Oct, 28 2010
GFI Group Inc. Announces Third Quarter 2010 Results; Declares Quarterly Cash Dividend Thu, 28 Oct 2010 15:08:54

Revenues: $209.7 Million; Non-GAAP Revenues: Up 9% to $214.6 Million; GAAP Net Loss: $2.5 Million or $0.02 per Diluted Share; Non-GAAP Net Income: $3.7 Million or $0.03 per Diluted Share; Quarterly Cash Dividend Declared of $0.05 per Share

NEW YORK, NY, Oct 28, 2010 (MARKETWIRE via COMTEX) —

GFI Group Inc. (NYSE: GFIG), a leading provider of wholesale brokerage, clearing services, electronic execution and trading support products for global financial markets, today announced financial results for the third quarter ended September 30, 2010.

 

Highlights


--  Total GAAP and non-GAAP revenues for the third quarter of 2010
    increased 9% from the third quarter of 2009 to $209.7 million and
    $214.6 million, respectively.  GAAP revenues included $26.4 million
    from Kyte Group ("Kyte") which was acquired on July 1, 2010.
--  Brokerage revenues for the third quarter of 2010 declined 5% to
    $174.7 million compared with the third quarter of 2009.  This included
    $1.6 million in brokerage revenues from Kyte.
--  Compensation and employee benefits expense in the third quarter of 2010
    was 63.6% of total GAAP revenues and 62.1% of non-GAAP revenues. This
    compares with 70.3% of total revenues on a GAAP basis and 68.4% of
    total revenues on a non-GAAP basis in the third quarter of 2009. The
    decrease in the GAAP and non-GAAP compensation and employee benefits
    expense ratios in the third quarter of 2010 was primarily due to the
    addition of clearing services revenues from Kyte.
--  Non-compensation expenses were 38.0% of GAAP revenues and 35.3% of
    non-GAAP revenues in the third quarter of 2010.  This compares with
    27.4% of total revenues on a GAAP basis and 26.0% on a non-GAAP basis
    in the third quarter of 2009. The increase in the non-compensation
    expense ratio was primarily due to the addition of execution, clearing,
    and settlement costs from Kyte.
--  On a GAAP basis, the net loss was $2.5 million, or $0.02 per diluted
    share, for the third quarter of 2010.  On a non-GAAP basis, net income
    was $3.7 million, or $0.03 per diluted share. In the third quarter of
    2009, GFI's GAAP net income was $2.8 million, or $0.02 per diluted
    share, and non-GAAP net income was $6.9 million, or $0.06 per diluted
    share.

Michael Gooch, Chairman and Chief Executive Officer of GFI, commented: “Our total revenues for the third quarter of 2010 increased 9% from the third quarter of 2009 and included the first contribution from our recent acquisition of the Kyte Group. We acquired Kyte because of its expertise in listed derivative markets, its strong management team and its unique clearing, broking and investment services business model.

“Our third quarter brokerage revenues were 5% lower than the same quarter last year with strong growth in financial and commodity product revenues offset by lower revenues from fixed income and equity products. Brokerage revenues were down 10% from the second quarter of 2010, with lower revenues across all categories with the exception of financial products.

“Historically, revenues in the second half of the year are lower than in the first half. In addition, revenues in the third quarter of 2010 were affected by a combination of low trading volume and modest volatility in the fixed income and equity markets, continued uncertainty about the global economy and concerns over the impact on the swaps markets of the Dodd-Frank Act and pending European legislation.

“Our fixed income products brokerage revenues decreased 22% from the same quarter of last year as revenues from cash fixed income products declined 39% due to competitive pressures and generally poor market conditions. This was partially offset by 4% growth in fixed income derivative products, as well as our recent addition of a mortgage-backed securities brokerage business in the U.S.

“Equity product revenues were down 17% from the third quarter of 2009 due to slowness in the markets for cash equities and equity derivatives, especially in the Americas.

