BGC PARTNERS, INC.

(Parent Company Only)

STATEMENTS OF FINANCIAL CONDITION

(in thousands, except share and per share data)


	December 31, 2013		December 31, 2012
Assets
Cash and cash equivalents	$	67	$	27
Investments in subsidiaries		410,778		431,536
Receivables from related parties		229,018		53,621
Note receivable from related party		406,775		413,839
Other assets		70,362		16,387

Total assets	$	1,117,000	$	915,410

Liabilities and Stockholders’ Equity
Payables to related parties	$	191,708	$	145,177
Accounts payable, accrued and other liabilities		54,149		22,102
Notes payable and collateralized borrowings		256,775		263,839
Notes payable to related parties		150,000		150,000

Total liabilities		652,632		581,118
Commitments and contingencies (Note 2)
Total stockholders’ equity		464,368		334,292

Total liabilities and stockholders’ equity	$	1,117,000	$	915,410

See accompanying Notes to Financial Statements.

BGC PARTNERS, INC.

(Parent Company Only)

STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Year Ended December 31,
	2013			2012			2011
Revenues:
Interest income	$	41,419		$	33,412		$	21,740

Expenses:
Interest expense		47,206			35,911			21,740
Other expenses		725			567			399

Total expenses		47,931			36,478			22,139
Loss from operations before income taxes		(6,512	)		(3,066	)		(399	)
Equity income of subsidiaries		186,868			32,441			24,083
Provision for income taxes		109,432			5,511			3,547

Net income available to common stockholders	$	70,924		$	23,864		$	20,137

Per share data:
Basic earnings per share	$	0.37		$	0.16		$	0.17

Basic weighted-average shares of common stock outstanding		193,694			144,886			116,132

Fully diluted earnings per share	$	0.36		$	0.16		$	0.17

Fully diluted weighted-average shares of common stock outstanding		265,348			280,809			116,514

See accompanying Notes to Financial Statements.

BGC PARTNERS, INC.

(Parent Company Only)

STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Year Ended December 31,
	2013			2012			2011
Net income	$	70,924		$	23,864		$	20,137
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(1,878	)		(430	)		(3,471	)
Unrealized gain (loss) on securities available for sale		—			—			696

Total other comprehensive loss, net of tax		(1,878	)		(430	)		(2,775	)

Comprehensive income attributable to common stockholders	$	69,046		$	23,434		$	17,362

See accompanying Notes to Financial Statements.

BGC PARTNERS, INC.

(Parent Company Only)

STATEMENTS OF CASH FLOWS

(in thousands)


	Year Ended December 31,
	2013			2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income available to common stockholders	$	70,924		$	23,864		$	20,137
Adjustments to reconcile net income to net cash used in operating activities:
Equity in net gains of unconsolidated investments		(186,868	)		(32,441	)		(24,083	)
Deferred tax (benefit) expense		(52,549	)		(8,839	)		2,394
Decrease (increase) in operating assets:
Receivables from related parties		(92,044	)		52,828			(12,954	)
Note receivable from related party		11,940			(97,851	)		(139,413	)
Other assets		(1,425	)		(5,782	)		(1,557	)
(Decrease) increase in operating liabilities:
Accounts payable, accrued and other liabilities		39,295			16,799			11,928
Payables to related parties		112,207			41,063			60,227

Net cash used in operating activities		(98,520	)		(10,359	)		(83,321	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired		(230	)		(30,153	)		(61,829	)
Purchase of notes receivable		—			(22,000	)		—
Distribution from equity method investment		—			928			—

Net cash used in investing activities		(230	)		(51,225	)		(61,829	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders		(91,395	)		(90,590	)		(77,244	)
Repurchase of Class A common stock		(15,528	)		(337	)		(392	)
Issuance of convertible notes		—			—			155,620
Purchase of capped call		—			—			(11,392	)
Proceeds from long-term borrowings		—			108,716			—
Proceeds from collateralized borrowings		—			—			4,986
Repayments of collateralized borrowings		(11,940	)		(10,865	)		(9,801	)
Proceeds from short-term borrowings		—			90,000			30,000
Repayments of short-term borrowings		—			(103,600	)		(16,400	)
Distributions from subsidiaries		171,980			55,537			45,187
Proceeds from offering of Class A common stock, net		45,673			12,667			15,632
Proceeds from exercises of stock options		—			—			8,812
Other		—			83			90

