EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

BGC Partners Reports First Quarter 2009 Financial Results

NEW YORK, NY – May 6, 2009 – 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 first quarter ended March 31, 2009.1

BGC Partners First Quarter Financial Summary

 

•  

Pre-tax distributable earnings were $30.1 million or $0.15 per fully diluted share in the first quarter of 2009, compared with $50.8 million or $0.27 per fully diluted share in the year-earlier quarter.

 

•  

Post-tax distributable earnings were $22.6 million or $0.11 per fully diluted share in the first quarter of 2009, compared with $39.4 million or $0.21 per fully diluted share in the first quarter of 2008.

 

•  

First quarter 2009 revenues as used to calculate distributable earnings were $286.1 million compared with $338.9 million in the year-earlier period.

 

•  

Income from continuing operations before income taxes as calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) was $21.3 million in the first quarter of 2009, compared with ($39.8) million in the year-earlier period.

 

•  

GAAP net income for fully diluted shares was $19.9 million or $0.10 per share in the first quarter of 2009, compared with ($48.5) million or ($0.26) per share in the year-earlier period.

 

•  

GAAP revenues were $283.9 million in the first quarter of 2009, compared with $337.1 million in the first quarter of 2008.

 

•  

BGC Partners’ Board of Directors declared a quarterly cash dividend of $0.09 per share payable on May 28, 2009 to Class A and Class B common stockholders of record as of May 18, 2009.

“Although our revenues for distributable earnings declined when compared with the record first quarter of 2008, we generated top line growth both sequentially and year-on-year in Credit and sequentially in Rates,” said Howard W. Lutnick, Chairman and Chief Executive Officer of BGC Partners, Inc. “Overall, our revenues were roughly flat when compared to the fourth quarter of 2008. Nonetheless, because of our strong focus on the bottom line, non-compensation expenses for distributable earnings were down by over 18 percent year-over-year and by more than 13 percent sequentially. Thus, despite the current market environment, we were able to expand our margins both sequentially and when compared to prior quarters with similar revenues.”

 

 

1

Because of BGC Partners’ merger with and into eSpeed on April 1, 2008, this release discusses historical financial results on a consolidated basis.

 

Page 5

First Quarter Revenues

For the first quarter of 2009, BGC Partners’ GAAP revenues were $283.9 million versus $337.1 million in the first quarter of 2008. Revenues used to calculate distributable earnings were $286.1 million, compared with the prior year quarter’s $338.9 million. The Company’s revenues for the first quarter of 2009 as calculated for GAAP and distributable earnings would have been approximately $24 million higher if not for the increase in the value of the U.S. dollar relative to other major currencies since the beginning of 2008. First quarter 2009 GAAP revenues included ($2.1) million in equity pick-up primarily related to Aqua and ELX, while first quarter 2008 GAAP revenues included ($1.8) million in equity pick-up related to the same equity investments. Year-over-year gains in brokerage revenues from Credit were offset primarily by year-over-year decreases in other brokerage revenues and fees from related parties.

Brokerage revenues for both GAAP and distributable earnings were $263.5 million, compared with $305.9 million in the prior year quarter. For the first quarter of 2009, Rates revenues were $123.6 million, Credit revenues were $91.3 million, Other Asset Classes revenues were $26.3 million, and Foreign Exchange revenues were $22.3 million. In comparison, for the first quarter of 2008, Rates revenues were $152.5 million, Credit revenues were $87.2 million, Other Asset Classes revenues were $28.8 million, and Foreign Exchange revenues were $37.5 million.

The increase in Credit revenues was driven primarily by BGC Partners’ strength in broking both corporate bonds and the related broking of credit default swaps used by the Company’s clients to hedge the underlying cash securities. Rates revenues were negatively impacted primarily by consolidation among large fixed fee eSpeed fully electronic U.S. Treasury customers as well as by lower industry-wide U.S. Treasury volumes. Foreign exchange revenues decreased primarily due to lower industry-wide emerging markets foreign exchange option volumes.

