGC Partners will host a conference call on Wednesday, August 6,
at 8:30 a.m. ET to discuss the results and outlook contained in this
release. Investors can access the call at the "Investor Relations"
section at http://www.bgcpartners.com and must have a Real Media or
Windows Media plug-in and headphones or speakers in order to listen to
the webcast or its replay. Additionally, call participants may dial in
with the following information:
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*T
DIAL IN: 888-680-0878
INTERNATIONAL DIAL IN: 617-213-4855
PARTICIPANT PASSCODE: 43226393
PRE REGISTRATION: Yes
PARTICIPANT URL: https://www.theconferencingservice.com/
prereg/key.process?key=PXNBKAUCV
(Due to its length, this URL may need to be
copied/pasted into your Internet browser's
address field. Remove the extra space if
one exists.)
REPLAY AVAILABLE FROM/TO: 08/06/2008 10:30 AM ET / 08/13/2008 11:59 PM
ET
REPLAY DIAL IN: 888-286-8010
INTERNATIONAL REPLAY: 617-801-6888
REPLAY PASSCODE: 61761191
*T
(1) Because of BGC Partners' merger with and into eSpeed, this
release discusses historical financial results on a consolidated
basis.
(2) See the section of this release entitled "Distributable
Earnings" for a definition of this term.
(3) This includes fees captured in both the "total brokerage
revenues" and "fees from related party" line items. These differing
categorizations of fees for fully electronic trading have no impact on
margins or revenues.
(4) See the section of this release entitled "Distributable
Earnings" for a discussion of this non-cash charge.
About BGC Partners, Inc.
BGC Partners, Inc. (Nasdaq: BGCP) is a leading, fast growing, and
global inter-dealer broker, specializing in the brokering of financial
instruments and related derivatives products. BGC Partners provides
integrated voice, hybrid, and fully electronic execution and other
brokerage services to the world's largest and most creditworthy banks,
broker-dealers, investment banks, trading firms, and investment firms
for a broad range of global financial products, including fixed income
securities, interest rate swaps, foreign exchange, equity derivatives,
credit derivatives, futures, commodities, structured products, and
other instruments.
Through its eSpeed and BGC Trader brands, BGC Partners uses its
proprietary, built, and paid for technology to operate multiple buyer,
multiple seller real-time electronic marketplaces for the world's most
liquid capital markets. The Company's pioneering suite of tools
provides end-to-end transaction solutions for the purchase and sale of
financial products over its global private network or via the
Internet. BGC Partners' neutral platform, reliable network,
straight-through processing and superior products make it the trusted
source for electronic trading for the world's largest financial firms.
Through its BGCantor Market Data brand, the Company also offers
globally distributed and innovative market data and analysis products
for numerous financial instruments and markets.
BGC's unique partnership structure and extensive employee
ownership creates a distinctive competitive advantage among its peers.
Named after fixed income trading innovator B. Gerald Cantor, BGC
Partners has 16 offices in New York and London, as well as in Beijing
(representative office), Chicago, Copenhagen, Hong Kong, Istanbul,
Johannesburg, Mexico City, Nyon, Paris, Seoul, Singapore, Sydney,
Tokyo and Toronto.
Distributable Earnings
"Pre-tax distributable earnings "and "post-tax distributable
earnings" are supplemental measures of operating performance that will
be used by management to evaluate the performance of BGC Partners and
its subsidiaries. We believe that distributable earnings best reflects
the operating earnings generated by the Company on a consolidated
basis and are the earnings which management considers available for
distribution to BGC Partners, Inc. and its common stockholders as well
as to holders of BGC Holdings partnership units during any period. As
compared to "income (loss) from continuing operations before minority
interest and income taxes", "net income (loss) for fully diluted
shares," and "fully diluted earnings per share," all prepared in
accordance with GAAP, distributable earnings calculations exclude
certain non-cash compensation and other expenses which do not involve
the receipt or outlay of cash by BGC Partners, and which do not dilute
existing stockholders, as described below.
