NEW YORK--(BUSINESS WIRE)--FXCM Inc (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended June 30, 2011, revenues increased to $103.4 million, compared to $94.7 million for the first quarter 2011 and $96.7 million for the second quarter 2010, an increase of 9% and 7% respectively. Adjusted Pro Forma EBITDA for the second quarter 2011 was $28.5 million compared to $25.5 million for the first quarter 2011 and $35.2 million for the second quarter 2010, an increase of 12% and a decrease of 19%, respectively. Adjusted Pro Forma Net Income was $15.6 million, or $0.21 per share on a fully exchanged, fully diluted basis, compared to $13.7 million, or $0.18 per share for the first quarter 2011 and $21.1 million, or $0.28 per share, for the second quarter 2010, an increase of 14% and a decrease of 26%, respectively. U.S. GAAP net income for the second quarter 2011 was $3.3 million, or $0.19 cents per fully diluted Class A share.
Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC units into FXCM Inc. Class A shares, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity’s tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges.
For the six months ended June 30, 2011 revenues increased 14% to $198.1 million, compared to $173.6 million for the corresponding period in 2010. Adjusted Pro Forma EBITDA for the six months ended June 30, 2011 was $54.0 million, compared to $60.3 million, for the corresponding prior period, a decrease of 10%. Adjusted Pro Forma Net Income was $29.4 million, or $0.39 on a fully exchanged, fully diluted basis, compared to $35.8 million, or $0.48 per share, for the corresponding prior year period, a decrease of 18%. U.S. GAAP net income for the six months ended June 30, 2011 was $6.1 million, or $0.35 cents per fully diluted Class A share.
During the three months ended June 30, 2011, FXCM Inc. established a reserve of $16.0 million related to a settlement with the National Futures Association (“NFA”) and ongoing discussions with the Commodity Futures Trading Commission (“CFTC”). Certain founding members of FXCM Holdings, LLC have agreed to reimburse the expense, resulting in no impact to the net income of FXCM Inc.
“FXCM delivered solid results in the second quarter. In particular, we are pleased with growing client equity to $839.0 million – up 97% from a year-ago and up 31% just from December 31, 2010,” said Drew Niv, Chief Executive Officer of FXCM Inc. “We are also pleased that in the quarter our retail clients generated record trading volume of $938 billion.”
“FXCM is well positioned in the event of market turmoil,” he continued. “In fact, in the first seven trading days in August our retail clients traded $19.0 billion per day in volume – a record for FXCM,” he continued.
In addition, FXCM Inc. today announced certain key operating metrics for July 2011 for its retail and institutional foreign exchange business. Monthly activities included:
July Monthly Metrics:
Retail Trading Metrics
- Retail customer trading volume(1) of $311 billion in July 2011, 2% lower than June 2011 and 21% higher than July 2010.
- Average retail customer trading volume(1) per day of $14.8 billion in July 2011, 3% higher than June 2011 and 26% higher than July 2010.
- An average of 367,787 retail client trades per day in July 2011, 1% higher than June 2011 and 23% higher than July 2010.
- Tradeable accounts(2) of 174,306 as of July 31, 2011, an increase of 3,168, or 2% from June 2011, and an increase of 5,653,or 3%, from July 2010.
Institutional Trading Metrics
- Institutional customer trading volume(1) of $60 billion in July 2011, 17% lower than June 2011 and 11% lower than July 2010.
- Average institutional trading volume(1) per day of $2.8 billion in July 2011, 13% lower than June 2011 and 7% lower than July 2010.
- An average of 6,282 institutional client trades per day in July 2011, 14% lower than June 2011 and 84% higher than July 2010.
More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company's corporate website, www.fxcm.com.
This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website, www.fxcm.com.
(1) Volume that FXCM customers traded in period translated into US dollars.
(2) An account that has traded at least once in the previous twelve months.