In the first quarter of 2009, Rates represented 43.2 percent of total distributable earnings revenues, Credit 31.9 percent, Other Asset Classes 9.2 percent, and Foreign Exchange 7.8 percent. In comparison, for the first quarter of 2008, Rates represented 45.0 percent of total distributable earnings revenues, Credit 25.7 percent, Foreign Exchange 11.1 percent, and Other Asset Classes 8.5 percent.

First quarter of 2009 revenues related to fully electronic trading2 represented 6.9 percent of total distributable earnings revenues versus 6.0 percent in the prior year period. This was driven by significant increases in fully electronic volumes for credit default swaps and foreign exchange options, offset by the decrease in fully electronic Rates volumes.

First Quarter Expense

Total GAAP expenses decreased by 30.3 percent to $262.6 million in the first quarter of 2009 compared with $376.9 million in the prior year period. Total expenses on a distributable earnings basis decreased by 11.1 percent year-over-year to $256.0 million compared with $288.1 million in the first quarter of 2008.

The Company’s compensation and employee benefits decreased to $174.3 million from $187.8 million year-over-year on a distributable earnings basis in the first quarter of 2009, but increased

 

 

2

This includes fees captured in both the “total brokerage revenues” and “fees from related party” line items related to fully electronic trading.

 

Page 6

to 60.9 percent of distributable earnings revenues, compared with 55.4 percent in the prior year period. This increase as a percentage of revenues is due in part to certain related party employees who perform services for the Company and whose compensation had been recorded in periods prior to the merger of BGC and eSpeed as fees to related parties. Because of the merger, the Company now includes the compensation for these employees as part of compensation and employee benefits. The compensation ratio also rose in part because the Company replaced some outside vendors and consultants with full-time employees, which also contributed to the year-over-year reduction in professional and consulting fees and to lower overall expenses.

The difference between first quarter 2009 compensation and employee benefits as calculated for GAAP and distributable earnings was due to a credit of $1.0 million in non-cash and non-dilutive compensation expenses related to the activation of exchangeability of founding partner interests granted pre-merger, which was offset by $2.5 million in non-cash and non-dilutive charges related to compensation expense for restricted stock units and REUs granted pre-merger and $0.1 million in expense related to dividend equivalents to holders of restricted stock units. The difference between first quarter 2008 compensation and employee benefits as calculated for GAAP and distributable earnings was $84.0 million in non-cash and non-dilutive compensation expenses related to redemption of partnership units issued prior to the merger and the activation of exchangeability of founding partner interests granted pre-merger, and $2.7 million in non-cash and non-dilutive charges related to compensation expense for restricted stock units and REUs granted pre-merger.

For the first quarter of 2009, non-compensation expenses, when compared to the year earlier period, declined by 20.2 percent on a GAAP basis and by 18.6 percent on a distributable earnings basis to $81.7 million. This represented 28.8 percent of GAAP revenues and 28.6 percent of distributable earnings revenues. This compares with $102.4 million or 30.4 percent on a GAAP basis and $100.3 million or 29.6 percent on a distributable earnings basis in the prior year period.

There were no differences between non-compensation expenses in the first quarter of 2009 as calculated for GAAP and distributable earnings. The difference between non-compensation expenses in the first quarter of 2008 as calculated for GAAP and distributable earnings was related to a $2.0 million pro forma adjustment due to the recapitalization in conjunction with the separation and merger of BGC and eSpeed, which reflected a net decrease in interest expense.

First Quarter Income

The Company recorded GAAP income from continuing operations before income taxes of $21.3 million, GAAP net income for fully diluted shares of $19.9 million, and GAAP net income per fully diluted share of $0.10 in the first quarter of 2009. This compares to GAAP net income from continuing operations before taxes of ($39.8) million, GAAP net income for fully diluted shares of ($48.5) million, and GAAP net income of ($0.26) per fully diluted share in the first quarter of 2008.

 

Page 7

In the first quarter of 2009, BGC Partners’ pre-tax distributable earnings were $30.1 million or $0.15 per fully diluted share, compared with $50.8 million or $0.27 per fully diluted share in the first quarter of 2008. The Company’s pre-tax distributable earnings margin was 10.5 percent in the first quarter of 2009 versus 15.0 percent in the prior year period.