Pre-tax distributable earnings are defined as GAAP income (loss)
from continuing operations before minority interest and income taxes
and exclude the following items:
-- Non-cash stock based equity compensation charges, for equity
granted or issued prior to the merger of BGC Partners with and
into eSpeed, as well as post-merger non-cash, non-dilutive
equity-based compensation related to REU conversion;
-- Non-cash undistributed income or non-cash loss from BGC
Partners' equity investments such as Aqua Securities, L.P.
("Aqua") and ELX Electronic Liquidity Exchange ("ELX");
-- Allocation of net income to founding/working partner units and
REUs; and
-- Non-cash asset impairment charges, if any.
Since distributable earnings are calculated on a pre-tax basis,
management intends to also report "post-tax distributable earnings"
and "post-tax distributable earnings per fully diluted share":
-- Post-tax distributable earnings are defined as pre-tax
distributable earnings adjusted to assume that all pre-tax
distributable earnings were taxed at the same effective rate.
-- Post-tax distributable earnings per fully diluted share are
defined as post-tax distributable earnings divided by the
weighted average number of fully diluted shares for the
period.
In addition to the pro rata distribution of net income to BGC
Holdings founding partner units and to Cantor for its minority
interest, BGC Partners, Inc. also expects to pay a quarterly dividend
to its stockholders. The amount of all of these payments is expected
to be determined using the same definition of distributable earnings.
The dividend to stockholders is expected to be calculated based on
post-tax distributable earnings allocated to BGC Partners, Inc. and
generated over the fiscal quarter ending prior to the record date for
the dividend.
Distributable earnings is not meant to be an exact measure of cash
generated by operations and available for distribution, nor should it
be considered in isolation or as an alternative to cash flow from
operations or income (loss) for fully diluted shares. Distributable
earnings is a metric that is not necessarily indicative of liquidity
or cash to fund our operations.
Pre- and post-tax distributable earnings are not intended to
replace the presentation of BGC Partners, Inc.'s GAAP financial
results. However, management does believe that they will help provide
investors with a clearer understanding of the Company's financial
performance and offer useful information to both management and
investors regarding certain financial and business trends related to
our financial condition and results from operations. In addition,
management uses these measures for reviewing the financial results for
BGC Partners, Inc. and in evaluating its financial performance.
Management believes that distributable earnings and the GAAP measures
of the Company's financial performance should be considered together.
The Company's first quarter and full year 2008 results for
distributable earnings exclude $86.8 million in non-cash compensations
charges, which consisted of:
-- Non-cash charges related to redemptions of partnerships units
issued prior to the merger in order to settle outstanding loan
obligations of certain executives and senior managers to
Cantor and other institutions. The pre-merger issuance of this
equity was dilutive to Cantor.
-- Non-cash charges related to additional pre-merger grants of
founding partner interests to certain executives and senior
managers and the activation of exchangeability of founding
partner interests granted pre-merger to certain executives.
The pre-merger issuance of this equity was dilutive to Cantor;
-- Non-cash charges related to compensation expense related to
restricted equity units in BGC Holdings, L.P., and restricted
stock units granted pre-merger.
In addition, BGC Partners' first quarter and full year 2008 final
results for distributable earnings exclude $1.8 million in non-cash
loss from BGC Partners' equity investments.
Management does not anticipate providing an outlook for GAAP
"income (loss) from continuing operations before minority interest and
income taxes", "net income (loss) for fully diluted shares," and
"fully diluted earnings per share", because the items previously
identified as excluded from pre-tax distributable earnings and
post-tax distributable earnings are difficult to forecast. Management
will instead provide its outlook only as it relates to pre- and
post-tax distributable earnings.
For more information on this topic, please see the table in this
release entitled "Reconciliation Between GAAP and Distributable
Earnings", which provides a summary reconciliation between pre- and
post-tax distributable earnings and GAAP net income (loss) for fully
diluted shares and GAAP Income (loss) from continuing operations
before minority interest and income taxes for the Company for the
first and second quarters of 2008 and 2007.