Net cash provided by financing activities		98,790			61,611			145,098
Net increase (decrease) in cash and cash equivalents		40			27			(52	)
Cash and cash equivalents at beginning of period		27			—			52

Cash and cash equivalents at end of period	$	67		$	27		$	—

Supplemental non-cash information:
Issuance of Class A common stock upon exchange of Cantor units	$	—		$	—		$	8,407
Issuance of Class B common stock upon exchange of Cantor units		—			—			8,407
Issuance of Class A common stock upon exchange of limited partnership interests		65,908			90,199			79,115
Issuance of Class A and contingent Class A common stock for acquisitions		1,776			9,026			26,778
Donations with respect to Charity Day		5,720			13,401			12,076
Issuance of Class A common stock upon purchase of notes receivable		—			3,055			—
Use of notes receivable in business acquisition		—			25,617			—

See accompanying Notes to Financial Statements.

BGC PARTNERS, INC.

(Parent Company Only)

NOTES TO FINANCIAL STATEMENTS

1.	Organization and Basis of Presentation

The accompanying Parent Company Only Financial Statements of BGC Partners, Inc. (“BGC Partners” or the “Company”) should be read in conjunction with the consolidated financial statements of BGC Partners, Inc. and subsidiaries and the notes thereto.

2.	Commitments, Contingencies and Guarantees

On various dates beginning in 2009 and most recently in December 2012, subsidiaries of the Company entered into secured loan arrangements, under which they pledged certain fixed assets including furniture, computers and telecommunications equipment in exchange for loans. The principal and interest on this secured loan arrangements are repayable in consecutive monthly installments at a fixed rate of 8.09% per annum with the final payment due in December 2016. During the year ended December 31, 2013, the Company prepaid $26.7 million related to the secured loan arrangements. The outstanding balance of the secured loan was $1.6 million and $26.4 million as of December 31, 2013 and 2012, respectively.

In connection with these secured loan arrangements, the Company provided guarantees of payment and performance of its subsidiaries’ obligations pursuant to the agreements.

As of December 31, 2013, the Company has not been called upon to fulfill any obligations under the guarantees.

3.	Long Term Debt

On April 1, 2010, the Company issued an aggregate of $150.0 million principal amount of Convertible Notes to BGC Holdings, L.P., which further issued an aggregate of $150.0 million Convertible Notes to Cantor in a private placement transaction. In a back-to-back transaction, the Company loaned the $150.0 million to BGC Partners, L.P., which utilized the proceeds to repay at maturity $150.0 million aggregate principal amount of Senior Notes due April 1, 2010.

The Convertible Notes bear an annual interest rate of 8.75%, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2010, and are currently convertible into approximately 23.7 million shares of Class A common stock. The Convertible Notes will mature on April 15, 2015, unless earlier repurchased, exchanged or converted. The Company recorded interest expense of $13.1 million, $13.1 million and $13.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.

On various dates during the years ended December 31, 2010 and 2011, the Company (as Co-Lessee with other related entities) sold certain furniture, equipment and software for $34.2 million, net of costs and concurrently entered into agreements to lease the property back. The principal and interest on the leases were repayable in equal monthly installments for terms of 36 months (software) and 48 months (furniture and equipment) with maturities through September 2014.

During the year ended December 31, 2013, the Company terminated the leases and prepaid the outstanding balance of $7.2 million. As a result of the prepayment, the Company incurred $0.1 million of early termination fees and recognized $0.2 million related to of the acceleration of deferred financing costs.

Because the leases were terminated during the year ended December 31, 2013, the Company had no outstanding balance or fixed assets related to the leases as of December 31, 2013. As of December 31, 2012, the outstanding balance of the leases and the value of the fixed assets were $11.7 million and $8.3 million, respectively. The Company recorded interest expense of $0.7 million, $1.1 million and $1.4 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Because assets reverted back to the BGC Partners, Inc. and subsidiaries at the end of the leases, the transactions were capitalized. As a result, consideration received from the purchaser was included in the BGC Partners, Inc. consolidated balance sheet as a financing obligation, and payments made under the lease were recorded as interest expense (at an effective rate of approximately 6%). Depreciation on these fixed assets was charged to “Occupancy and equipment” in the BGC Partners, Inc. consolidated statements of operations.