BGC Partners recorded post-tax distributable earnings of $22.6 million or $0.11 per fully diluted share in the first quarter of 2009 compared with $39.4 million or $0.21 per fully diluted share in the first quarter of 2008. The Company’s post-tax distributable earnings margin was 7.9 percent in the first quarter of 2009 versus 11.6 percent in the prior year period.

In the first quarter of 2009, the effective tax rate for distributable earnings was 26.6 percent compared with 21.1 percent in the prior year quarter. The Company had a fully diluted weighted average share count of 200.0 million for the first quarter of 2009, compared with 185.0 million in the year earlier period. As of March 31, 2009, BGC had approximately 197.4 million fully diluted shares outstanding.

Broker Statistics

As of March 31, 2009, BGC Partners had 1,270 voice/hybrid brokers, versus 1,289 as of December 31, 2008 and 1,201 as of March 31, 2008. Voice/hybrid brokerage revenue per average voice/hybrid broker for the first quarter of 2009 was approximately $194,000 compared with $245,000 in the year earlier period.

Balance Sheet

As of March 31, 2009, the Company’s cash position, which is defined as cash and cash equivalents, cash segregated under regulatory requirements, and reverse repurchase agreements, was $366.3 million; long-term debt was $150.0 million; book value per share was $2.40; and total capital, which is comprised of “redeemable partnership interest”, Cantor’s “non-controlling interest in subsidiaries”, and “total stockholders’ equity”, was $447.9 million.

In comparison, as of December 31, 2008 the Company’s cash position was $361.3 million; long-term debt was $150.0 million; book value per share was $2.31; and its total capital was $443.8 million.

Second Quarter 2009 Outlook

The Company expects to generate distributable earnings revenues of between $260 million and $280 million in the second quarter of 2009, compared with $306.7 million in the prior year period. This revenue outlook would have been approximately $25 million higher if not for the relative appreciation of the U.S. dollar year-over-year.

The Company expects second quarter 2009 pre-tax distributable earnings of approximately $20 million to $28 million, compared with $42.3 million in the second quarter of 2008. The Company expects second quarter 2009 post-tax distributable earnings to be in the range of $14 million to $20 million versus $32.2 million in the year-earlier quarter.

 

Page 8

The Company’s compensation and employee benefits are expected to remain at approximately 60 percent of total revenues on a distributable earnings basis for the full year 2009.

The Company anticipates an effective tax rate for distributable earnings of approximately 27 percent for 2009.

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 should they occur.

Quarterly Dividend and Stock Repurchase

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. On May 4, 2009, the Company’s Board of Directors declared a quarterly cash dividend of $0.09 per share payable on May 28, 2009 to Class A and Class B common stockholders of record as of May 18, 2009.

From December 31, 2008 through April 30, 2009, the Company repurchased 4,023,959 shares of its Class A common stock for an aggregate purchase price of $7,892,998, as detailed in the following table:

 

Period

    Number of shares purchased    Average price per share

January

    —      $ —  

February

    —      $ —  

March

    3,537,258    $ 1.89

April

    486,701    $ 2.50

As of April 30, 2009, the Company had approximately $32.4 million remaining from its $100 million repurchase authorization.

Conference Call

BGC Partners will host a conference call Thursday, May 7, at 8:45 a.m. ET to discuss these results. Investors can access the call and download an accompanying PowerPoint presentation at the “Investor Relations” section of http://www.bgcpartners.com. One 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:

 

U.S #   888-679-8034
International #   617-213-4847
Passcode   72243218

 

Page 9

Pre-registration

   https://www.theconferencingservice.com/prereg/key.process?key=PBDCLAB9G

Replay From/To

   05/07/2009 11:45 AM / 05/15/2009 11:59 PM

U.S. #

   888-286-8010

International #

   617-801-6888

Passcode

   22192962

(Note: If clicking on the above links does not open up a new web page, you may need to cut and paste the above urls into your browser’s address bar.)