Discussion of Forward-Looking Statements
The information in this release contains forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Such statements are based upon current expectations
that involve risks and uncertainties. Any statements contained herein
that are not statements of historical fact may be deemed to be
forward-looking statements. For example, words such as "may," "will,"
"should," "estimates," "predicts," "potential," "continue,"
"strategy," "believes," "anticipates," "plans," "expects," "intends"
and similar expressions are intended to identify forward-looking
statements.
The actual results of BGC Partners, Inc. ("we," "our", or the
"Company") and the outcome and timing of certain events may differ
significantly from the expectations discussed in the forward-looking
statements. Factors that might cause or contribute to such a
discrepancy for the Company include, but are not limited to, our
relationship with Cantor and its affiliates and any related conflicts
of interests, competition for and retention of brokers and other
managers and key employees, pricing and commissions and market
position with respect to any of our products, and that of our
competitors, the effect of industry concentration and consolidation,
and market conditions, including trading volume and volatility, as
well as economic or geopolitical conditions or uncertainties. Results
may also be affected by the extensive regulation of our businesses and
risks relating to compliance matters, as well as factors related to
specific transactions or series of transactions, including credit,
performance and unmatched principal risk as well as counterparty
failure. Factors may also include the costs and expenses of
developing, maintaining and protecting intellectual property,
including judgments or settlements paid or received in connection with
intellectual property or employment or other litigation and their
related costs, and certain financial risks, including the possibility
of future losses and negative cash flow from operations, risks of
obtaining financing and risks of the resulting leverage, as well as
interest and currency rate fluctuations. Our ability to meet
expectations with respect to payment of dividends, if any, will depend
from period to period on our business and financial condition, our
available cash, accounting or other charges and other factors relating
to our business and financial condition and needs at the time.
Discrepancies may also result from such factors as the ability to
enter new markets or develop new products, trading desks, marketplaces
or services and to induce customers to use these products, trading
desks, marketplaces or services, to secure and maintain market share,
to enter into marketing and strategic alliances, and other
transactions, including acquisitions, dispositions, reorganizations,
partnering opportunities, and joint ventures, and the integration of
any completed transactions, to hire new personnel, to expand the use
of technology and to effectively manage any growth that may be
achieved. Results are also subject to risks relating to the separation
of the BGC businesses and merger and the relationship between the
various entities, financial reporting, accounting and internal control
factors, including identification of any material weaknesses in our
internal controls, our ability to prepare historical and pro forma
financial statements and reports in a timely manner, and other
factors, including those that are discussed under "Risk Factors" in
eSpeed Inc.'s Annual Report on Form 10-K for the year ended December
31, 2007, which was filed with the SEC on March 17, 2008; in eSpeed's
definitive proxy statement, which was filed with the SEC on February
11, 2008; and in BGC Partners' final prospectus, which was filed with
the SEC on June 6, 2008.
We believe that all forward-looking statements are based upon
reasonable assumptions when made. However, we caution that it is
impossible to predict actual results or outcomes or the effects of
risks, uncertainties or other factors on anticipated results or
outcomes and that accordingly you should not place undue reliance on
these statements. Forward-looking statements speak only as of the date
when made and we undertake no obligation to update these statements in
light of subsequent events or developments.
