LaBranche & Co Inc. (NYSE: LAB) (the “Company”) today reported financial
results for the second quarter and six months ended June 30, 2009. The
Company reported after-tax net income of $13.3 million, or $0.24 per
diluted share, for the 2009 second quarter, which includes a pre-tax
unrealized gain on the Company's shares of NYSE Euronext, Inc. common
stock (the "NYX shares") of $29.3 million and income on early
extinguishment of debt of $1.0 million. This compares to a net loss of
$21.3 million, or $0.34 per share, for the 2008 second quarter, which
included a $33.2 million pre-tax unrealized loss on the Company's NYX
shares and expense on early extinguishment of debt of $5.1 million.
On a pro-forma basis, the Company reported a net loss for the second
quarter of 2009 of $4.9 million, or $0.09 per share, compared to
pro-forma net income of $1.7 million, or $0.03 per share, for the second
quarter of 2008. These pro-forma results exclude the unrealized gain on
the NYX shares and the income on early extinguishment of debt in the
second quarter of 2009 and the unrealized loss on the NYX shares and the
expense on early extinguishment of debt in the second quarter of 2008.
The Company reported an after-tax net loss of $16.4 million, or $0.29
per share, for the six months ended June 30, 2009, which compares to a
net loss of $61.6 million, or $0.99 per share, for the six months ended
June 30, 2008.
On a pro-forma basis, the Company reported a net loss for the six months
ended June 30, 2009 of $16.8 million, or $0.30 per share, compared to
pro-forma net income of $9.5 million, or $0.15 per share, for the six
months ended June 30, 2008. These pro-forma results exclude both the
unrealized loss on the NYX shares in each period and the income (loss)
on early extinguishment of debt as reported in the attached
reconciliation of Non-GAAP Financial Measures.
The Company also announced that its Board of Directors has increased the
$40.0 million share repurchase program previously announced by the
Company on April 22, 2008 by $25.0 million, making the total
authorization under the share repurchase program $65.0 million.
Following this increase and repurchases made to date under the
repurchase plan, approximately $29.5 million in shares of common stock
may be repurchased under the repurchase plan. The repurchase program may
be implemented from time to time in the open market, in privately
negotiated transactions or otherwise, in compliance with applicable
state and federal securities laws. The timing and amounts of any
purchases will be based on market conditions and other factors,
including price, regulatory requirements, debt covenant compliance and
capital availability. The share repurchase program may be suspended,
modified or discontinued at any time.
The Company is the parent of LaBranche & Co. LLC, one of the largest
market-makers in exchange-listed securities. The Company is also the
parent of LaBranche Structured Holdings, Inc., whose subsidiaries are
market-makers in options, exchange-traded funds and futures on various
exchanges domestically and internationally. Another subsidiary of the
Company, LaBranche Financial Services, LLC, provides mainly securities
execution and brokerage services to institutional investors.
Certain statements contained in this release, including without
limitation, statements containing the words "believes", "intends",
"expects", "anticipates", and words of similar import, constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned that any
such forward-looking statements are not guarantees of future
performance, and since such statements involve risks and uncertainties,
the actual results and performance of the Company and the industry may
turn out to be materially different from the results expressed or
implied by such forward-looking statements. Given these uncertainties,
readers are cautioned not to place undue reliance on such
forward-looking statements. The Company also disclaims any obligation to
update its view of any such risks or uncertainties or to publicly
announce the result of any revisions to the forward-looking statements
made in this release.
TABLES TO FOLLOW
|
LaBranche & Co Inc.