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 create 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. For more information, visit http://www.bgcpartners.com. The Company’s corporate address is: BGC Partners, Inc., 499 Park Avenue, New York, New York 10022. The media, analysts, and investors can also subscribe to BGC Partners’ investor “Email Alerts” at the “Investor Relations” section of http://www.bgcpartners.com.

Distributable Earnings

“Revenues for distributable earnings”, “pre-tax distributable earnings “and “post-tax distributable earnings” are supplemental measures of operating performance used by management to evaluate the financial 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

 

Page 10

distribution to BGC Partners, Inc. and its common stockholders as well as to holders of BGC Holdings partnership units during any period. As compared with “income (loss) from continuing operations before income taxes”, “net income (loss) for fully diluted shares,” and “fully diluted earnings (loss) 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, and which do not have economic consequences, as described below.

Revenues for distributable earnings are defined as GAAP revenues excluding the impact of BGC Partners’ equity investments, such as in Aqua Securities, L.P. (“Aqua”) and ELX Electronic Liquidity Exchange (“ELX”).

Pre-tax distributable earnings are defined as GAAP income (loss) from continuing operations before income taxes and exclude non-cash, non-dilutive, and non-economic items, including, for example:

 

•  

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 founding partner unit and REU conversion;

 

•  

Non-cash undistributed income or non-cash loss from BGC Partners’ equity investments including Aqua and 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/working partner units, to REUs, and to Cantor for its non-controlling 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.

Employees who are holders of unvested restricted stock units (“RSUs”) are granted pro-rata payments equivalent to the amount of dividend paid to common stockholders. Under GAAP, dividend equivalents on unvested RSUs are required to be taken as a compensation charge in the period paid. However, to the extent that they represent cash payments made from the prior period’s distributable earnings, they do not dilute existing stockholders and are therefore excluded from the calculation of distributable earnings.

 

Page 11

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. Management believes that distributable earnings and the GAAP measures of the Company’s financial performance should be considered together.

Management does not anticipate providing an outlook for GAAP “income (loss) from continuing operations before income taxes”, “net income (loss) for fully diluted shares,” and “fully diluted earnings (loss) 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 Of GAAP Income To Non-GAAP 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 income taxes” for the Company for the periods discussed in this release.

Discussion of Forward-Looking Statements by BGC Partners

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 (the “Exchange Act”). 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.

Our actual results 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 include, but are not limited to: our relationship with Cantor Fitzgerald, L.P. and its affiliates (“Cantor”) and any related conflicts of interest, competition for and retention of brokers and other managers and key employees, reliance on Cantor for liquidity and capital and other relationships; pricing and commissions and market position with respect to any of our products and services and those of our competitors; the effect of industry concentration and reorganization, reduction of customers and consolidation; liquidity, clearing capital requirements and the impact of recent credit market events; market conditions, including trading volume and volatility, and further deterioration of the equity and debt capital markets; economic or

 

Page 12

geopolitical conditions or uncertainties; the extensive regulation of the Company’s businesses, changes in regulations relating to the financial services industry, and risks relating to compliance matters; factors related to specific transactions or series of transactions, including credit, performance and unmatched principal risk, as well as counterparty failure; 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; certain financial risks, including the possibility of future losses and negative cash flow from operations, potential liquidity and other risks relating to the ability to obtain financing and risks of the resulting leverage, as well as interest and currency rate fluctuations; 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 and to secure and maintain market share; the ability 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; the ability to hire new personnel; the ability to expand the use of technology for our hybrid platform, including screen-assisted, voice-assisted and fully electronic trading; effectively managing any growth that may be achieved; financial reporting, accounting and internal control factors, including identification of any material weaknesses in our internal controls and our ability to prepare historical and pro forma financial statements and reports in a timely manner; the effectiveness of risk management policies and procedures; the ability to meet expectations with respect to payment of dividends, distributions and repurchases of our common stock or purchases of BGC Holdings, L.P. (“BGC Holdings”) limited partnership interests or other equity interests in our subsidiaries, including from Cantor, our executive officers, and our employees; and the risks and other factors described herein under the heading “Item 1A—Risk Factors” in most recent Form 10-K filed with the SEC on March 16, 2009, and as amended in any subsequent filings.

