EX-99.1 2 dex991.htm PRESS RELEASE ISSUED BY THE COMPANY DATED MAY 20, 2008 Press Release issued by the Company dated May 20, 2008

Exhibit 99.1

LOGO

MF Global Reports Record Fourth Quarter and Fiscal Year 2008 Results

Growth Strategy Continues to Deliver Strong Performance in April

Company Takes Significant Steps to Strengthen Permanent Capital Structure

NEW YORK, May 20, 2008 – MF Global Ltd. (NYSE: MF), the world’s leading broker of exchange-listed futures and options, today reported financial results for the fiscal fourth quarter and full year ended March 31, 2008. MF Global has also taken significant steps to strengthen its capital structure and refinance its existing bridge loan.

“Over the last three months, we have delivered record results, strengthened our risk management processes and systems and successfully put in motion plans to refinance our bridge facility,” said Kevin Davis, chief executive officer, MF Global. “This franchise has performed through exceptionally challenging circumstances, and I firmly believe we have emerged as a stronger company than ever before.”

Fiscal Fourth Quarter and Year-End 2008 Highlights:

 

   

Total exchange-traded futures and options volumes grew 38 percent year-over-year for the fourth fiscal quarter to a record 594.4 million contracts; fiscal year 2008 volume grew 40 percent to a record 2,105.1 million contracts.

 

 

 

GAAP net revenues grew ten percent from the prior year period to $412.7 million for the fourth fiscal quarter. Adjusted net revenues1 increased 23 percent to a record $464.1 million; fiscal year 2008 adjusted net revenues were up 23 percent to 1,692.4 million.

 

   

GAAP net loss for the fiscal fourth quarter was $71.1 million; adjusted net income increased 40 percent year over year to $60.9 million in the fiscal fourth quarter of 2008, or $0.48 per adjusted diluted share; fiscal year 2008 adjusted net income grew 43 percent to $211.8 million.

 

   

GAAP pre-tax margin for the fiscal fourth quarter was negative 23.4 percent. Adjusted pre-tax margin for the fiscal fourth quarter was 18.6 percent.

 

   

Total exchange-traded futures and options volume for the month of April 2008 was 178 million contracts. Net revenues for the month of April were $136 million. Net interest income for the month was $42 million.

 

   

MF Global has received a $300 million backstop commitment from an affiliate of J.C. Flowers & Co. LLC to purchase equity-linked securities of the company. This equity commitment serves as the foundation of the plan to refinance the company’s bridge facility while providing existing shareholders the opportunity to participate.

 

 

1

Adjusted items are non-GAAP measures. For a reconciliation of non-GAAP measures used in this release with the comparable GAAP measures, please reference the information at the end of this release.

MF Global Ltd.

Clarendon House

2 Church Street

Hamilton HM 11, Bermuda

Tel 441-296-1274


Mr. Davis added, “Whilst we had a number of equity related financing options available to the company, we felt it was critical to secure a transaction that allowed our existing shareholders to participate in our future success. We believe this transaction will provide our shareholders certainty around our capital structure.”

Mr. Davis continued, “Looking ahead, the secular shifts taking place in our markets are creating higher demand for MF Global’s services. We are ideally situated to benefit from this evolution as market turbulence and increasing demand for centrally cleared counterparties fits squarely with MF Global’s leadership position and independent, agency-only model. We continue to drive strong performance in the current quarter as evidenced by solid volume and net revenues in April.”

Fiscal Fourth Quarter and Year-End 2008 Performance

GAAP revenues, net of interest and transaction-based expenses (net revenues), were $412.7 million in the fourth quarter, up ten percent from $376.6 million for the same period last year. Adjusted net revenues were $464.1 million, up 23 percent from $376.6 million in prior year period. The only adjustment to net revenues was related to a one-time charge from a cash flow hedge originally entered into in anticipation of a previously forecasted debt issuance. GAAP net revenues for the year ended March 31, 2008, were $1,641.0 million, up 19 percent from $1,378.7 million for the same period last year. Adjusted net revenues were $1,692.4 million for the fiscal year, up 23 percent from the same period last year.

In the fourth quarter, GAAP pre-tax loss was $96.6 million. Adjusted pre-tax income was a record $86.5 million, an increase of 29 percent from the prior year period. GAAP pre-tax income for fiscal year 2008 was $16.4 million. Adjusted pre-tax income for the same period was up 38 percent to another record $313.7 million.