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BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH
GAAP
(in thousands, except per share data)
(unaudited)
June 30, December 31,
2008 2007
------------ ------------
Assets
Cash and cash equivalents $ 305,505 $ 277,299
Cash segregated under regulatory
requirements 2,109 2,683
Reverse repurchase agreements 177,209 148,249
Loan receivable from related party - 65,000
Securities owned, at fair value 31,672 34,088
Receivables from brokers, dealers, clearing
organizations, customers and related
broker-dealers 618,488 221,079
Accrued commissions receivable 156,988 140,887
Forgivable and other loans receivable from
employees and partners 67,965 63,304
Fixed assets, net 137,991 137,815
Investments 29,748 12,264
Goodwill 67,826 62,826
Other intangible assets, net 14,529 15,676
Receivable from related parties 102,790 131,811
Other assets 68,204 64,648
------------ ------------
Total assets $ 1,781,024 $ 1,377,629
============ ============
Liabilities and Stockholders' and Members'
Equity
Accrued compensation $ 107,455 $ 85,470
Payables to brokers, dealers, clearing
organizations, customers and related
broker-dealers 400,500 270,465
Securities loaned 289,117 -
Payable to related parties 120,512 139,500
Accounts payable and accrued liabilities 209,876 206,847
Deferred revenue 18,843 6,852
Long-term debt to related parties - 196,818
Long-term debt 150,000 -
------------ ------------
Total liabilities 1,296,303 905,952
Commitments, contingencies and guarantees - -
Redeemable partnership interest (a) 106,221
Minority interest (a) 190,186 2,352
Stockholders' and members' equity
Members' equity - 235,454
Class A common stock, par value $0.01 per
share 500,000 shares authorized; 57,582 and
36,796 shares issued at June 30, 2008 and
December 31, 2007, respectively, and 50,905
and 30,294 shares outstanding at June 30,
2008 and December 31, 2007, respectively 576 368
Class B common stock, par value $0.01 per
share 100,000 shares authorized; 31,848 and
20,498 shares outstanding at June 30, 2008
and December 31, 2007, respectively,
convertible into Class A common stock 318 205
Additional paid-in capital 297,814 313,238
Treasury stock, at cost: 6,677 and 6,502
shares of Class A common stock at June 30,
2008 and
December 31, 2007, respectively (63,948) (62,597)
Retained deficit (46,446) (17,282)
Accumulated other comprehensive loss - (61)
------------ ------------
Total stockholders' and members' equity
(a) 188,314 469,325
Total liabilities and stockholders' and
members' equity $ 1,781,024 $ 1,377,629
============ ============
(a) Total Capital for BGC Partners, Inc. as at June 30, 2008 equals
$484,721 and is comprised of redeemable partnership interest,
minority interests and total stockholders' equity.
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BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH
GAAP
(in thousands, except per share data)
(unaudited)
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
(in thousands, except for per share data)
Revenues:
Commissions $ 212,541 $ 190,711 $ 466,572 $ 380,815
Principal
transactions 66,062 58,263 117,958 111,273
Fees from related
parties 18,599 7,898 39,512 18,791
Market data 5,101 5,359 10,645 9,732
Software solutions 1,454 2,778 3,537 6,342
Interest income 3,931 5,945 7,784 15,012
Other revenues (2,216) 2,002 (1,630) 4,067
----------- ----------- ----------- -----------
Total revenues 305,472 272,956 644,378 546,032
Expenses:
Compensation and
employee benefits 176,921 159,613 451,466 318,320
Allocation of net
income to
founding/working
partners units 7,133 - 7,133 -
Allocation of net
income to REUs 252 - 252 -
----------- ----------- ----------- -----------
Total compensation
and employee
benefits 184,306 159,613 458,851 318,320
Occupancy and
equipment 28,775 29,581 59,497 59,030
Fees to related
parties 3,140 4,607 9,680 10,963
Professional and
consulting fees 11,803 14,329 27,349 23,854
Communications 17,041 13,950 33,761 28,068
Selling and
promotion 15,070 13,795 30,305 26,799
Commissions and
floor brokerage 6,185 2,588 9,898 7,966
Interest expense 3,628 9,065 11,291 18,748
Other expenses 3,391 14,580 11,422 19,908
----------- ----------- ----------- -----------
Total expenses 273,339 262,108 652,054 513,656
----------- ----------- ----------- -----------
GAAP income (loss)
from continuing
operations before
minority interest
and income taxes 32,133 10,848 (7,676) 32,376
Minority interest 11,426 894 12,080 1,049
Provision (benefit)
for income taxes 8,723 (2,697) 16,793 (365)
----------- ----------- ----------- -----------
GAAP net income
(loss) available
to common
stockholders $ 11,984 $ 12,651 $ (36,549) $ 31,692
=========== =========== =========== ===========
Per share data:
Basic earnings
(loss) per share
Net income (loss)
available to
common
stockholders $ 11,984 $ 12,651 $ (36,549) $ 31,692
=========== =========== =========== ===========
Basic earnings
(loss) per share $ 0.16 $ 0.07 $ (0.28) $ 0.17
=========== =========== =========== ===========
Basic weighted
average shares of
common stock
outstanding 75,194 184,308 130,081 184,295
=========== =========== =========== ===========
Fully diluted
earnings (loss) per
share (a)
Net income (loss)
for fully diluted
shares $ 30,069 $ 12,651 $ (18,464) $ 31,692
=========== =========== =========== ===========
Fully diluted
earnings (loss)
per share $ 0.16 $ 0.07 $ (0.10) $ 0.17
=========== =========== =========== ===========
Diluted weighted
average shares of
common stock
outstanding 190,121 185,353 188,493 185,451
=========== =========== =========== ===========
(a) For 2008, fully diluted earnings (loss) per share is computed from
the summation of the GAAP net income (loss) available to common
stockholders, the allocation of net income to founding/working
partners units, the allocation of net income to REUs and the minority
interest allocation to Cantor of $10.7 million for the quarter ended
June 30, 2008. Prior to the merger in 2008 of BGC Partners Inc. and
eSpeed, Inc. there was no allocation of income to these unit holders.