The foregoing risks and uncertainties, as well as those risks discussed under the heading “Item 7A—Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in our most recent 10-K, may cause actual results to differ materially from the forward-looking statements. The information included herein is given as of the filing date of our most recent Form 10-K with the SEC, and future events or circumstances could differ significantly from these forward-looking statements. 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.

Our discussions in financial releases often summarize the significant factors affecting our results of operations and financial condition. This discussion is provided to increase the understanding of, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto included elsewhere in our most recent Form 10-K .

 

Page 13

BGC PARTNERS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION IN ACCORDANCE WITH GAAP

(unaudited, in thousands, except share and per share data)

 

     March 31,
2009		     December 31,
2008		  
      

Assets:

     

Cash and cash equivalents

    $ 300,874     $ 204,930  

Cash segregated under regulatory requirements

      2,437       5,101  

Reverse repurchase agreements with related parties

      63,011       151,224  

Loan receivables from related parties

      980       980  

Securities owned

      4,801       887  

Securities borrowed

      23,734       —    

Marketable securities

      1,106       920  

Receivables from brokers, dealers, clearing organizations, customers and related broker-dealers

      250,755       177,831  

Accrued commissions receivable, net

      129,628       127,639  

Forgivable and other loan receivables from employees and partners

      90,634       80,597  

Fixed assets, net

      135,433       136,812  

Investments

      25,287       26,559  

Goodwill

      63,500       63,500  

Other intangible assets, net

      16,240       17,066  

Receivables from related parties

      29,102       14,780  

Other assets

      58,161       59,515  
                

Total assets

    $ 1,195,683     $ 1,068,341  
                

Liabilities, Redeemable Partnership Interest and Total Equity:

     

Accrued compensation

    $ 128,108     $ 113,547  

Securities sold, not yet purchased

      1,151       321  

Payables to brokers, dealers, clearing organizations, customers and related broker-dealers

      224,615       119,262  

Payables to related parties

      61,268       50,316  

Accounts payable, accrued and other liabilities

      169,744       177,340  

Deferred revenue

      12,896       13,774  

Long-term debt

      150,000       150,000  
                

Total liabilities

      747,782       624,560  

Redeemable partnership interest

      112,859       102,579  

Stockholders’ equity

     

Class A common stock, par value $0.01 per share 500,000 shares authorized; 61,735 and 61,735 shares issued at March 31, 2009 and December 31, 2008, respectively; and 47,685 and 51,222 shares outstanding at March 31, 2009 and December 31, 2008, respectively

      617       617  

Class B common stock, par value $0.01 per share 100,000 shares authorized; 30,148 and 30,148 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively, convertible into Class A common stock

      301       301  

Additional paid-in capital

      269,641       271,161  

Treasury stock, at cost: 14,050 and 10,513 shares of Class A common stock at March 31, 2009 and December 31, 2008, respectively

     (88,540 )     (81,845 )

Retained earnings

      10,038       1,958  

Accumulated other comprehensive losses

      (4,973 )     (3,942 )
                

Total stockholders’ equity

      187,084       188,250  

Noncontrolling interest in subsidiaries

      147,958       152,952  
                

Total equity

      335,042       341,202  

Total liabilities, redeemable partnership interest and equity

    $ 1,195,683     $ 1,068,341  
                

 

Page 14

BGC PARTNERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH GAAP

(unaudited, in thousands, except per share data)

 

     Three Months Ended
March 31,		  
     2009     2008  

Revenues:

     

Commissions

    $ 172,280     $ 254,031  

Principal transactions

      91,261       51,896  
                

Total brokerage revenues

      263,541       305,927  

Fees from related parties

      14,924       20,913  

Market data

      4,462       5,544  

Software solutions

      1,498       2,083  

Interest income

      1,312       3,853  

Other revenues

      320       586  

Losses on equity investments

      (2,143 )     (1,796 )
                