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Consolidated Adjusted Pro Forma and U.S. GAAP Results |
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| Unaudited U.S. GAAP (thousands except per share amounts) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||
| Total Revenues | $ | 103,399 | $ | 96,662 | 7% | $ | 198,051 | $ | 173,622 | 14% | |||||||
| Referring broker fees | 24,932 | 21,418 | 16% | 46,533 | 37,073 | 26% | |||||||||||
| Compensation and benefits | 23,121 | 17,608 | 31% | 45,707 | 34,499 | 32% | |||||||||||
| Other expenses | 44,801 | 22,445 | 100% | 72,166 | 41,778 | 73% | |||||||||||
| EBITDA | 10,545 | 35,191 | -70% | 33,645 | 60,272 | -44% | |||||||||||
| Depreciation and amortization | 4,740 | 1,718 | 176% | 8,834 | 3,461 | 155% | |||||||||||
| Income before income taxes | 5,805 | 33,473 | -83% | 24,811 | 56,811 | -56% | |||||||||||
| Income tax provision | 2,070 | 2,358 | -12% | 2,619 | 4,966 | -47% | |||||||||||
| Net Income | 3,735 | 31,115 | -88% | 22,192 | 51,845 | -57% | |||||||||||
| Net income attributable to non-controlling interest | 420 | 31,115 | -99% | 16,081 | 51,845 | -69% | |||||||||||
| Net Income Attributable to FXCM Inc. | $ | 3,315 | $ | - | $ | 6,111 | $ | - | |||||||||
| Net Income (in thousands) | $ | 3,315 | $ | 6,111 | |||||||||||||
| Net Income per Class A Share | |||||||||||||||||
| Basic and Diluted | $ | 0.19 | $ | 0.35 | |||||||||||||
| Average Class A shares outstanding | 17,214 | 17,266 | |||||||||||||||
| Adjusted Pro Forma (thousands except per share amounts) | |||||||||||||||||
| Three Months Ended June 30, | SIx Months Ended June 30, | ||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||
| Total Revenues | $ | 103,399 | $ | 96,662 | 7% | $ | 198,051 | $ | 173,622 | 14% | |||||||
| Referring broker fees | 24,932 | 21,418 | 16% | 46,533 | 37,073 | 26% | |||||||||||
| Compensation and benefits | 21,154 | 17,608 | 20% | 41,307 | 34,499 | 20% | |||||||||||
| Other expenses | 28,801 | 22,445 | 28% | 56,166 | 41,778 | 34% | |||||||||||
| EBITDA | 28,512 | 35,191 | -19% | 54,045 | 60,272 | -10% | |||||||||||
| Depreciation and amortization | 4,740 | 1,718 | 176% | 8,834 | 3,461 | 155% | |||||||||||
| Income before income taxes | 23,772 | 33,473 | -29% | 45,211 | 56,811 | -20% | |||||||||||
| Income tax provision | 8,140 | 12,385 | -34% | 15,840 | 20,989 | -25% | |||||||||||
| Net Income | 15,632 | 21,088 | -26% | 29,371 | 35,822 | -18% | |||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | |||||||||||
| Net Income Attributable to FXCM Inc. | $ | 15,632 | $ | 21,088 | -26% | $ | 29,371 | $ | 35,822 | -18% | |||||||
| Pro forma fully exchanged, fully diluted shares outstanding | 75,195 | 75,300 | (0) | 75,247 | 75,300 | (0.00) | |||||||||||
| Earnings Per Share | $ | 0.21 | $ | 0.28 | -26% | $ | 0.39 | $ | 0.48 | -18% | |||||||
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Selected Operating Metrics |
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| (Unaudited) | |||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||
| Total trading volume ($ in billions) | $ | 938 | $ | 823 | 14 | % | $ | 1,759 | $ | 1,566 | 12 | % | |||||||
| Total active accounts | 154,786 | 131,778 | 17 | % | 154,786 | 131,778 | 17 | % | |||||||||||
| Trading days in period | 65 | 65 | 129 | 128 | |||||||||||||||
| Daily average trades | 350,349 | 326,651 | 7 | % | 330,220 | 320,533 | 3 | % | |||||||||||
| Daily average trades per active account | 2.4 | 2.6 | -8 | % | 2.3 | 2.6 | -12 | % | |||||||||||
| Retail trading revenue per million traded | $ | 100 | $ | 105 | -5 | % | $ | 97 | $ | 99 | -1 | % | |||||||
| Total customer equity ($ in millions) | $ | 839.0 | $ | 425.5 | 97 | % | $ | 839.0 | $ | 425.5 | 97 | % | |||||||
Non-GAAP Financial Measures
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per fully diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP.
Declaration of Quarterly Dividend
The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on September 30, 2011 to Class A stockholders of record at the close of business on September 19, 2011.
Conference Call
As previously announced, FXCM Inc. will host a conference call to discuss its results at 8:15 a.m. (EST) today. This conference call will be available to domestic participants by dialing 866.788.0546 and 857.350.1684 for international participants. The conference ID number is 21502238.