Condensed Consolidated Statements of Operations
(all data in thousands, except per share data)
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
Net gain on principal transactions
|
$
|
13,074
|
|
|
$
|
44,917
|
|
|
$
|
11,032
|
|
|
$
|
105,097
|
|
|
Commissions and other fees
|
|
20,866
|
|
|
|
9,950
|
|
|
|
37,042
|
|
|
|
19,959
|
|
|
Net gain (loss) on investments
|
|
28,804
|
|
|
|
(36,344
|
)
|
|
|
(2,961
|
)
|
|
|
(117,769
|
)
|
|
Interest income
|
|
1,047
|
|
|
|
17,469
|
|
|
|
1,910
|
|
|
|
47,394
|
|
|
Other
|
|
888
|
|
|
|
1,110
|
|
|
|
2,004
|
|
|
|
1,403
|
|
|
Total revenues
|
|
64,679
|
|
|
|
37,102
|
|
|
|
49,027
|
|
|
|
56,084
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
Debt
|
|
5,393
|
|
|
|
8,504
|
|
|
|
11,057
|
|
|
|
19,367
|
|
|
Inventory financing
|
|
5,455
|
|
|
|
20,808
|
|
|
|
11,090
|
|
|
|
51,620
|
|
|
Total interest expense
|
|
10,848
|
|
|
|
29,312
|
|
|
|
22,147
|
|
|
|
70,987
|
|
|
Revenues, net of interest expense
|
|
53,831
|
|
|
|
7,790
|
|
|
|
26,880
|
|
|
|
(14,903
|
)
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
Employee compensation and related benefits
|
|
13,658
|
|
|
|
19,594
|
|
|
|
21,727
|
|
|
|
48,124
|
|
|
Exchange, clearing and brokerage fees
|
|
12,145
|
|
|
|
9,743
|
|
|
|
17,632
|
|
|
|
20,401
|
|
|
Lease of exchange memberships and trading license fees
|
|
406
|
|
|
|
416
|
|
|
|
810
|
|
|
|
843
|
|
|
Depreciation and amortization of intangibles
|
|
992
|
|
|
|
907
|
|
|
|
1,947
|
|
|
|
1,797
|
|
|
Early extinguishment of debt
|
|
(1,038
|
)
|
|
|
5,119
|
|
|
|
(1,038
|
)
|
|
|
6,005
|
|
|
Other
|
|
7,239
|
|
|
|
6,923
|
|
|
|
14,979
|
|
|
|
14,271
|
|
|
Total expenses
|
|
33,402
|
|
|
|
42,702
|
|
|
|
56,057
|
|
|
|
91,441
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before benefit for income taxes
|
|
20,429
|
|
|
|
(34,912
|
)
|
|
|
(29,177
|
)
|
|
|
(106,344
|
)
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes
|
|
7,116
|
|
|
|
(13,571
|
)
|
|
|
(12,750
|
)
|
|
|
(44,766
|
)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) applicable to common stockholders
|
$
|
13,313
|
|
|
$
|
(21,341
|
)
|
|
$
|
(16,427
|
)
|
|
$
|
(61,578
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
55,394
|
|
|
|
61,993
|
|
|
|
56,883
|
|
|
|
61,924
|
|
|
Diluted
|
|
55,536
|
|
|
|
61,993
|
|
|
|
56,883
|
|
|
|
61,924
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.24
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.99
|
)
|
|
Diluted
|
$
|
0.24
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.99
|
)
|
|
LaBranche & Co Inc.
Condensed Consolidated Statements of Financial Condition
(all data in thousands)
|
|
|
|
|
|
|
|
June 30, 2009
|
|
December 31, 2008
|
|
ASSETS
|
(unaudited)
|
|
(audited)
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
194,983
|
|
$
|
304,179
|
|
Cash and securities segregated under federal regulations
|
|
1,827
|
|
|
1,876
|
|
Receivable from brokers, dealers and clearing organizations
|
|
52,969
|
|
|
91,354
|
|
Receivable from customers
|
|
2,319
|
|
|
--
|
|
Financial instruments owned, at fair value
|
|
2,634,354
|
|
|
3,175,968
|
|
Exchange memberships owned, at adjusted cost (market value of
$4,356 and $3,910, respectively)
|
|
1,202
|
|
|
1,202
|
|
Office equipment and leasehold improvements, at cost, less
accumulated depreciation and amortization of $13,152 and $14,362,
respectively
|
|
15,639
|
|
|
16,522
|
|
Goodwill and other intangible assets, net
|
|
109,229
|
|
|
109,229
|
|
Deferred tax assets
|
|
108
|
|
|
--
|
|
Income tax receivable
|
|
7,330
|
|
|
--
|
|
Other assets
|
|
19,329
|
|
|
31,285
|
|
|
|
|
|
|
Total assets
|
$
|
3,039,289
|
|
$
|
3,731,615
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
Payable to brokers, dealers and clearing organizations
|
$
|
436,985
|
|
$
|
105,037
|
|
Payable to customers
|
|
2,345
|
|
|
36
|
|
Financial instruments sold, but not yet purchased, at fair value
|
|
1,965,653
|
|
|
2,855,420
|
|
Accrued compensation
|
|
4,786
|
|
|
75,747
|
|
Accounts payable and other accrued expenses
|
|
19,806
|
|
|
29,179
|
|
Other liabilities
|
|
12,578
|
|
|
12,840
|
|
Income tax payable
|
|
--
|
|
|
5,834
|
|
Deferred tax liabilities
|
|
--
|
|
|
5,349
|
|
Long term debt
|
|
189,323
|
|
|
199,323
|
|
|
|
|
|
|
Total liabilities
|
|
2,631,476
|
|
|
3,288,765
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
407,813
|
|
|
442,850
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
|
3,039,289
|
|
$
|
3,731,615
|
LaBranche & Co Inc.