Total revenues

      283,914       337,110  

Expenses:

     

Compensation and employee benefits

      175,837       274,545  

Allocation of net income to founding/working partner units

      4,227       —    

Allocation of net income to REUs

      852       —    
                

Total compensation

      180,916       274,545  

Occupancy and equipment

      25,824       30,722  

Fees to related parties

      4,335       6,540  

Professional and consulting fees

      7,484       15,546  

Communications

      15,324       16,720  

Selling and promotion

      15,004       15,235  

Commissions and floor brokerage

      3,675       3,713  

Interest expense

      2,397       7,663  

Other expenses

      7,630       6,235  
                

Total non-compensation expenses

      81,673       102,374  
                

Total expenses

      262,589       376,919  

Income (loss) from continuing operations before income taxes

      21,325       (39,809 )

Provision for income taxes

      7,031       8,070  
                

Consolidated net income (loss)

      14,294       (47,879 )
                

Less: Net income attributable to noncontrolling interest in subsidiaries

      6,214       654  
                

Net income (loss) available to common stockholders

    $ 8,080     $ (48,533 )
                

Per share data:

     

Basic earnings (loss) per share

      `    

Net income (loss) available to common stockholders

    $ 8,080     $ (48,533 )
                

Basic earnings (loss) per share

    $ 0.10     $ (0.26 )
                

Basic weighted average shares of common stock outstanding

    $ 80,561     $ 184,967  
                

Fully diluted earnings (loss) per share

     

Net income (loss) for fully diluted shares

    $ 19,892     $ (48,533 )
                

Fully diluted earnings (loss) per share

    $ 0.10     $ (0.26 )
                

Diluted weighted average shares of common stock outstanding

    $ 199,981     $ 184,967  
                

Dividends declared per share of common stock

    $ 0.09     $ —    
                

Dividends declared and paid per share of common stock

    $ —       $ —    
                

 

Page 15

BGC Partners, Inc.

DISTRIBUTABLE EARNINGS AND KEY METRICS

(in thousands, except per share data)

 

    2009     2008     2007 (a)  
    Q1 (a)     Q1 (a)     Q2     Q3     Q4     FULL
YEAR		     Q1     Q2     Q3     Q4     FULL
YEAR		  

Revenues:

                      

Brokerage revenues:

                      

Rates

   $ 123,556     $ 152,450     $ 143,100     $ 142,162     $ 116,392     $ 554,104     $ 139,511     $ 140,611     $ 162,375     $ 117,844     $ 560,341  

Credit

     91,334       87,193       69,114       67,923       83,258       307,488       51,862       55,857       57,963       63,439       229,121  

Foreign exchange

     22,349       37,466       34,048       38,434       30,910       140,858       33,047       32,215       36,132       34,417       135,811  

Other asset classes

     26,302       28,818       32,341       25,795       29,199       116,153       18,694       20,291       18,169       25,578       82,732  
                                                                                       

Total brokerage revenues

     263,541       305,927       278,603       274,314       259,758       1,118,602       243,114       248,974       274,639       241,278       1,008,005  

Market data and software solutions

     5,960       7,627       6,555       6,951       6,051       27,184       7,937       8,137       7,223       6,667       29,964  

Fees from related parties, interest and other revenues

     16,556       25,352       21,590       21,513       21,760       90,215       22,025       15,845       17,516       24,728       80,114  
                                                                                       

Total revenues

     286,057       338,906       306,748       302,778       287,569       1,236,001       273,076       272,956       299,378       272,673       1,118,083  
                                                                                       

Expenses:

                      

Compensation and employee benefits (b)

     174,334       187,776       175,450       174,617       181,715       719,558       158,707       159,613       168,592       158,005       644,917  

Other expenses

     81,673       100,332       89,033       94,601       94,527       378,493       90,524       96,217       109,708       106,884       403,333  
                                                                                       

Total expenses

     256,007       288,108       264,483       269,218       276,242       1,098,051       249,231       255,830       278,300       264,889       1,048,250  
                                                                                       