GAAP net loss was $71.1 million or $0.59 per basic and diluted share in the fourth quarter. Fiscal fourth quarter adjusted net income was up 40 percent to $60.9 million, or $0.48 per adjusted diluted share.

For the year ended March 31, 2008 the company reported a loss of $57.6 million, or $0.50 per basic and diluted share. Adjusted net income for the year increased 43 percent to $211.8 million, or $1.67 per adjusted diluted share.

In the fourth quarter, net interest income increased two percent year-over-year to $127.0 million. There are two main components which make up interest income: 1) $35.1 million in interest generated from principal transactions and related financing transactions; 2) $91.9 million in interest generated from our client funds and interest on excess cash. Please see the attached table for comparison periods.

Employee compensation and benefits expense, excluding non-recurring IPO awards, was $202.3 million for the fourth fiscal quarter. On an adjusted basis, employee compensation and benefits was $248.7 million, or 53.6 percent of adjusted net revenues, for the fourth fiscal quarter 2008, compared to 55.9 percent in the prior year period.

Non-compensation expense was $260.7 million for the fourth fiscal quarter compared to $109.4 million for the prior year period. Adjusted non-compensation expense was $111.8 million for the fourth fiscal quarter 2008, or 24.1 percent of adjusted net revenues, compared with 23.5 percent in the prior year period.

 

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For the fiscal year 2008, the company’s effective tax rate on adjusted operations was approximately 33 percent.

As of March 31, 2008, MF Global had $15.3 billion in client funds, compared to $15.8 billion at March 31, 2007.

Fourth Quarter Rate per Contract

MF Global reports the following additional information on yields, or rate per contract in exchange-traded derivatives.

 

                              % Change  
     1Q08    2Q08    3Q08    4Q08    FY08    2Q08 vs
1Q08
    3Q08 vs
2Q08
    4Q08 vs
3Q08
 
Execution(1)    $ 0.67    $ 0.70    $ 0.66    $ 0.65    $ 0.67    5 %   (6 )%   (1 )%
Clearing(1)                      

Total

   $ 0.43    $ 0.38    $ 0.40    $ 0.44    $ 0.41    (12 )%   5 %   9 %

Non-Professional Trader

                  (8 )%   6 %   2 %

 

(1) Excludes transaction fees and volumes unrelated to exchange-traded derivative activities.

In the fourth fiscal quarter, the rate per contract on cleared commissions was $0.44, up nine percent or $0.04 sequentially from the third fiscal quarter. The rate per contract in the company’s non-professional trader customer group increased two percent from the third quarter. Rate per contract in execution only commissions was $0.65 down approximately $0.01 from the third quarter.

Permanent Capital Structure

MF Global has taken significant steps to strengthen its capital structure and has begun to refinance the company’s $1.4 billion bridge loan established at the time of the IPO.

Today, MF Global signed a definitive agreement with an affiliate of J.C. Flowers & Co. LLC in which J.C. Flowers has agreed to provide a backstop commitment of $300 million toward the sale of equity–linked securities. Following the filing of the company’s annual report on Form 10-K in June, MF Global may conduct a public or private offering of these securities. Under the terms of the backstop commitment, J.C. Flowers will purchase a minimum of $150 million and a maximum of $300 million of any offering of these securities.

“This investment represents a tremendous vote of confidence in the strength of MF Global’s diversified business model and market leadership position by a sophisticated investor, with deep knowledge of the financial services industry,” said Randy MacDonald, chief financial officer, MF Global. “This strongly positions MF Global for future growth and provides the opportunity to build upon the compelling value proposition we offer our shareholders, clients and employees.”

 

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“We are delighted to have the opportunity to make an investment in MF Global and we look forward to the company’s future success,” said J. Christopher Flowers, Managing Director at J.C. Flowers & Co.

The proceeds from the commitment and the potential offering will be used to repay a portion of the $1.4 billion bridge loan, which the company borrowed in conjunction with its initial public offering and separation from Man Group plc in July 2007. In addition to the equity capital proceeds, the company intends to use $350 million of excess liquidity on its existing five-year revolver and excess capital from internal sources to reduce portions of the outstanding bridge loan. The company is also in active discussions with its current bank group to refinance a portion of the bridge loan. The backstop commitment is subject to receipt of this refinancing.