Regulation G Requirement: Reconciliation of Non-GAAP Financial Measures
(all data in thousands, except per share data)
(unaudited)
In evaluating the Company’s financial performance, management reviews
results from operations, which excludes non-operating charges. Pro-forma
earnings per share is a non-GAAP (generally accepted accounting
principles) performance measure, but the Company believes that it is
useful to assist investors in gaining an understanding of the trends and
operating results for the Company’s core business. Pro-forma earnings
per share should be viewed in addition to, and not in lieu of, the
Company’s reported results under U.S. GAAP.
The following is a reconciliation of U.S. GAAP results to pro-forma
results for the periods presented:
|
|
Three Months Ended June 30,
|
|
|
2009
|
|
2008
|
|
|
Amounts as reported
|
|
(1) (2)
Adjustments
|
|
Pro forma amounts
|
|
Amounts as reported
|
|
(1) (2)
Adjustments
|
|
Pro forma amounts
|
|
Revenues, net of interest expense
|
$53,831
|
|
$(29,313) (1)
|
|
$24,518
|
|
$7,790
|
|
$33,206 (1)
|
|
$40,996
|
|
Total expenses
|
33,402
|
|
1,038 (2)
|
|
34,440
|
|
42,698
|
|
(5,119) (2)
|
|
37,579
|
|
Income (loss) before provision (benefit) for income taxes
|
20,429
|
|
(30,351)
|
|
(9,922)
|
|
(34,908)
|
|
38,325
|
|
3,417
|
|
Provision (benefit) for income taxes
|
7,116
|
|
(12,140)
|
|
(5,024)
|
|
(13,571)
|
|
15,330
|
|
1,759
|
|
Income (loss) applicable to common stockholders
|
$13,313
|
|
$(18,211)
|
|
$(4,898)
|
|
$(21,337)
|
|
$22,995
|
|
$1,658
|
|
Basic per share
|
$0.24
|
|
$(0.33)
|
|
$(0.09)
|
|
$(0.34)
|
|
$0.37
|
|
$0.03
|
|
Diluted per share
|
$0.24
|
|
$(0.33)
|
|
$(0.09)
|
|
$(0.34)
|
|
$0.37
|
|
$0.03
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2009
|
|
2008
|
|
|
Amounts as reported
|
|
(1) (2)
Adjustments
|
|
Pro forma amounts
|
|
Amounts as reported
|
|
(1) (2)
Adjustments
|
|
Pro forma amounts
|
|
Revenues, net of interest expense
|
$26,880
|
|
$408 (1)
|
|
$27,288
|
|
$(14,903)
|
|
$112,452 (1)
|
|
$97,549
|
|
Total expenses
|
56,057
|
|
1,038 (2)
|
|
57,095
|
|
91,437
|
|
(6,005) (2)
|
|
85,432
|
|
(Loss) income before (benefit) provision for income taxes
|
(29,177)
|
|
(630)
|
|
(29,807)
|
|
(106,340)
|
|
118,457
|
|
12,117
|
|
(Benefit) provision for income taxes (3)
|
(12,750)
|
|
(252)
|
|
(13,002)
|
|
(44,766)
|
|
47,383
|
|
2,617
|
|
Net (loss) income applicable to common stockholders
|
$(16,427)
|
|
$(378)
|
|
$(16,805)
|
|
$(61,574)
|
|
$71,074
|
|
$9,500
|
|
Basic per share
|
$(0.29)
|
|
$(0.01)
|
|
$(0.30)
|
|
$(0.99)
|
|
$1.14
|
|
$0.15
|
|
Diluted per share
|
$(0.29)
|
|
$(0.01)
|
|
$(0.30)
|
|
$(0.99)
|
|
$1.14
|
|
$0.15
|
__________________
(1) Revenue adjustment reflects (gain) loss in each accounting period,
based on the change in fair market value of the Company’s restricted and
unrestricted NYX shares at the end of each such period versus the
beginning of such period.
(2) Expense adjustment reflects the (income) expense associated with
early extinguishment of the Company’s debt in accounting period.
(3) In the first quarter of 2008, the Company recognized a tax benefit
due to the release of a tax reserve for an expired tax year, which
resulted in a reduced provision for income taxes.
LaBranche & Co Inc.
Jeffrey A. McCutcheon, 212-820-6220
Senior
Vice President & Chief Financial Officer