Pre-tax distributable earnings, before noncontrolling interest in subsidiaries and taxes

     30,050       50,798       42,265       33,560       11,327       137,950       23,845       17,126       21,078       7,784       69,833  

Noncontrolling interest in subsidiaries (c)

     (519 )     654       726       933       795       3,108       155       894       375       928       2,352  

Provision for income taxes

     8,002       10,703       9,327       7,284       2,502       29,816       2,332       (2,697 )     3,899       5,863       9,397  
                                                                                       

Post-tax distributable earnings to fully diluted shareholders

   $ 22,567     $ 39,441     $ 32,212     $ 25,343     $ 8,030     $ 105,026     $ 21,358     $ 18,929     $ 16,804     $ 993     $ 58,084  
                                                                                       

Earnings per share:

                      

Fully diluted pre-tax distributable earnings per share

   $ 0.15     $ 0.27     $ 0.22     $ 0.17     $ 0.06     $ 0.73     $ 0.13     $ 0.09     $ 0.11     $ 0.04     $ 0.38  
                                                                                       

Fully diluted post-tax distributable earnings per share

   $ 0.11     $ 0.21     $ 0.17     $ 0.13     $ 0.04     $ 0.55     $ 0.12     $ 0.10     $ 0.09     $ 0.01     $ 0.31  
                                                                                       

Fully diluted weighted average shares of common stock outstanding

     199,981       184,967       190,121       196,574       189,058       188,835       185,301       185,353       184,315       184,187       185,482  

Total Revenues

     286,057       338,906 (d)     306,748       302,778       287,569       1,236,001       273,076       272,956       299,378       272,673       1,118,083  

Total Compensation Expense (b)

     174,334       187,776       175,450       174,617       181,715       719,558       158,707       159,613       168,592       158,005       644,917  

Compensation expense as a percent of revenues

     60.9 %     55.4 %     57.2 %     57.7 %     63.2 %     58.2 %     58.1 %     58.5 %     56.3 %     57.9 %     57.7 %

Pre-tax distributable earnings margins (on distributable earnings revenues)

     10.5 %     15.0 %     13.8 %     11.1 %     3.9 %     11.2 %     8.7 %     6.3 %     7.0 %     2.9 %     6.2 %

Post-tax distributable earnings margins (on distributable earnings revenues)

     7.9 %     11.6 %     10.5 %     8.4 %     2.8 %     8.5 %     7.8 %     6.9 %     5.6 %     0.4 %     5.2 %

Effective tax rate for distributable earnings

     26.6 %     21.1 %     22.1 %     21.7 %     22.1 %     21.6 %     9.8 %     (15.7 )%     18.5 %     75.3 %     13.5 %

 

Notes and Assumptions

(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, allocations of income to founding/working Partners, and dividends paid to restricted stock unit holders.
(c)    -    Noncontrolling interest allocation associated with joint ownership of administrative services company.
(d)    -    Reflects reclass of Q1 equity pickup loss from other expenses to Fees from related parties, interest and other revenues.

 

Page 16

BGC Partners, Inc.

RECONCILIATION OF GAAP INCOME TO DISTRIBUTABLE EARNINGS

(in thousands except per share data)

 

    2009     2008     2007  
    Q1     Q1     Q2     Q3     Q4     FULL
YEAR		     Q1   Q2   Q3   Q4     FULL
YEAR		  

GAAP income (loss) from continuing operations before noncontrolling interest in subsidiaries and income taxes

   $ 21,325     $ (39,809 )   $ 32,133     $ 18,126     $ (676 )   $ 9,774     $ 21,528   $ 10,848   $ 14,743   $ (4,445 )   $ 42,674  

Allocation of net income to founding/working partners holding units

     4,227       —         7,133       3,716       —         10,849       —       —       —       —         —    

Allocation of net income to REUs

     852       —         252       299       —         551       —       —       —       —         —    

Pro forma adjustments for recapitalization (a)