The equity-linked securities will be in the form of perpetual convertible preferred shares. Each preferred share will be convertible at any time, at the option of the holder, into MF Global’s common shares, at an initial conversion price of $12.50 per share. The conversion rate and the conversion price will be subject to adjustments in certain circumstances.

Dividends on the security are cumulative at the rate of 6% per annum, payable in cash or common shares. Holders will have the right to vote with holders of the common shares on an “as-converted” basis.

The company may redeem the preferred shares after five years and may require the holders to convert the shares at any time after five years when the market price of the common shares exceeds 125% of the conversion price.

In connection with the investment, J.C. Flowers will have the right to appoint up to two directors to MF Global’s board of directors.

The securities have not been registered under the Securities Act of 1933, and may not be offered or sold in the United States absent registration, or an exemption from registration.

This release is not an offer to sell any securities.

Conference Call Information

MF Global will hold a conference call to discuss the quarter’s results today at 10:00 a.m. EDT. The call is open to the public.

Dial-in Information

U.S. Domestic: 866.314.4483

International: 617.213.8049

Passcode: 90100109

Listeners to the call should dial in approximately 15 minutes prior to the start of the call. A live audio webcast of the presentation will be available on the investor relations section of the MF Global Web site and will be available for replay shortly after the event.

About MF Global Ltd.

MF Global Ltd., formerly Man Financial, is the leading broker of exchange-listed futures and options in the world. It provides execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange products and securities in the cash market.

 

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MF Global is uniquely diversified across products, trading markets, customers and regions. Its worldwide client base of more than 130,000 active accounts ranges from financial institutions, industrial groups, hedge funds and other asset managers to professional traders and private/retail clients.

MF Global operates in 12 countries on more than 70 exchanges, providing access to the largest and fastest growing financial markets in the world. It is the leader by volume on many of these markets and on a single day averages eight million contracts, more than most of the world’s largest derivatives exchanges.

MF Global Ltd. is rated Baa1/BBB/BBB+ by Moody’s, S&P and Fitch, respectively.

For more information, please visit www.mfglobal.com.

About J.C. Flowers & Co. LLC

J.C. Flowers & Co. LLC, based in New York, is a private equity firm focused solely on the financial services sector. Its latest fund has over $7 billion in commitments from investors.

Forward-Looking Statement

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release, including statements relating to the Company’s future revenues and earnings, plans, strategies, objectives, expectations and intentions, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which might not be anticipated. We caution you not to place undue reliance on these forward-looking statements. We refer you to the Company’s filings with the Securities and Exchange Commission (SEC) for a description of the risks and uncertainties the Company faces. This press release includes certain non-GAAP financial measures, as defined under SEC rules. A reconciliation of these measures is included in the financial information later in this release, as well as in the Company’s Current Report on Form 8-K furnished to the SEC in connection with this earnings release, which is available on the Company’s website at www.mfglobal.com and on the SEC’s website at www.sec.gov.

(Tables Follow)

Investor Contact:

Lisa Kampf        +1.212.589.6592 lkampf@mfglobal.com

Media Contact:

Diana DeSocio +1.212.589.6282 ddesocio@mfglobal.com

# # #

Non-GAAP Financial Measures

In addition to our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures of our financial performance for the reasons described further below. The presentation of these measures is not intended to be considered in isolation from, as a substitute for or as superior to, the financial information prepared and presented in accordance with GAAP, and our presentation of these measures may be different from non-GAAP financial measures used by other companies. In addition,

 

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these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. The non-GAAP financial measures we use are (1) non-GAAP adjusted net income, (2) non-GAAP adjusted pre-tax income, (3) non-GAAP adjusted net income per adjusted diluted common shares, (4) non-GAAP adjusted employee compensation and benefits, and (5) non-GAAP adjusted non-compensation expenses. These non-GAAP financial measures currently exclude the following items from our statement of operations:

 

   

Refco integration costs

 

   

Exchange membership gains

 

   

IPO-related costs

 

   

Tax resulting from reorganization and separation

 

   

Settlement and curtailment of U.S. pension plan

 

   

Legal settlements

 

   

Loss on extinguishment of debt

 

   

Stock compensation charge related to vesting of predecessor Man Group plc awards

 

   

Stock compensation related to IPO awards

 

   

Transfer of UK defined benefit pension plan

 

   

Release of deferred loss on cash flow hedge from other comprehensive income to principal transactions

 

   

Broker related loss

We do not believe that any of these items are representative of our future operating performance. Other than exchange membership gains and losses, these items reflect costs that were incurred for specific reasons outside of normal operations.