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BGC Partners, Inc.
NON-GAAP DISTRIBUTABLE EARNINGS AND KEY METRICS
2007 and 2008 Comparisons
---------------------------------------
(in thousands, except per
share data) 2008
---------------------------------------
Six Months Ended
Q1 (a) Q2 June 30
--------- --------- ----------------
Revenues:
Brokerage revenues:
Rates $152,450 $143,100 $ 295,550
Credit 87,193 69,114 156,307
Foreign exchange 37,466 34,048 71,514
Other asset classes 28,818 32,341 61,159
--------- --------- ----------------
Total brokerage revenues 305,927 278,603 584,530
Market data and software
solutions 7,627 6,555 14,182
Fees from related parties,
interest and other revenues 24,781 21,590 46,371
--------- --------- ----------------
Total revenues 338,335 306,748 645,083
--------- --------- ----------------
Expenses:
Compensation and employee
benefits (b) 187,776 175,450 363,226
Other expenses 99,761 89,033 188,794
--------- --------- ----------------
Total expenses 287,537 264,483 552,020
--------- --------- ----------------
Pre-tax Distributable
Earnings, before minority
interest and taxes 50,798 42,265 93,063
Minority interest (c) 654 726 1,380
Provision for income taxes 10,703 9,327 20,030
--------- --------- ----------------
Post-tax distributable
earnings to fully diluted
shareholders $ 39,441 $ 32,212 $ 71,654
========= ========= ================
Earnings per share:
Fully diluted pre-tax
distributable earnings per
share $ 0.27 $ 0.22 $ 0.49
========= ========= ================
Fully diluted post-tax
distributable earnings per
share $ 0.21 $ 0.17 $ 0.38
========= ========= ================
Fully diluted weighted
average shares of common
stock outstanding 184,967 190,121 188,493
Total Revenues, per GAAP
financials 338,906 305,472 644,378
Compensation expense as a
percent of revenues 55.4% 57.4% 56.4%
Pre-tax distributable earnings
margins 15.0% 13.8% 14.4%
Post-tax distributable
earnings margins 11.6% 10.5% 11.1%
------------------------------------
(in thousands, except per share
data) 2007 (a)
------------------------------------
Six Months Ended
Q1 Q2 June 30
--------- --------- ----------------
Revenues:
Brokerage revenues:
Rates $146,277 $140,611 $ 286,888
Credit 50,821 55,857 106,678
Foreign exchange 27,320 32,215 59,535
Other asset classes 18,696 20,291 38,987
--------- --------- ----------------
Total brokerage revenues 243,114 248,974 492,088
Market data and software
solutions 7,937 8,137 16,074
Fees from related parties,
interest and other revenues 22,025 15,845 37,870
--------- --------- ----------------
Total revenues 273,076 272,956 546,032
--------- --------- ----------------
Expenses:
Compensation and employee
benefits (b) 158,707 159,613 318,320
Other expenses 90,524 96,217 186,741
--------- --------- ----------------
Total expenses 249,231 255,830 505,061
--------- --------- ----------------
Pre-tax Distributable Earnings,
before minority interest and
taxes 23,845 17,126 40,971
Minority interest (c) 155 894 1,049
Provision for income taxes 2,332 (2,697) (365)
--------- --------- ----------------
Post-tax distributable earnings
to fully diluted shareholders $ 21,358 $ 18,929 $ 40,287
========= ========= ================
Earnings per share:
Fully diluted pre-tax
distributable earnings per
share $ 0.13 $ 0.09 $ 0.22
========= ========= ================
Fully diluted post-tax
distributable earnings per
share $ 0.12 $ 0.10 $ 0.22
========= ========= ================
Fully diluted weighted average
shares of common stock
outstanding 185,301 185,353 185,451
Total Revenues, per GAAP
financials 273,076 272,956 546,032
Compensation expense as a percent
of revenues 58.1% 58.5% 58.3%
Pre-tax distributable earnings
margins 8.7% 6.3% 7.5%
Post-tax distributable earnings
margins 7.8% 6.9% 7.4%
*T
-0-
*T
Notes
-----
(a) - All periods prior to April 1 of 2008 are presented on a pro
forma basis to reflect the effects of the merger related debt
restructure.
