Feb, 19 2009
GFI Group Inc. Announces Fourth Quarter and Full Year 2008 Results; Declares Quarterly Cash Dividend Thu, 19 Feb 2009 17:08:11

Fourth Quarter

 New York,  February 19, 2009 – GFI Group Inc. (Nasdaq: GFIG), an inter-dealer brokerage, market data, trading platform and analytical software provider for global cash and derivative markets, today announced financial results for the fourth quarter and year ended December 31, 2008.

Highlights

Total revenues for the fourth quarter of 2008 were $196.2 million, and included a $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues. Excluding this loss, non-GAAP revenues were $210.9 million for the fourth quarter of 2008. In the fourth quarter of 2007, total GAAP and non-GAAP revenues were $247.4 million and $248.0 million, respectively.
Brokerage revenues for the fourth quarter of 2008 declined to $193.8 million from $238.2 million in the fourth quarter of 2007. While equity product revenues increased 3% over the fourth quarter of 2007, credit, financial and commodity product revenues decreased 21%, 37% and 30%, respectively.  Within credit products, a 61% increase in corporate and sovereign fixed income revenues was offset by a 47% decrease in credit derivative revenues, compared with the fourth quarter of 2007.
In the fourth quarter of 2008, compensation and employee benefits expense was 70.1% of total revenues compared with 61.1% of revenues in the fourth quarter of 2007.  On a non-GAAP basis, compensation and employee benefits expense as a percentage of revenues was 65.2% in the fourth quarter of 2008 compared with 60.9% in the fourth quarter of 2007.
Non-compensation expense as a percentage of revenues was 30.1% for the fourth quarter of 2008 compared with 24.7% in the fourth quarter of 2007. On a non-GAAP basis, non-compensation expense as a percentage of revenue was 27.3% in the fourth quarter of 2008 compared with 23.4% in the fourth quarter of 2007.
Net income for the fourth quarter of 2008 was $0.2 million, or $0.00 per diluted share compared with net income of $25.2 million, or $0.21 per diluted share, in the fourth quarter of 2007.  On a non-GAAP basis, net income for the fourth quarter of 2008 was $10.7 million, or $0.09 per diluted share, compared with $26.0 million, or $0.22 per diluted share, for the fourth quarter of 2007.
For the full year 2008, total revenues increased 5% to $1.02 billion from $970.5 million in 2007.  Net income for 2008 was $53.1 million or $0.44 per diluted share compared to $94.9 million, or $0.80 per diluted share for full year 2007.  On a non-GAAP basis, total revenues for 2008 rose 7% to $1.04 billion while net income was $94.7 million or $0.79 per diluted share compared with $100.3 million or $0.84 per diluted share for full year 2007.
Michael Gooch, Chairman and Chief Executive Officer of GFI, commented: “While market volatility normally benefits GFI, the extreme market volatility and dislocation that followed the Lehman Brothers bankruptcy in September severely impacted trading conditions in our derivative markets in the fourth quarter. This period was marked by tight credit conditions, far-reaching government intervention in global banks, and contraction and deleveraging by dealers and hedge funds.  Substantial declines in share prices and asset and index values reduced GFI’s revenues in certain European products where our commissions are based on notional values rather than volumes. Additionally, we reduced the number of our brokerage desks and personnel in the fourth quarter due to the restructuring initiative announced in October.  As a result of these and other factors, we saw reduced trading across many of our asset classes, especially in November and December.  Our results were also affected by unfavorable foreign currency exchange rates. In total, our brokerage revenues in the fourth quarter of 2008 were 19% lower than the fourth quarter of 2007, although full year 2008 brokerage revenues rose 3% over 2007.

“We experienced a decline in revenues in each product category in the fourth quarter with the exception of equity products, which increased 3% over the fourth quarter of 2007, and were our largest product category at 38% of fourth quarter brokerage revenues. The growth in equity products, in which we have made a determined investment over the past few years, came from both cash equities and equity derivatives.  For the year, revenues from equity products increased 22% from 2007.

“Our revenues from credit products were 21% lower than the fourth quarter of 2007, despite a 61% increase in revenues from fixed income products.  This growth was more than offset by a 47% decline in credit derivative revenues.  For the full year our credit product revenues were down only 4% over 2007 on a GAAP basis, and virtually even with the prior year on a non-GAAP basis.