In addition, we may consider whether other significant non-operating or unusual items that arise in the future should also be excluded in calculating the non-GAAP financial measures we use. The non-GAAP financial measures also take into account income tax adjustments with respect to the excluded items.

 

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MF Global

Consolidated and Combined Statements of Operations

(Dollars in thousands, except share data)

 

     Three months ended
March 31,
    Year Ended March 31,
      2008     2007     2008     2007

Revenues

        

Execution only commissions

     131,317       105,182     $ 486,192     $ 386,533

Cleared commissions

     439,599       359,287       1,528,642       1,280,047

Principal transactions

     28,572       61,317       286,691       299,546

Interest income

     631,876       1,771,187       3,669,020       4,090,431

Other

     13,044       16,117       54,081       37,836
                              

Total revenues

     1,244,408       2,313,090       6,024,626       6,094,393

Interest and transaction-based expenses:

        

Interest expense

     504,865       1,646,239       3,165,247       3,739,310

Execution and clearing fees

     247,786       202,491       927,369       700,435

Sales commissions

     79,064       87,785       290,972       275,916
                              

Total interest and transaction-based expenses

     831,715       1,936,515       4,383,588       4,715,661

Revenues, net of interest and transaction-based expenses

     412,693       376,575       1,641,038       1,378,732
                              

Expenses

        

Employee compensation and benefits (excluding non-recurring IPO awards)

     202,307       212,231       898,672       834,710

Employee compensation related to non-recurring IPO awards

     25,260       —         59,131       —  

Communications and technology

     31,371       26,950       118,732       102,234

Occupancy and equipment costs

     9,340       7,078       35,622       29,823

Depreciation and amortization

     15,784       14,512       54,820       46,777

Professional fees

     26,436       19,706       74,576       50,082

General and other

     31,961       20,355       98,334       77,335

PAAF legal settlement

     —         —         76,814       —  

Broker related loss

     141,045       —         141,045       —  

IPO-related costs

     4,471       19,692       56,133       33,531

Refco integration costs

     279       1,058       2,709       19,382
                              

Total other expenses

     488,254       321,582       1,616,588       1,193,874

Gains on exchange seats and shares

     (3,962 )     50,696       79,519       126,712

Net gain on settlement of legal proceeding

     —         21,900       —         21,900

Loss on extinguishment of debt

     —         —         18,268       —  

Interest on borrowings

     17,107       10,758       69,301       43,807
                              

Income before provision for income taxes

     (96,630 )     116,831       16,400       289,663

Provision for income taxes

     (26,127 )     39,988       67,427       100,000

Minority interests in income of combined companies (net of tax)

     641       376       4,871       1,733

Equity in earnings of unconsolidated companies (net of tax)

     40       (405 )     (1,683 )     69
                              

Net income (loss)

   $ (71,104 )   $ 76,062     $ (57,581 )   $ 187,999
                              

Earnings per share:

        

Basic

   $ (0.59 )   $ 0.73     $ (0.50 )   $ 1.81

Diluted

   $ (0.59 )   $ 0.73     $ (0.50 )   $ 1.81

Weighted average number of common shares outstanding:

        

Basic

     120,030,708       103,726,453       115,027,797       103,726,453

Diluted

     120,030,708       103,726,453       115,027,797       103,726,453

 

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MF Global

Consolidated and Combined Balance Sheets

(Dollars in thousands, except share data)

 

     March 31,
     2008     2007

Assets

    

Cash and cash equivalents

   $ 1,481,084     $ 1,692,554

Restricted cash

     5,976,799       4,474,678

Securities purchased under agreements to resell

     18,424,363       19,056,287

Securities borrowed

     4,649,172       4,843,281

Securities received as collateral

     623,752       555,229

Securities owned, at fair value

     8,048,513       13,598,979

Receivables:

    

Brokers, dealers and clearing organizations

     7,085,652       6,185,144

Customers

     2,367,461       801,643

Affiliates

     716       12,004

Other

     41,835       41,741

Memberships in exchanges, at cost

     8,909       17,514

Furniture, equipment and leasehold improvements, net

     54,911       45,756

Goodwill

     74,145       35,767

Intangible assets, net

     193,180       202,291

Other assets

     223,539       107,404
              

TOTAL ASSETS

     49,254,031       51,670,272
              

Liabilities and Shareholders’ Equity/ Equity

    