(b) - Compensation charges exclude all one-time merger related non-
cash compensation, equity grants prior to the merger and
allocations of income to Founding/Working Partners.
(C) - Minority interest allocation associated with joint ownership of
administrative services company.
*T
-0-
*T
BGC Partners, Inc.
RECONCILIATION OF GAAP INCOME TO NON-GAAP DISTRIBUTABLE EARNINGS
(in thousands except per share
data)
------------------------------------
2008
------------------------------------
Six Months Ended
Q1 Q2 June 30
--------- --------- ----------------
GAAP income (loss) from
continuing operations before
minority interest and income
taxes $(39,809) $ 32,133 (7,676)
Allocation of net income to
founding/working partners
units - 7,133 7,133
Allocation of net income to
REUs - 252 252
Pro forma adjustments for
recapitalization (a) 2,042 - 2,042
--------- --------- ----------------
Pro forma pre-tax operating
income (loss) available to
fully diluted shareholders (37,767) 39,518 1,751
Pre-tax adjustments:
Compensation expenses related to
redemption of partnership units
issued prior to the merger;
additional pre-merger grants of
founding partner interests to
management and the activation
of exchangeability of founding
partner interests granted pre-
merger 84,063 - 84,063
Charges related to compensation
expense for restricted stock
units and restricted equity
units granted pre-merger 2,706 1,471 4,177
Equity loss on investments 1,796 1,276 3,072
Asset impairment charges - - -
--------- --------- ----------------
Total pre-tax adjustments 88,565 2,747 91,312
Pre-tax distributable earnings $ 50,798 $ 42,265 $ 93,063
========= ========= ================
GAAP net income (loss) available
to common stockholders $(48,533) $ 11,984 $(36,549)
Allocation of net income to
founding/working partners
units - 7,133 7,133
Allocation of net income to
REUs - 252 252
Allocation of net income to
Cantor's minority interest - 10,700 10,700
Pro forma adjustments for
recapitalization (a) 2,042 - 2,042
--------- --------- ----------------
Pro forma GAAP net income (loss)
for fully diluted shares (46,491) 30,069 (16,422)
Total pre-tax adjustments (from
above) 88,565 2,747 91,312
Income tax impact of pre-tax
adjustments (2,633) (604) (3,237)
--------- --------- ----------------
Post-tax distributable earnings $ 39,441 $ 32,212 $ 71,653
========= ========= ================
Pre-tax distributable earnings
per share $ 0.27 $ 0.22
========= =========
Post-tax distributable earnings
per share $ 0.21 $ 0.17
========= =========
Fully diluted weighted average
shares of common stock
outstanding 184,967 190,121
========= =========
(in thousands except per share
data)
----------------------------------
2007
----------------------------------
Six Months Ended
Q1 Q2 June 30
-------- -------- ----------------
GAAP income (loss) from continuing
operations before minority
interest and income taxes $ 21,528 $ 10,848 $ 32,376
Allocation of net income to
founding/working partners units - - -
Allocation of net income to REUs - - -
Pro forma adjustments for
recapitalization (a) 2,317 2,268 4,585
-------- -------- ----------------
Pro forma pre-tax operating income
(loss) available to fully diluted
shareholders 23,845 13,116 36,961
Pre-tax adjustments:
Compensation expenses related to
redemption of partnership units
issued prior to the merger;
additional pre-merger grants of
founding partner interests to
management and the activation of
exchangeability of founding
partner interests granted pre-
merger - - -
Charges related to compensation
expense for restricted stock
units and restricted equity units
granted pre-merger - - -
Equity loss on investments - - -
Asset impairment charges - 4,010 4,010
-------- -------- ----------------
Total pre-tax adjustments - 4,010 4,010
Pre-tax distributable earnings $ 23,845 $ 17,126 $ 40,971
======== ======== ================