“Financial product revenues declined 37% from the fourth quarter of 2007 due to less trading in emerging market interest rate, currency and exotic derivatives.  Dealers scaled back their trading operations in Asia and other emerging markets that had been a growth area for us in past quarters.  Full year revenues from financial products were down 7% from 2007 due, in part, to the transfer of our global U.S. dollar interest rate swaps business in March and the restructuring initiative implemented in the fourth quarter.

“Commodity product revenues decreased 30% from the fourth quarter of 2007, but were flat for the full year 2008 compared to the full year 2007.  The fourth quarter was impacted by the significant decline of the Baltic Dry Freight Index in October, which substantially reduced our dry freight revenues in Europe and Asia compared with the fourth quarter of 2007.  North American and European energy product revenues also declined due, in part, to customer deleveraging.

“Employee compensation and benefit expenses are the largest component of our costs.  While they decreased 9% from the fourth quarter of 2007, they increased as a percentage of total revenues from the prior year’s fourth quarter. This resulted from several factors, including substantially lower revenues, unfavorable foreign exchange rates and the $14.6 million unrealized foreign currency hedge loss.  It also resulted from the continuing impact of the expense incurred earlier last year to re-staff our New York credit desks, a shift in our revenue mix to lower margin products, and the lag that occurs between rapid revenue decline and our ability to restructure operations to reduce costs.  The balance of our expenses also increased as a percentage of revenues compared with the fourth quarter of 2007, mainly due to the effect of lower revenues.  Although we continue to focus on controlling costs and anticipate some additional benefits from our recent restructuring initiative, we expect our clearing costs to remain at higher levels for some time as our cash equities and fixed income businesses continue to expand in relation to our other brokerage products.

“Current market conditions continue to be challenging.  As a result, we expect our brokerage revenues in the first quarter of 2009 to decline by approximately 34% to 37% and total revenues to decline by approximately 32% to 35% from the record levels achieved in the first quarter of 2008. 

“Global government efforts to restore faith in the financial markets may be having some beneficial effect.  There are preliminary signs that some trading volumes may be stabilizing and establishing a sustainable base.  It is upon that base that we expect to re-establish our growth.  The diversity of our products and our global reach position us to capture market opportunities as they emerge.  We have moved existing staff and added strategic hires in all regions to capitalize on the shift in market demand for cash equities and fixed income products.  The recent high levels of volatility have resulted in less market liquidity and wider spreads, underscoring the value of our hybrid approach of coupling skilled voice brokerage with proprietary electronic execution.  I expect that eventually the volatility levels will subside somewhat to levels that will benefit growth in overall trading volumes.

“We are closely involved in the rapid evolution of the OTC derivatives markets in the U.S. and Europe. We believe that GFI can be a beneficiary of well-crafted legislative and regulatory initiatives requiring greater transparency, appropriate centralized clearing and increased regulatory oversight and GFI supports effective legislation in furtherance of these objectives. 

Mr. Gooch concluded: “Despite the substantial challenges in the second half of 2008 and the dramatic changes in our operating environment, we achieved record revenues for the full year, surpassing the billion dollar mark for the first time. We ended the year profitable, with a strong balance sheet and cash position, which increased by over $100 million.  This strength and our positive cash flow will continue to support our strategy and provides us with important flexibility to respond to future challenges and opportunities. We are also pleased to declare a quarterly cash dividend of $0.05 per share and remain fully focused on restoring and building value, as we have done over the past 21 years.”

Revenues

For the fourth quarter of 2008, total revenues decreased to $196.2 million, including the $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues. This compares with total revenues of $247.4 million in the fourth quarter of 2007.   On a non-GAAP basis, which excludes the unrealized hedge loss, total revenues decreased to $210.9 million in the fourth quarter of 2008 from $248.0 million in the fourth quarter of 2007.