Short-term borrowings, including current portion of long-term borrowings

     1,729,815       82,005

Securities sold under agreements to repurchase

     18,638,033       16,874,222

Securities loaned

     3,188,154       10,107,681

Obligation to return securities borrowed

     623,752       555,229

Securities sold, not yet purchased, at fair value

     1,864,260       3,378,462

Payables:

    

Brokers, dealers and clearing organizations

     6,317,297       2,561,509

Customers

     15,302,498       15,756,035

Affiliates

     12,921       869,897

Accrued expenses and other liabilities

     305,485       345,868

Long-term borrowings

     —         594,622
              

TOTAL LIABILITIES

     47,982,215       51,125,530
              

Commitments and contingencies

    

Minority interests in consolidated subsidiaries

     10,830       6,973
              

SHAREHOLDERS’ EQUITY/ EQUITY

    

Preference shares, $1.00 par value per share; 200,000,000 shares authorized, no shares issued and outstanding

     —      

Common shares, $1.00 par value per share; 1,000,000,000 shares authorized, 119,647,222 shares issued and outstanding

     119,647    

Additional paid-in capital

     1,265,733    

Accumulated other comprehensive income (net of tax)

     6,084    

Accumulated deficit

     (130,478 )  
              

TOTAL SHAREHOLDERS’ EQUITY/ EQUITY

     1,260,986       537,769
              

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY/ EQUITY

   $ 49,254,031     $ 51,670,272
              

 

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GAAP Reconciliation

The table below reconciles pre-tax income to adjusted pre-tax income for the periods presented:

 

     Three months ended
March 31,
    Year ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Income/(loss) before taxes (unadjusted)

   $ (96.6 )   $ 116.8     $ 16.4     $ 289.7  

Add: Refco integration costs

     0.3       1.1       2.7       19.4  

Less: Exchange membership gains

     4.0       (50.7 )     (79.5 )     (126.7 )

Add: IPO-related costs

     4.4       19.7       56.1       33.5  

Add: Settlement and curtailment of U.S. pension plan

     —         1.9       —         28.0  

Add: Legal settlements

     —         (21.9 )     76.8       (16.3 )

Add: Loss on extinguishment of debt

     —         —         18.3       —    

Add: Stock compensation charge on vesting of predecessor awards

     —         —         14.6       —    

Add: Stock compensation charge on IPO awards

     25.2       —         59.1       —    

Add: Employee compensation related to transfer of UK defined benefit plan from Group

     3.6       —         3.6       —    

Add: Release of deferred loss on cash flow hedges from other comprehensive income to principal transactions

     51.4       —         51.4       —    

Add: Broker related loss

     94.2       —         94.2       —    
                                

Adjusted pre-tax income

   $ 86.5     $ 66.9     $ 313.7     $ 227.6  
The table below reconciles net income to adjusted net income (applying an assumed tax rate of 35% to the adjustments prior to the Reorganization and Separation), for the periods presented:   
     Three months ended
March 31,
    Year ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Net income/(loss) (unadjusted)

   $ (71.1 )   $ 76.1     $ (57.6 )   $ 188.0  

Add: Refco integration costs

     0.7       0.7       2.3       12.6  

Less: Exchange membership gains

     (4.2 )     (33.0 )     (52.7 )     (82.4 )

Add: IPO-related costs

     9.5       12.8       46.6       21.8  

Add: Tax from Reorganization and Separation

     16.3       —         75.7       —    

Add: Settlement and curtailment of U.S. pension plan

     —         1.2       —         18.3  

Add: Legal settlements

     0.6       (14.2 )     46.1       (10.6 )

Add: Loss on extinguishment of debt

     0.1       —         10.8       —    

Add: Stock compensation charge on vesting of predecessor awards

     0.3       —         9.8       —    

Add: Stock compensation charge on IPO awards

     19.3       —         41.4       —    

Add: Employee compensation related to transfer of UK defined benefit plan from Group

     3.6       —         3.6       —    

Add: Release of deferred loss on cash flow hedges from other comprehensive income to principal transactions