GAAP net income (loss) available
to common stockholders $ 19,041 $ 12,651 $ 31,692
Allocation of net income to
founding/working partners units - - -
Allocation of net income to REUs - - -
Allocation of net income to
Cantor's minority interest - - -
Pro forma adjustments for
recapitalization (a) 2,317 2,268 4,585
-------- -------- ----------------
Pro forma GAAP net income (loss)
for fully diluted shares 21,358 14,919 36,277
Total pre-tax adjustments (from
above) - 4,010 4,010
Income tax impact of pre-tax
adjustments - - -
-------- -------- ----------------
Post-tax distributable earnings $ 21,358 $ 18,929 $ 40,287
======== ======== ================
Pre-tax distributable earnings per
share $ 0.13 $ 0.09
======== ========
Post-tax distributable earnings
per share $ 0.12 $ 0.10
======== ========
Fully diluted weighted average
shares of common stock
outstanding 185,301 185,353
======== ========
(a) Reflects a net decrease in interest income and interest expense
related to the separation and recapitalization transactions in
connection with the merger.
*T
-0-
*T
BGC Partners, Inc. Quarterly Market Activity Report
The following table provides certain volume and transaction count
information on BGC Partner's eSpeed system for the periods indicated.
---------------------------------------
2Q07 3Q07 4Q07 1Q08
---------------------------------------
Volume (in billions)
----------------------------
Fully Electronic Volume -
Excluding New Products* 10,281 12,689 11,364 13,155
Fully Electronic Volume - New
Products** 1,066 990 1,335 1,405
---------------------------------------
Total Fully Electronic Volume 11,347 13,679 12,699 14,560
Voice-Assisted Volume 9,820 10,883 9,769 12,967
Screen-Assisted Volume 7,317 8,438 7,503 9,016
Total Hybrid Volume*** 17,137 19,321 17,272 21,983
---------------------------------------
Total Volume 28,484 33,000 29,971 36,543
=======================================
Transaction Count
----------------------------
Fully Electronic Transactions
- Excluding New Products 1,749,219 2,660,756 2,810,937 3,865,649
Fully Electronic Transactions
- New Products** 153,673 128,425 125,631 248,286
---------------------------------------
Total Fully Electronic
Transactions 1,902,892 2,789,181 2,936,568 4,113,935
Voice-Assisted Transactions 209,504 216,436 202,500 232,137
Screen-Assisted Transactions 114,320 119,370 116,826 135,671
Total Hybrid Transactions 323,824 335,806 319,326 367,808
---------------------------------------
Total Transactions 2,226,716 3,124,987 3,255,894 4,481,743
=======================================
Trading Days 64 63 62 61
% Change % Change
------------------------------------
2Q08 2Q08 vs 1Q08 2Q08 vs 2Q07
----------
Volume (in billions)
-------------------------------
Fully Electronic Volume -
Excluding New Products* 11,043 (16.1%) 7.4%
Fully Electronic Volume - New
Products** 2,054 46.2% 92.6%
------------------------------------
Total Fully Electronic Volume 13,097 (10.0%) 15.4%
Voice-Assisted Volume 13,010 0.3% 32.5%
Screen-Assisted Volume 8,956 (0.7%) 22.4%
Total Hybrid Volume*** 21,966 (0.1%) 28.2%
------------------------------------
Total Volume 35,063 (4.1%) 23.1%
====================================
Transaction Count
-------------------------------
Fully Electronic Transactions -
Excluding New Products 3,530,869 (8.7%) 101.9%
Fully Electronic Transactions -
New Products** 330,361 33.1% 115.0%
------------------------------------
Total Fully Electronic
Transactions 3,861,230 (6.1%) 102.9%
Voice-Assisted Transactions 206,572 (11.0%) (1.4%)
Screen-Assisted Transactions 134,422 (0.9%) 17.6%
Total Hybrid Transactions 340,994 (7.3%) 5.3%
------------------------------------
Total Transactions 4,202,224 (6.2%) 88.7%
====================================
Trading Days 64
* Defined as U.S. Treasuries, Canadian Sovereigns and European
Government Bonds.