A live, audio webcast, a copy of FXCM's earnings release, and a presentation and replay of this conference call will also be available at http://ir.fxcm.com/.
Disclosure Regarding Forward-Looking Statements
In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2011 and subsequently filed quarterly reports on Form 10-Q.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
About FXCM Inc.
FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide.
At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers CFD products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.
Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.
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ANNEX I |
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| Schedule | Page Number |
| U.S. GAAP Results | |
| Unaudited U.S. GAAP Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010 | A-1 |
| Unaudited U.S. GAAP Consolidated Statements of Financial Condition As of June 30, 2011 and December 31, 2010 | A-2 |
| Adjusted Pro Forma Results | A-3 |
| Unaudited Adjusted Pro Forma and U.S. GAAP Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010 | A-4 |
| Unaudited Adjusted Pro Forma and U.S. GAAP Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010 | A-5 |
| Reconciliation of EBITDA to U.S. GAAP Net Income | A-6 |
| FXCM Inc. | |||||||||||||
| Consolidated Statement of Operations | |||||||||||||
| (In thousands, except per share amounts) | |||||||||||||
| (Unaudited ) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Revenues | |||||||||||||
| Retail trading revenues | $ | 93,482 | $ | 86,477 | $ | 171,217 | $ | 154,225 | |||||
| Institutional trading revenues | 6,721 | 7,402 | 14,100 | 13,589 | |||||||||
| Interest income | 933 | 489 | 1,874 | 1,005 | |||||||||
| Other income | 2,263 | 2,294 | 10,860 | 4,803 | |||||||||
| Total revenues | 103,399 | 96,662 | 198,051 | 173,622 | |||||||||
| Expenses | |||||||||||||
| Referring broker fees | 24,932 | 21,418 | 46,533 | 37,073 | |||||||||
| Compensation and benefits | 23,121 | 17,608 | 45,707 | 34,499 | |||||||||
| Advertising and marketing | 7,487 | 5,979 | 14,505 | 11,315 | |||||||||
| Communication and technology | 8,010 | 7,260 | 15,369 | 12,798 | |||||||||
| General and administrative | 29,244 | 9,181 | 42,159 | 17,614 | |||||||||
| Depreciation and amortization | 4,740 | 1,718 | 8,834 | 3,461 | |||||||||
| Interest expense | 60 | 25 | 133 | 51 | |||||||||
| Total expenses | 97,594 | 63,189 | 173,240 | 116,811 | |||||||||
| Income before income taxes | 5,805 | 33,473 | 24,811 | 56,811 | |||||||||
| Income tax provision | 2,070 | 2,358 | 2,619 | 4,966 | |||||||||
| Net income | 3,735 | 31,115 | 22,192 | 51,845 | |||||||||
| Net income attributable to non-controlling interest | 420 | 31,115 | 16,081 | 51,845 | |||||||||
| Net income attributable to FXCM, Inc. | $ | 3,315 | $ | - | $ | 6,111 | $ | - | |||||
| Net Income | $ | 3,315 | $ | 6,111 | |||||||||
| Net Income per Class A Share | |||||||||||||
| Basic and Diluted | $ | 0.19 | $ | 0.35 | |||||||||
| Average Class A shares outstanding | 17,214 | 17,266 | |||||||||||
|
A-1 |
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| FXCM Inc. | |||||||
| Consolidated Statements of Financial Condition | |||||||
| As of June 30, 2011 and December 31, 2010 | |||||||
| (Amounts in thousands) | |||||||
| (Unaudited) | |||||||
| June 30, | December 31, | ||||||
| 2011 | 2010 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 179,539 | $ | 193,330 | |||
| Cash and cash equivalents, held for customers | 839,006 | 641,152 | |||||
| Due from brokers | 6,956 | 125 | |||||
| Accounts receivables | 17,728 | 18,324 | |||||
| Deferred tax asset | 7,054 | 7,625 | |||||
| Tax receivable | 1,834 | 1,643 | |||||
| Total current assets | 1,052,117 | 862,199 | |||||
| Deferred tax asset | 86,872 | 90,107 | |||||
| Office, communication and computer equipment, net | 31,459 | 18,709 | |||||
| Intangible assets and goodwill, net | 64,961 | 64,409 | |||||
| Other assets | 14,488 | 12,369 | |||||
| Total assets | $ | 1,249,897 | $ | 1,047,793 | |||
| Liabilities and Equity | |||||||