Brokerage revenues in the fourth quarter of 2008 declined 19% to $193.8 million from the fourth quarter of 2007.  While equity product revenues increased 3% over the fourth quarter of 2007, credit, financial and commodity product revenues decreased 21%, 37% and 30%, respectively, compared with the prior year fourth quarter.  Within credit products, a 61% increase in corporate and sovereign fixed income revenues was offset by 47% lower credit derivative revenues, compared with the 2007 fourth quarter.

Revenues from analytics, software, trading platform and data products for the fourth quarter of 2008 increased 164% to $12.8 million from the same period of 2007 and included a $7.3 million contribution from Trayport Limited, acquired by the Company on January 31, 2008.

By geographic region, fourth quarter 2008 brokerage revenue decreased 23% in EMEA, 8% in the Americas and 44% in Asia-Pacific compared with the fourth quarter of 2007.

Expenses

For the fourth quarter of 2008, compensation and employee benefit expense decreased 9% to $137.6 million, or 70.1% of total revenues.  For the fourth quarter of 2007, compensation and employee benefit expense was $151.0 million, or 61.1% of total revenues.  On a non-GAAP basis, compensation and employee benefits expense was 65.2% of total revenues in the fourth quarter of 2008 compared with 60.9% in the fourth quarter of 2007. 

Non-compensation expense for the fourth quarter of 2008 declined 3% to $59.0 million or 30.1% of total revenues compared with $61.0 million or 24.7% of total revenues in the fourth quarter of 2007.  On a non-GAAP basis, non-compensation expense was 27.3% of total revenue in the fourth quarter of 2008 versus 23.4% in the fourth quarter of 2007.

The effective tax rate for 2008 was 36.0% compared to 38.0% for 2007, excluding the one time benefit of $1.4 million related to a non-operating adjustment for the recognition of a tax benefit.

Earnings

Net income for the fourth quarter of 2008 was $0.2 million, or $0.00 per diluted share on a GAAP basis, which includes the mark-to-market unrealized loss on forward foreign currency hedges in the quarter equivilent to $0.08 per diluted share. This compares with net income of $25.2 million, or $0.21 per diluted share, in the fourth quarter of 2007.  On a non-GAAP basis, net income for the fourth quarter of 2008 was $10.7 million, or $0.09 per diluted share, compared with $26.0 million or $0.22 for the fourth quarter of 2007. Per share amounts for the fourth quarter of 2007 have been adjusted to reflect the Company’s 4-for-1 stock split effective March 31, 2008.

Full Year Results

Total revenues for the year ended December 31, 2008 increased 5% to $1.02 billion from $970.5 million for 2007.  Net income for the full year 2008 was $53.1 million, or $0.44 per diluted share, compared with $94.9 million, or $0.80 per diluted share, for 2007.  On a non-GAAP basis, revenues for 2008 increased 7% to $1.04 billion, while net income was $94.7 million, or $0.79 per diluted share, compared with non-GAAP revenues of $971.1 million and net income of $100.3 million, or $0.84 per diluted share, for 2007.

Non-GAAP Financial Measures

To supplement GFI’s unaudited financial statements presented in accordance with GAAP, the Company uses certain non-GAAP measures of financial performance.  The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies.  In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP.  The non-GAAP financial measures used by GFI include non-GAAP revenues, non-GAAP net income and non-GAAP diluted earnings per share.  These non-GAAP financial measures currently exclude amortization of acquired intangibles and certain other items that management views as non-operating or non-recurring from the Company’s statement of income as detailed below.

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

GFI believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook.  GFI’s management uses, and believes that investors benefit from referring to these non-GAAP financial measures in assessing the Company’s operating results, as well as when planning, forecasting and analyzing future periods.  These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods.

In addition to the reasons stated above, which are generally applicable to each of the items GFI excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude amortization of acquired intangibles because when analyzing the operating performance of an acquired business, GFI’s management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any charges for allocations made for accounting purposes.  Further, because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets, when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of acquired intangible assets on its financial results.  GFI believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.

Set forth below is specific detail regarding items excluded in our non-GAAP financial measures. A reconciliation of the non-GAAP to GAAP figures follows this press release.