     30.3       —         30.3       —    

Add: Broker related loss

     55.5       —         55.5       —    
                                

Adjusted net income

   $ 60.9     $ 43.6     $ 211.8     $ 147.7  

Adjusted diluted earnings per share

   $ 0.48     $ 0.34     $ 1.67     $ 1.16  

Adjusted diluted shares outstanding (in millions) (1)

     127.0       127.1       127.0       127.1  

 

(1) We believe it is meaningful to investors to present adjusted net income per adjusted diluted common share. Common shares outstanding are adjusted at March 31, 2008 to add back shares underlying an additional 6,984,596 restricted share units granted as part of the IPO Awards that are not considered dilutive under U.S. GAAP and therefore not included in diluted common shares outstanding. As of March 31, 2008, our adjusted diluted shares outstanding are 127.0 million, subject to increase to reflect our grant of additional awards in the future. Since we expect to add back the expenses associated with these awards in determining our adjusted net income in future periods, we believe it is more meaningful to investors to calculate pro forma adjusted net income per common share based on adjusted diluted shares outstanding. We believe that this presentation is meaningful because it demonstrates the dilution that investors will experience at the end of the three-year vesting period of these awards.

 

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GAAP Reconciliation (continued)

The table below calculates Adjusted Principal Transaction Revenue for the periods presented:

 

     Three months ended
March 31,
    Year Ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Principal transactions

   $ 28.6     $ 61.3     $ 286.7     $ 299.5  

Release of deferred loss on cash flow hedges from other comprehensive income to principal transactions

     51.4       —         51.4       —    
                                

Adjusted Principal Transaction Revenue

   $ 80.0     $ 61.3     $ 338.1     $ 299.5  
                                

The table below calculates Total Adjusted Principal Transaction Revenue for the periods presented:

 

     Three months ended
March 31,
    Year Ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Adjusted Principal Transaction Revenue

   $ 80.0     $ 61.3     $ 338.1     $ 299.5  

Net interest generated from principal transactions, related financing transactions and impact of equity swaps

     35.1       34.7       94.7       47.4  
                                

Total Adjusted Principal Transaction Revenue

   $ 115.1     $ 96.0     $ 432.8     $ 346.9  
                                

The table below calculates the components of net interest income:

        
     Three months ended
March 31,
    Year Ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Net Interest generated from client funds and excess cash

   $ 91.9     $ 90.2     $ 409.1     $ 303.7  

Net interest generated from principal transactions, related financing transactions and impact of equity swaps

     35.1       34.7       94.7       47.4  
                                

Total Net Interest Income

   $ 127.0     $ 124.9     $ 503.8     $ 351.1  
                                

The table below calculates Adjusted Employee Compensation and Benefits for the periods presented:

 

     Three months ended
March 31,
    Year Ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Employee compensation and benefits (excluding non-recurring IPO awards)

   $ 202.3     $ 212.2     $ 898.7     $ 834.7  

Less: Settlement and curtailment of U.S. pension plan

     —         (1.9 )     —         (28.0 )

Less: Transfer of UK defined benefit pension plan

     (3.6 )     —         (3.6 )     —    

Less: Stock compensation charge on vesting of predecessor awards

     —         —         (14.6 )     —    

Add: Compensation adjustment following broker related loss

     50.0       —         50.0       —    
                                

Adjusted Employee Compensation and Benefits

   $ 248.7     $ 210.3     $ 930.5     $ 806.7  
                                

The table below calculates Adjusted Non-Compensation Expenses for the periods presented:

 

     Three months ended
March 31,
    Year Ended March 31,  
     2008     2007     2008     2007  
     (dollars in millions)  

Total other expenses

   $ 488.3     $ 321.6     $ 1,616.6     $ 1,193.9  

Less: Employee compensation and benefits (excluding non-recurring IPO awards)

     (202.3 )     (212.2 )     (898.7 )     (834.7 )

Less: Employee compensation related to non-recurring IPO awards

     (25.3 )     —         (59.1 )     —    

Less: Refco integration costs

     (0.3 )     (1.1 )     (2.7 )     (19.4 )

Less: IPO-related costs

     (4.4 )     (19.7 )     (56.1 )     (33.5 )

Less: Legal settlements

     —         —         (76.8 )     (5.6 )

Less: Broker related loss

     (144.2 )     —         (144.2 )     —    
                                

Adjusted Non-Compensation Expenses

   $ 111.8     $ 88.6     $ 379.0     $ 300.7  
                                

 

10