| Current liabilities | |||||||
| Customer account liabilities | $ | 839,006 | $ | 641,152 | |||
| Accounts payable and accrued expenses | 54,766 | 37,470 | |||||
| Due to brokers | 2,855 | 13,314 | |||||
| Deferred tax liability - current | 1,838 | 1,844 | |||||
| Due to related parties - pursuant to tax receivable agreement | 3,744 | 3,817 | |||||
| Deferred revenue | - | 6,000 | |||||
| Total current liabilities | 902,209 | 703,597 | |||||
| Deferred tax liability | 5,359 | 5,770 | |||||
| Due to related parties - pursuant to tax receivable agreement | 68,620 | 70,419 | |||||
| Total liabilities | 976,188 | 779,786 | |||||
| Commitments and Contingencies | |||||||
| Stockholders' equity | |||||||
|
Class A common stock, par value $0.01 per share; 3,000,000 shares
authorized, 16,952,324 and 17,319,000 shares issued |
170 | 173 | |||||
|
Class B common stock, par value $0.01 per share; 1,000,000 shares
authorized, 100 and 0 shares issued |
1 | 1 | |||||
| Additional paid-in-capital | 103,359 | 101,848 | |||||
| Retained earnings | 4,193 | 146 | |||||
| Accumulated other comprehensive income | 639 | 52 | |||||
| Total stockholders' equity of FXCM, Inc. | 108,362 | 102,220 | |||||
| Non-controlling interest | 165,347 | 165,787 | |||||
| Total stockholders' equity | 273,709 | 268,007 | |||||
| Total liabilities and stockholders' equity | $ | 1,249,897 | $ | 1,047,793 | |||
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A-2 |
|||||||
Adjusted Pro Forma Results
Throughout the discussion of FXCM Inc.’s results, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), adjusted to exclude certain items and reflects the conversion of all units of FXCM Holdings, LLC for shares of Class A common stock of FXCM Inc. FXCM believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare FXCM’s results across several periods and facilitate an understanding of FXCM’s operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:
1. Assumed Exchange of Units of FXCM Holdings, LLC for FXCM Inc. Class A Shares. As a result of the exchange of FXCM Holdings units, the non-controlling interest related to these units is converted to controlling interest. The Company’s management believes that it is useful to provide the per-share effect associated with the assumed exchange of all FXCM Holdings units.
2. Stock Based Compensation Expense. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate expense relating to stock based compensation. The Company’s management believes it is useful to provide the effects of eliminating these expenses.
3. Income Taxes. Prior to the initial public offering FXCM was organized as a series of limited liability companies and foreign corporations, and even following the initial public offering not all of the Company’s income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted Pro Forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are recorded directly to stockholders’ equity. This assumption is consistent with the assumption that all of FXCM Holdings’ units are exchanged for shares of FXCM Inc. Class A common stock, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.
4. Regulatory Reserve. During the three months ended June 30, 2011, the Company established a reserve of $16.0 million regarding a settlement with the NFA and ongoing discussions with the CFTC relating to trade execution activities. Pursuant to an agreement with a subsidiary of FXCM Holdings LLC, certain founding members of FXCM Holdings agreed to reimburse the cost of these matters, up to $16.0 million. In July 2011, $16.0 million of additional capital was provided by the respective founding members and their capital accounts were increased and decreased for the funding and expense, respectively, in accordance with their membership interest in Holdings. Given there was no impact to FXCM Inc.'s net income for the three and six months ended June 30, 2011 as the expense was allocated to such members as permitted under the specific allocations terms of Holdings’ partnership agreement, the Company believes it is useful to provide the effects of eliminating these expenses.