In the fourth quarter of 2008, the difference between GAAP and non-GAAP revenue was $14.6 million and the difference between GAAP and non-GAAP net income was $10.5 million and reflected for non-GAAP purposes:

The exclusion from revenues of a $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues;
The exclusion of $1.4 million of amortization on all acquired intangible assets;
The effect of adjusting for these items would increase the Company’s income tax expense by $5.5 million.
For full year 2008, the difference between GAAP and non-GAAP revenues was $24.2 million and the difference between GAAP and non-GAAP net income was $41.6 million and reflected for non-GAAP purposes:

The exclusion from revenues of a $14.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues;
The exclusion from revenues of a $9.6 million charge for unsettled trades directly related to the Lehman Brothers bankruptcy;
The exclusion of $5.3 million of amortization on all acquired intangible assets;
The exclusion of $1.8 million in expenses related to discontinued merger discussions;
The exclusion of items related to the relocation of the Company’s New York offices to larger premises completed in third quarter of 2008, including:
$2.5 million of duplicate rent expense,
$2.7 million of accelerated depreciation expense related to assets to be abandoned, and
$7.8 million of costs related to the abandonment of and move from our previous headquarters
The exclusion of $3.5 million of reduced compensation expenses related to the Lehman Brothers bankruptcy;
The exclusion of $20.9 million related to the Company’s restructuring initiatives, including:
$14.5 million for costs relating to desk closings and other restructuring charges, and
$6.4 million adjustment related to deferred compensation expense;
The exclusion of a $3.1 million write-off of an investment in an unconsolidated affiliate; and
The effect of adjusting for these items would increase the Company’s income tax expense by $23.4 million.
In the fourth quarter of 2007, the difference between GAAP and non-GAAP revenues was $0.6 million and the difference between GAAP and non-GAAP net income was $0.8 million and reflected for non-GAAP purposes:

The exclusion from revenues of a $0.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues;
The exclusion of $0.7 million of amortization on all acquired intangible assets;
The exclusion of items related to the planned relocation of the Company’s New York offices to larger premises scheduled for the third quarter of 2008, including:
$0.8 million of duplicate rent expense; and
$1.4 million of accelerated depreciation expense related to assets to be abandoned;
The effect of adjusting for these items would increase the Company’s income tax expense by $1.3 million; and
Income tax expense was also increased an additional $1.4 million in order to exclude the recognition of a tax benefit for which a reserve was previously established.
For full year 2007, the difference between GAAP and non-GAAP revenues was $0.6 million, and the difference between GAAP and non-GAAP net income was $5.5 million for the period and reflected the exclusion for non-GAAP purposes of:

The exclusion from revenues of a $0.6 million mark-to-market unrealized loss on forward hedges of future foreign currency revenues;
The exclusion of $3.3 million of amortization on all acquired intangible assets;
The exclusion of $0.8 million of payroll-related taxes in the UK on the exercise of stock options by a former Company executive in connection with his departure from the Company;
The exclusion of items related to the planned relocation of the Company’s New York offices, including:
$1.6 million accrual for lease termination costs;
$1.9 million of duplicate rent expense; and
$2.9 million of accelerated depreciation expense related to assets to be abandoned;
The effect of adjusting for these items would increase the Company’s income tax expense by $4.3 million; and
Income tax expense was also increased an additional $1.4 million in order to exclude the recognition of a tax benefit for which a reserve was previously established.
Dividend Declaration

The Board of Directors of GFI Group has declared a quarterly cash dividend of $0.05 per share payable on March 31, 2009 to shareholders of record on March 17, 2009.

Conference Call

GFI has scheduled an investor conference call at 8:30 a.m. (Eastern Time) on Friday, February 20, 2009 to review its fourth quarter 2008 financial results and business outlook. Those wishing to listen to the live conference call via telephone should dial 800-295-4740 in North America, passcode 73245214 and +1 617-614-3925 in Europe, same passcode.  A live audio web cast of the conference call will be available on the Investor Relations section of GFI’s Web site. For web cast registration information, please visit the Investor Relations page at http://www.gfigroup.com.  Following the conference call, an archived recording will be available at the same site. 

Supplementary Financial Information

GFI Group has posted details of its historical monthly brokerage revenues on the Investor Relations page of its web site under the heading Supplementary Financial Information. The Company currently plans to post this information quarterly in conjunction with its announcement of earnings, but does not undertake a responsibility to continue to provide or update such information.