** New Products defined as Foreign Exchange, Interest Rate Swaps,
Repos, Futures, and Credit Default Swaps.
*** Defined notional volume from Hybrid transactions conducted by BGC
brokers using the eSpeed system, exclusive of voice-only
transactions.
2Q07 3Q07 4Q07 1Q08
-----------------------------------------------
Global Interest Rate
Futures Volume (1)
CBOT - US Treasury
Contracts 171,180,151 190,159,708 169,104,983 194,563,399
CME - Euro $
Contracts 148,244,973 180,358,177 140,142,461 191,121,345
EUREX - Bund
Contracts 88,867,284 91,302,644 72,162,362 84,683,863
Fed UST Primary Dealer
Volume (in billions)
(2)
UST Volume 33,100 39,414 35,044 41,815
Average Daily UST
Volume 517 626 565 685
NYSE - Volume (shares
traded) - in millions
(3) 127,755 145,470 135,045 158,453
Transaction Value -
in millions 5,339,909 6,015,397 5,577,200 5,781,700
NASDAQ - Volume
(shares traded) - in
millions (4) 134,007 136,916 139,202 149,378
Transaction Value -
in millions 3,526,949 3,896,657 4,536,801 4,363,261
% Change % Change
2Q08 2Q08 vs 1Q08 2Q08 vs 2Q07
------------
Global Interest Rate Futures
Volume (1)
CBOT - US Treasury Contracts 156,735,725 (19.4%) (8.4%)
CME - Euro $ Contracts 165,141,437 (13.6%) 11.4%
EUREX - Bund Contracts 65,580,034 (22.6%) (26.2%)
Fed UST Primary Dealer Volume
(in billions) (2)
UST Volume 35,689 (14.7%) 7.8%
Average Daily UST Volume 558 (18.7%) 7.8%
NYSE - Volume (shares traded) -
in millions (3) 140,709 (11.2%) 10.1%
Transaction Value - in
millions 5,207,000 (9.9%) (2.5%)
NASDAQ - Volume (shares traded)
- in millions (4) 134,511 (10.0%) 0.4%
Transaction Value - in
millions 3,912,200 (10.3%) 10.9%
-------------------
Trading Days
-------------------
Sources:(1) Futures Industry Association - Monthly
Volume Report - (www.cme.com,
www.eurexchange.com) 2008
-------------------
(2)
www.newyorkfed.org/markets/statrel.html -
Federal Reserve Bank Q1 Q2 Q3 Q4
---- ---- ---- ----
(3) NYSE - www.nyse.com 61 64 64 62
(4) NASDAQ - www.nasdaqtrader.com
Note: CBOT Futures volume calculated based on per
contract notional value of $200,000 for the two
year contract and $100,000 for all others. 2007
-------------------
Q1 Q2 Q3 Q4
---- ---- ---- ----
62 64 63 62
*T
BGC Partners, Inc.
Media:
Florencia Panizza, 212-294-7938
fpanizza@bgcpartners.com
or
Investors:
Nneoma Njoku, 212-610-2297
nnjoku@bgcpartners.com
or
Jason McGruder, 212-829-4988
jmcgruder@bgcpartners.com
Copyright Business Wire 2008