     —         2,042       —         —         —         2,042       2,317     2,268     6,335     6,452       17,372  
                                                                                 

Pro forma pre-tax operating income (loss) available to fully diluted shareholders

     26,404       (37,767 )     39,518       22,141       (676 )     23,216       23,845     13,116     21,078     2,007       60,046  

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

     (1,029 )     84,063       —         192       2,368       86,623       —       —       —       —         —    

Charges related to compensation expense for restricted stock units and REUs granted pre-merger

     2,470       2,706       1,471       2,700       5,960       12,837       —       —       —       4,590       4,590  

Equity loss on investments

     2,143       1,796       1,276       1,910       2,087       7,069       —       —       —       442       442  

Dividend equivalents to RSUs

     62       —         —         230       165       395       —       —       —       —         —    

Donations by Partners, re: Charity Day

     —         —         —         6,387       —         6,387       —       —       —       —         —    

Asset impairment charges

     —         —         —         —         1,423       1,423       —       4,010     —       745       4,755  
                                                                                 

Total pre-tax adjustments

     3,646       88,565       2,747       11,419       12,003       114,734       —       4,010     —       5,777       9,787  

Pre-tax distributable earnings

   $ 30,050     $ 50,798     $ 42,265     $ 33,560     $ 11,327     $ 137,950     $ 23,845   $ 17,126   $ 21,078   $ 7,784     $ 69,833  
                                                                                 

GAAP net income (loss) available to common stockholders

   $ 8,080     $ (48,533 )   $ 11,984     $ 6,853     $ (13 )   $ (29,709 )   $ 19,041   $ 12,651   $ 10,469   $ (11,159 )   $ 31,002  

Allocation of net income to founding/working partners holding units

     4,227       —         7,133       3,716       —         10,849       —       —       —       —         —    

Allocation of net income to REUs

     852       —         252       299       —         551       —       —       —       —         —    

Allocation of net income to Cantor’s noncontrolling interest in subsidiaries

     6,733       —         10,700       5,578       (18 )     16,260       —       —       —       —         —    

Pro forma adjustments for recapitalization (a)

     —         2,042       —         —         —         2,042       2,317     2,268     6,335     6,452       17,372  
                                                                                 

Pro forma GAAP net income (loss) for fully diluted shares

   $ 19,892     $ (46,491 )   $ 30,069     $ 16,446     $ (31 )   $ (7 )   $ 21,358   $ 14,919   $ 16,804   $ (4,707 )   $ 48,374  

Total pre-tax adjustments (from above)

     3,646       88,565       2,747       11,419       12,003       114,734       —       4,010     —       5,777       9,787  

Income tax adjustment to reflect effective tax rate

     (971 )     (2,633 )     (604 )     (2,522 )     (3,942 )     (9,701 )     0     0     0     (77 )     (77 )

Post-tax distributable earnings

   $ 22,567     $ 39,441     $ 32,212     $ 25,343     $ 8,030     $ 105,026     $ 21,358   $ 18,929   $ 16,804   $ 993     $ 58,084  
                                                                                 

Pre-tax distributable earnings per share

   $ 0.15     $ 0.27     $ 0.22     $ 0.17     $ 0.06     $ 0.73     $ 0.13   $ 0.09   $ 0.11   $ 0.04     $ 0.38  
                                                                                 

Post-tax distributable earnings earnings per share

   $ 0.11     $ 0.21     $ 0.17     $ 0.13     $ 0.04     $ 0.56     $ 0.12   $ 0.10   $ 0.09   $ 0.01     $ 0.31  
                                                                                 

Fully diluted weighted average shares of common stock outstanding

     199,981       184,967       190,121       196,574       189,058       188,835       185,301     185,353     184,315     184,187       185,482  

 

(a) Reflects a net decrease in interest income and interest expense related to the separation and recapitalization transactions in connection with the merger.

 

Page 17

CONTACTS

 

Media:

Florencia Panizza

212-294-7938

fpanizza@bgcpartners.com

   

Investors:

Jason McGruder

212-829-4988

jmcgruder@bgcpartners.com

   

###