On July 29, 2011, the Company issued an aggregate of $160.0 million principal amount 4.50% Convertible Senior Notes due 2016 (the “4.50% Convertible Notes”). The 4.50% Convertible Notes are general senior unsecured obligations of BGC Partners, Inc. The 4.50% Convertible Notes pay interest semiannually at a rate of 4.50% per annum and were priced at par. The 4.50% Convertible Notes will mature on July 15, 2016, unless earlier repurchased, exchanged or converted. The Company recorded interest expense related to the 4.50% Convertible Notes of $11.7 million, $11.6 million and $4.8 million for the years ended December 31, 2013, 2012 and 2011, respectively.

As of December 31, 2013, the 4.50% Convertible Notes were convertible, at the holder’s option, at a conversion rate of 101.6260 shares of Class A common stock per $1,000 principal amount of notes, subject to adjustment in certain circumstances, including stock dividends and stock splits on the Class A common stock and the Company’s payment of a quarterly cash dividend in excess of $0.17 per share of Class A common stock. Upon conversion, the Company will pay or deliver cash, shares of the Company’s Class A common stock, or a combination thereof at the Company’s election. As of December 31, 2013, the 4.50% Convertible Notes were convertible into approximately 16.3 million shares of Class A common stock.

As prescribed by FASB guidance, Debt, the Company recognized the value of the embedded conversion feature as an increase to additional paid-in capital of approximately $19.0 million on a pre-tax basis ($16.1 million net of taxes and issuance costs). The embedded conversion feature was measured as the difference between the proceeds received and the fair value of a similar liability without the conversion feature. The value of the conversion feature is treated as a debt discount and reduced the initial carrying value of the 4.50% Convertible Notes to $137.2 million, net of debt issuance costs of $3.8 million allocated to the debt component of the instrument. The discount is amortized as interest cost and the carrying value of the notes will accrete up to the face amount over the term of the notes.

In connection with the offering of the 4.50% Convertible Notes, the Company entered into capped call transactions, which are expected to reduce the potential dilution of the Company’s Class A common stock upon any conversion of the 4.50% Convertible Notes in the event that the market value per share of the Company’s Class A common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions ($10.35 as of December 31, 2013, subject to adjustments in certain circumstances). The capped call transactions had an initial cap price equal to $12.30 per share (50% above the last reported sale price of the Company’s Class A common stock on the NASDAQ on July 25, 2011), and had a cap price equal to approximately $12.94 per share as of December 31, 2013. The purchase price of the capped call resulted in a decrease to additional paid-in capital of $11.4 million on a pre-tax basis ($9.9 million on an after-tax basis). The capped call transactions cover approximately 15.5 million shares of BGC’s Class A common stock.

On June 26, 2012, the Company issued an aggregate of $112.5 million principal amount of 8.125% Senior Notes due 2042 pursuant to the Company’s effective Shelf Registration Statement on Form S-3, as amended. The 8.125% Senior Notes are senior unsecured obligations of BGC Partners, Inc. The 8.125% Senior Notes may be redeemed for cash, in whole or in part, on or after June 26, 2017, at the Company’s option, at any time and from time to time, until maturity at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued but unpaid interest on the principal amount being redeemed to, but not including, the redemption date. The 8.125% Senior Notes are listed on the New York Stock Exchange under the symbol “BGCA.” The Company used the proceeds to repay short-term borrowings under its unsecured revolving credit facility and for general corporate purposes, including acquisitions.

The initial carrying value of the 8.125% Senior Notes was $108.7 million, net of debt issuance costs of $3.8 million. The issuance costs are amortized as interest cost and the carrying value of the notes will accrete up to the face amount over the term of the notes. The Company recorded interest expense of $9.3 million and $4.8 million for the years ended December 31, 2013 and 2012, respectively. There was no interest expense related to the 8.125% Senior Notes for the year ended December 31, 2011.