About GFI Group Inc.

GFI Group Inc. (http://www.GFIgroup.com) is a leading inter-dealer broker specializing in over-the-counter derivatives products and related securities. GFI Group Inc. provides brokerage services, market data, trading platform and analytics software products to institutional clients in markets for a range of credit, financial, equity and commodity instruments.

Headquartered in New York, GFI was founded in 1987 and employs more than 1,700 people with additional offices in London, Paris, Hong Kong, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Dubai, Tel Aviv, Calgary, Englewood (NJ) and Sugar Land (TX).  GFI provides services and products to over 2,100 institutional clients, including leading investment and commercial banks, corporations, insurance companies and hedge funds. Its brands include GFI™, GFInet®, CreditMatcht®, GFI ForexMatcht®, EnergyMatcht®, FENICSt®, Starsupplyt®, Amerext®, and Trayportt®.

Forward-looking statements
Certain matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “estimate,” “may,” “might,” “intend,” “expect” and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: acquisitions by us of businesses or technologies; economic, political and market factors affecting trading volumes, securities prices or demand for the Company’s brokerage services; competition from current and new competitors; the Company’s ability to attract and retain key personnel, including highly-qualified brokerage personnel; the Company’s ability to identify and develop new products and markets; changes in laws and regulations governing the Company’s business and operations or permissible activities; the Company’s ability to manage its international operations; financial difficulties experienced by the Company’s customers or key participants in the markets in which the Company focuses its brokerage services; the Company’s ability to keep up with technological changes; and uncertainties relating to litigation.  Further information about factors that could affect the Company’s financial and other results is included in the Company’s filings with the Securities and Exchange Commission.  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. 

 

 

                         GFI Group Inc. and Subsidiaries
                  Consolidated Statements of Income (unaudited)
                  (In thousands except share and per share data)

                                 Three Months Ended      Twelve Months Ended
                                    December 31,             December 31,
                                 2008         2007        2008         2007

    REVENUES:
      Brokerage revenues:
        Agency
         commissions           $143,556     $186,827    $757,310     $749,223
        Principal
         transactions            50,272       51,366     206,669      188,254
          Total brokerage
           revenues             193,828      238,193     963,979      937,477
      Software,
       analytics and
       market data               12,800        4,850      51,250       19,522
      Contract revenue               28            –          86          215
      Interest income             1,669        2,726       8,617        9,714
      Other income/
       (loss)                   (12,089)       1,590      (8,429)       3,613
        Total revenues          196,236      247,359   1,015,503      970,541

    EXPENSES:
      Compensation
       and employee
       benefits                 137,583      151,020     665,973      604,847
      Communications
       and market data           12,245       11,538      47,810       44,622
      Travel and
       promotion                  8,897       13,057      45,756       41,992
      Rent and
       occupancy                  5,363        6,132      33,705       23,661
      Depreciation and
       amortization               7,827        6,992      31,390       24,686
      Professional fees           6,081        5,539      26,200       17,899
      Clearing fees               9,706       10,200      43,420       32,732
      Interest                    3,993        1,522      14,334        7,076
      Other expenses              4,847        6,023      23,870       22,155
      Contract costs                 46            –          68          133
        Total expenses          196,588      212,023     932,526      819,803

    (LOSS)/INCOME
     BEFORE (BENEFIT
     FROM)/PROVISION
     FOR INCOME TAXES              (352)      35,336      82,977      150,738

    (BENEFIT FROM)/
     PROVISION FOR
     INCOME TAXES                  (544)      10,128      29,871       55,880

    NET INCOME                     $192      $25,208     $53,106      $94,858

    Basic earnings per
     share                        $0.00        $0.21       $0.45        $0.81
    Diluted earnings per
     share                        $0.00        $0.21       $0.44        $0.80

    Weighted average
     shares
     outstanding –
     basic                  118,425,796  117,656,483 117,966,596  116,595,920

    Weighted average
     shares
     outstanding –
     diluted                119,604,529  120,078,634 119,743,693  119,180,791

 