A-3
| FXCM Inc. | ||||||||||||||||||||||||
| Adjusted Pro Forma Consolidated Statements of Operations | ||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||
| (Unaudited ) | ||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| As | Adjusted | As | Adjusted | |||||||||||||||||||||
| Reported | Adjustments | Pro Forma | Reported | Adjustments | Pro Forma | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Retail trading revenues | $ | 93,482 | - | $ | 93,482 | $ | 86,477 | - | $ | 86,477 | ||||||||||||||
| Institutional trading revenues | 6,721 | - | 6,721 | 7,402 | - | 7,402 | ||||||||||||||||||
| Interest income | 933 | - | 933 | 489 | - | 489 | ||||||||||||||||||
| Other income | 2,263 | - | 2,263 | 2,294 | - | 2,294 | ||||||||||||||||||
| Total revenues | 103,399 | - | 103,399 | 96,662 | - | 96,662 | ||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Referring broker fees | 24,932 | - | 24,932 | 21,418 | - | 21,418 | ||||||||||||||||||
| Compensation and benefits | 23,121 | (1,967 | ) |
(1) |
21,154 | 17,608 | - | 17,608 | ||||||||||||||||
| Advertising and marketing | 7,487 | - | 7,487 | 5,979 | - | 5,979 | ||||||||||||||||||
| Communication and technology | 8,010 | - | 8,010 | 7,260 | - | 7,260 | ||||||||||||||||||
| General and administrative | 29,244 | (16,000 | ) |
(2) |
13,244 | 9,181 | - | 9,181 | ||||||||||||||||
| Depreciation and amortization | 4,740 | - | 4,740 | 1,718 | - | 1,718 | ||||||||||||||||||
| Interest expense | 60 | - | 60 | 25 | - | 25 | ||||||||||||||||||
| Total expenses | 97,594 | (17,967 | ) | 79,627 | 63,189 | - | 63,189 | |||||||||||||||||
| Income before income taxes | 5,805 | 17,967 | 23,772 | 33,473 | - | 33,473 | ||||||||||||||||||
| Income tax provision | 2,070 | 6,070 |
(3) |
8,140 | 2,358 | 10,027 |
(3) |
12,385 | ||||||||||||||||
| Net income | 3,735 | 11,897 | 15,632 | 31,115 | (10,027 | ) | 21,088 | |||||||||||||||||
| Net income attributable to non-controlling interest | 420 | (420 | ) |
(4) |
- | 31,115 | (31,115 | ) |
(4) |
- | ||||||||||||||
| Net income attributable to FXCM Inc. | $ | 3,315 | $ | 12,317 | $ | 15,632 | $ | - | $ | 21,088 | $ | 21,088 | ||||||||||||
| Pro Forma fully exchanged, fully diluted shares outstanding | 75,195 |
(5) |
|
|
75,300 |
(5) |
||||||||||||||||||
| Adjusted Pro Forma net income per fully exchanged, fully diluted shares outstanding | $ | 0.21 | $ | 0.28 | ||||||||||||||||||||
| (1) Represents the elimination of equity-based compensation. | ||||||||||||||||||||||||
| (2) Represents an adjustment to reflect a reserve established relating to a settlement with the NFA and ongoing discussions with the CFTC regarding trade execution activities. Pursuant to an agreement with a subsidiary of FXCM Holdings, certain founding members of FXCM Holdings agreed to reimburse the cost of these matters, up to $16.0 million. Consequently, there was no impact to FXCM Inc.'s net income for the three and six months ended June 30, 2011 as the entire expense was allocated to such founding members. In July 2011, $16.0 million of additional capital was provided by the respective founding members. | ||||||||||||||||||||||||
| (3) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 34.2% and 37.0% for the three months ended June 30, 2011 and 2010, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC units for shares of Class A common stock of the Company. | ||||||||||||||||||||||||
| (4) Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of FXCM Holdings, LLC (excluding FXCM, Inc.), as if the unitholders had fully exchanged their FXCM Holdings, LLC units for shares of Class A common stock of the Company. | ||||||||||||||||||||||||
| (5) Fully diluted shares assuming all unitholders had fully exchanged their FXCM Holdings, LLC units for shares of Class A common stock of the Company. | ||||||||||||||||||||||||
A-4
| FXCM Inc. | |||||||||||||||||||||
| Adjusted Pro Forma Consolidated Statements of Operations | |||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||
| (Unaudited ) | |||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||||
| As | Adjusted | As | Adjusted | ||||||||||||||||||
| Reported | Adjustments | Pro Forma | Reported | Adjustments | Pro Forma |
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| Revenues | |||||||||||||||||||||
| Retail trading revenues | $ | 171,217 | - | $ | 171,217 | $ | 154,225 | - | $ | 154,225 |
|
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| Institutional trading revenues | 14,100 | - | 14,100 | 13,589 | - | 13,589 |
|
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| Interest income | 1,874 | - | 1,874 | 1,005 | - | 1,005 |
|
||||||||||||||
| Other income | 10,860 | - | 10,860 | 4,803 | - | 4,803 |
|
||||||||||||||
| Total revenues | 198,051 | - | 198,051 | 173,622 | - | 173,622 |
|
||||||||||||||
| Expenses | |||||||||||||||||||||
| Referring broker fees | 46,533 | - | 46,533 | 37,073 | - | 37,073 |
|
||||||||||||||
| Compensation and benefits | 45,707 | (4,400) | (1) | 41,307 | 34,499 | - | 34,499 |
|
|||||||||||||
| Advertising and marketing | 14,505 | - | 14,505 | 11,315 | - | 11,315 |
|
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| Communication and technology | 15,369 | - | 15,369 | 12,798 | - | 12,798 |
|
||||||||||||||
| General and administrative | 42,159 | (16,000) | (2) | 26,159 | 17,614 | - | 17,614 |
|
|||||||||||||
| Depreciation and amortization | 8,834 | - | 8,834 | 3,461 | - | 3,461 |
|
||||||||||||||
| Interest expense | 133 | - | 133 | 51 | - | 51 |
|
||||||||||||||
| Total expenses | 173,240 | (20,400) | 152,840 | 116,811 | - | 116,811 |
|
||||||||||||||
| Income before income taxes | 24,811 | 20,400 | 45,211 | 56,811 | - | 56,811 |
|
||||||||||||||
| Income tax provision | 2,619 | 13,221 |
(3) |
15,840 | 4,966 | 16,023 | (3) | 20,989 |
|
||||||||||||
| Net income | 22,192 | 7,179 | 29,371 | 51,845 | (16,023) | 35,822 |
|
||||||||||||||
| Net income attributable to non-controlling interest | 16,081 | (16,081) |
(4) |
- | 51,845 | (51,845) |
(4) |
- | |||||||||||||
| Net income attributable to FXCM Inc. | $ | 6,111 | $ | 23,260 | $ | 29,371 | $ | - | $ | 35,822 | $ | 35,822 |
|
||||||||
| Pro Forma fully exchanged, fully diluted shares outstanding | 75,247 |
(5) |
|
75,300 |
(5) |
||||||||||||||||
| Adjusted Pro Forma net income per fully exchanged, fully diluted shares outstanding | $ | 0.39 | $ | 0.48 |
|
||||||||||||||||
| (1) Represents the elimination of equity-based compensation. | |||||||||||||||||||||
| (2) Represents an adjustment to reflect a reserve established relating to a settlement with the NFA and ongoing discussions with the CFTC regarding trade execution activities. Pursuant to an agreement with a subsidiary of FXCM Holdings, certain founding members of FXCM Holdings agreed to reimburse the cost of these matters, up to $16.0 million. Consequently, there was no impact to FXCM Inc.'s net income for the three and six months ended June 30, 2011 as the entire expense was allocated to such founding members. In July 2011, $16.0 million of additional capital was provided by the respective founding members. | |||||||||||||||||||||
| (3) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 35.0% and 36.9% for the three months ended June 30, 2011 and 2010, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC units for shares of Class A common stock of the Company. | |||||||||||||||||||||
| (4) Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of FXCM Holdings, LLC (excluding FXCM, Inc.), as if the unitholders had fully exchanged their FXCM Holdings, LLC units for shares of Class A common stock of the Company. | |||||||||||||||||||||
| (5) Fully diluted shares assuming all unitholders had fully exchanged their FXCM Holdings, LLC units for shares of Class A common stock of the Company. | |||||||||||||||||||||
|
A-5 |
|||||||||||||||||||||
| FXCM Inc. | ||||||||||||||||||||||||
| Reconciliation of EBITDA to Net Income | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (Unaudited ) | ||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| Adjusted Pro Forma | U.S. GAAP | Adjusted Pro Forma | U.S. GAAP | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Net income attributable to FXCM Inc. | $ | 15,632 | $ | 21,088 | $ | 3,315 | $ | - | $ | 29,371 | $ | 35,822 | $ | 6,111 | $ | - | ||||||||
| Net income attributable to noncontrolling interest | - | - | 420 | 31,115 | - | - | 16,081 | 51,845 | ||||||||||||||||
| Provision for income taxes | 8,140 | 12,385 | 2,070 | 2,358 | 15,840 | 20,989 | 2,619 | 4,966 | ||||||||||||||||
| Depreciation and amortization | 4,740 | 1,718 | 4,740 | 1,718 | 8,834 | 3,461 | 8,834 | 3,461 | ||||||||||||||||
| EBITDA | $ | 28,512 | $ | 35,191 | $ | 10,545 | $ | 35,191 | $ | 54,045 | $ | 60,272 | $ | 33,645 | $ | 60,272 | ||||||||
| Equity-based compensation associated with IPO Options | 2,433 | 2,433 | ||||||||||||||||||||||
| One-time items related to IPO | ||||||||||||||||||||||||
|
A-6 |
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