                      GFI Group Inc. and Subsidiaries
               Consolidated Statements of Income (unaudited)
                     As a Percentage of Total Revenues

                                                Three         Twelve
                                                Months        Months
                                                Ended         Ended
                                            December 31,  December 31,
                                             2008   2007   2008   2007

    REVENUES:
      Brokerage revenues:
        Agency commissions                   73.2%  75.5%  74.6%  77.2%
        Principal transactions               25.6%  20.8%  20.4%  19.4%
          Total brokerage
           revenues                          98.8%  96.3%  94.9%  96.6%
      Software, analytics and market data     6.5%   2.0%   5.0%   2.0%
      Contract revenue                        0.0%   0.0%   0.0%   0.0%
      Interest income                         0.9%   1.1%   0.8%   1.0%
      Other income/(loss)                    -6.2%   0.6%  -0.8%   0.4%
        Total revenues                      100.0% 100.0% 100.0% 100.0%

    EXPENSES:
      Compensation and employee benefits     70.1%  61.1%  65.6%  62.3%
      Communications and market data          6.2%   4.7%   4.7%   4.6%
      Travel and promotion                    4.5%   5.3%   4.5%   4.3%
      Rent and occupancy                      2.7%   2.5%   3.3%   2.4%
      Depreciation and amortization           4.0%   2.8%   3.1%   2.5%
      Professional fees                       3.1%   2.2%   2.6%   1.8%
      Clearing fees                           4.9%   4.1%   4.3%   3.4%
      Interest                                2.0%   0.6%   1.4%   0.7%
      Other expenses                          2.5%   2.4%   2.4%   2.3%
      Contract costs                          0.0%   0.0%   0.0%   0.0%
        Total expenses                      100.2%  85.7%  91.8%  84.5%

    (LOSS)/INCOME BEFORE (BENEFIT FROM)/
     PROVISION FOR INCOME TAXES              -0.2%  14.3%   8.2%  15.5%

    (BENEFIT FROM)/PROVISION FOR INCOME
     TAXES                                   -0.3%   4.1%   2.9%   5.8%

    NET INCOME                                0.1%  10.2%   5.2%   9.8%

 

                        GFI Group Inc. and Subsidiaries
                      Selected Financial Data (unaudited)
                            (Dollars in thousands)

                                          Three Months     Twelve Months
                                             Ended             Ended
                                          December 31,      December 31,
                                         2008     2007     2008     2007

    Brokerage Revenues by Product
     Categories:
      Credit                            $57,439  $72,632 $304,438 $317,724
      Financial                          28,051   44,540  171,935  184,704
      Equity                             72,891   70,712  291,184  239,534
      Commodity                          35,447   50,309  196,422  195,515

         Total brokerage revenues      $193,828 $238,193 $963,979 $937,477

    Brokerage Revenues by Geographic
     Region:
      Americas                          $88,646  $95,976 $385,854 $401,897
      Europe, Middle East, and Africa    92,050  118,737  489,517  449,949
      Asia-Pacific                       13,132   23,480   88,608   85,631

         Total brokerage revenues      $193,828 $238,193 $963,979 $937,477

 

                                     December 31, December 31,
                                           2008     2007

    Consolidated Statement of Financial
     Condition Data:
      Cash and cash equivalents        $342,375 $240,393
      Total assets (1)                1,085,911  975,814
      Total debt, including current
        portion                          223,823  55,291
      Stockholders’ equity               476,963 452,193

    Selected Statistical Data:
      Brokerage personnel headcount (2)  1,037     1,037
      Employees                          1,740     1,599
      Broker productivity for the
       period (3)                         $184      $226

    (1) Total assets include receivables from brokers, dealers and clearing
        organizations of $149.7 million and $317.8 million at December 31,
        2008 and December 31, 2007, respectively. These receivables primarily
        represent securities transactions entered into in connection with our
        matched principal business which have not settled as of their stated
        settlement dates. These receivables are substantially offset by
        corresponding payables to brokers, dealers and clearing organizations
        for these unsettled transactions.
    (2) Brokerage personnel headcount includes brokers, trainees and clerks.
    (3) Broker productivity is calculated as brokerage revenues divided by
        average monthly brokerage personnel headcount for the quarter.

                        GFI Group Inc. and Subsidiaries
        Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
                (In thousands except share and per share data)

                                Three Months Ended      Twelve Months Ended
                                    December 31,            December 31,
                                 2008        2007        2008        2007

    GAAP revenues              $196,236    $247,359  $1,015,503    $970,541
      Net charge
       related to
       Lehman unsettled
       trades (a)                     –           –       9,586           –
      Mark-to-market loss
       on forward hedges
       of future foreign
       currency revenues (a)     14,645         605      14,645         605
    Total Revenues             $210,881    $247,964  $1,039,734    $971,146

    GAAP expenses               196,588     212,023     932,526     819,803
    Non-operating adjustments:
      Amortization of
       intangibles               (1,373)       (675)     (5,282)     (3,332)
      Tax on former executive
       stock option exercise          –           –           –        (840)
      Discontinued merger
       discussion costs               –           –      (1,832)          –
      Desk closings and
       other restructuring            –           –     (14,541)          –
      Adjustment related to
       deferred compensation
       expense                        –           –      (6,408)          –
      Duplicate rent                  –        (849)     (2,547)     (1,921)
      Accelerated depreciation
       on 100 Wall Street             –      (1,365)     (2,730)     (2,872)
      Lease termination on
       100 Wall Street                –           –           –      (1,591)
      Abandonment of 100 Wall Street  –           –      (7,830)          –
      Reduction in compensation
       related to Lehman              –           –       3,469           –
      Write-off investment in
       unconsolidated affiliate       –           –      (3,071)          –
        Total Non-GAAP
         adjustments (a)         (1,373)     (2,889)    (40,772)    (10,556)
    Non-GAAP operating expenses 195,215     209,134     891,754     809,247

    GAAP (loss) income
     before income
     tax (benefit) provision       (352)     35,336      82,977     150,738
    Sum of Non-GAAP items = (a)  16,018       3,494      65,003      11,161
    Non-GAAP income before
     tax provision               15,666      38,830     147,980     161,899

    GAAP (benefit from)/
     provision for income tax     (544)      10,128      29,871      55,880

    Income tax impact on
     Non-GAAP items (b)           5,545       1,328      23,401       4,297

    Non-operating adjustment for
     the recognition of
     a tax benefit (c)                –       1,400           –       1,400
        Total                     5,545       2,728      23,401       5,697

    Non-GAAP (benefit from)/
     provision for income taxes   5,001      12,856      53,272      61,577

    GAAP net income                 192      25,208      53,106      94,858

    Sum of Non- GAAP adjustments
     [ (a) – (b) – (c) ]         10,473         766      41,602       5,464
    Non-GAAP net income         $10,665     $25,974     $94,708    $100,322

    GAAP basic net income
     per share                       $-       $0.21       $0.45       $0.81

    Basic non-operating
     income per share              0.09        0.01        0.35        0.05

    Non-GAAP basic net
     income per share             $0.09       $0.22       $0.80       $0.86

    GAAP diluted net
     income per share                $-       $0.21       $0.44       $0.80

    Diluted non-operating
     income per share              0.09        0.01        0.35        0.04

    Non-GAAP diluted net
     income per share             $0.09       $0.22       $0.79       $0.84

    Weighted average
     Non-GAAP shares
     outstanding – basic    118,425,796 117,656,483 117,966,596 116,595,920

    Weighted average
     Non-GAAP shares
     outstanding – diluted  119,604,529 120,078,634 119,743,693 119,180,791

 

SOURCE GFI Group Inc.

CONTACT:

Investor Relations Contact:
GFI Group Inc.
Christopher Giancarlo
Executive Vice President – Corporate Development
+1-212-968-2992
investorinfo@gfigroup.com Ann Casaburri
Investor Relations Manager
+1-212-968-4167,
chris.casaburri@gfigroup.com
both of GFI Group Inc.

Chris

June Filingeri,
Comm-Partners LLC
+1-203-972-0186
junefil@optonline.net;
Alan Bright,
Public Relations Manager
GFI Group Inc.
011-44-20-7877-8049,
alan.bright@gfigroup.co.uk
Web Site: http://www.GFIgroup.com
(GFIG)

 

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