“In contrast, our financial product revenues continued to improve in the third quarter, increasing 20% from the same quarter of 2009. Strength in emerging markets and Asia has been the major growth driver in this category since the beginning of the year.

“Our commodity product revenues rose 17% over the third quarter of 2009 due to growth in certain energy products as well as from the contribution of new desks.

“Our technological capabilities and ongoing development efforts continue to create an important foundation for our future growth. We have now rolled out hybrid electronic trading capabilities in all regions of the world, with signs of electronic traction continuing in the Americas and Asia-Pacific, while remaining strong in Europe. We estimate that approximately 50% of our overall brokerage revenues are derived from desks with hybrid electronic brokerage capabilities. Moreover, we estimate approximately 60% of our brokerage revenues are derived from markets which are supported by central counterparty clearing houses. We expect these trends to continue to grow, particularly in light of the regulations evolving across the financial markets in the U.S. and Europe.

“Our proven technology combined with our product expertise underlies our optimism that we will operate as a swap execution facility under the Dodd-Frank Act, further positioning us for new market opportunities resulting from the legislation.

“Looking at our preliminary brokerage revenues, excluding Kyte, for October, revenues are tracking down approximately 6% compared with brokerage revenues for the same month last year.”

Mr. Gooch concluded: “Despite current market conditions and challenges, we have achieved $30 million in non-GAAP earnings year to date, generated $139 million in adjusted EBITDA over the trailing twelve month period and ended the third quarter with balance sheet cash of $2.93 per share. We plan to continue to build upon our product and geographic diversity, our technology advantages and our solid balance sheet. We are pleased to declare a quarterly cash dividend of $0.05 per share to our shareholders.”

Revenues

For the third quarter of 2010, total revenues were $209.7 million on a GAAP basis. This included revenues from Kyte totaling $26.4 million, which consisted of $21.6 million of clearing services revenues, $1.6 million of brokerage revenues, $1.6 million in equity in earnings of unconsolidated brokerage businesses, $0.9 million of other income and $0.7 million of interest income.

On a non-GAAP basis, total revenues for the third quarter of 2010 were $214.6 million. This excludes mark-to-market unrealized losses on forward hedges of future foreign currency revenues of $4.1 million, as well as a $0.8 million fair value mark-to-market adjustment of a future purchase commitment related to the Kyte transaction.

In the third quarter of 2009, total revenues were $192.2 million on a GAAP basis and $197.5 million on a non-GAAP basis. The non-GAAP amount excludes a mark-to-market unrealized loss on forward hedges of future foreign currency revenues of $5.2 million.

Brokerage revenues in the third quarter of 2010 were $174.7 million (including $1.6 million from Kyte) compared with $184.4 million in the third quarter of 2009. Revenues from financial products and commodity products increased 20% and 17% respectively, while revenues from fixed income products and equity products decreased 22% and 17%, respectively, from the third quarter of 2009. By geographic region, brokerage revenues for the third quarter of 2010 increased 21% in Asia-Pacific but decreased 10% in EMEA and 5% in the Americas compared with the third quarter of 2009.

Revenues from trading software, analytics and market data products for the third quarter of 2010 were $14.9 million, an increase of 9% from the third quarter of 2009.

Expenses

For the third quarter of 2010, compensation and employee benefits expense was $133.3 million compared with $135.1 million in the third quarter of 2009, both on a GAAP and non-GAAP basis. The third quarter of 2010 included $2.9 million of compensation and employee benefits expense for Kyte.

Non-compensation expenses for the third quarter of 2010 were $79.8 million on a GAAP basis and $75.7 million on a non-GAAP basis. This included non-compensation expenses for Kyte of $25.5 million on a GAAP basis, with execution, clearing and settlement costs accounting for $21.0 million. In the third quarter of 2009, GFI’s non-compensation expenses were $52.7 million on a GAAP basis and $51.3 million on a non-GAAP basis.

The effective tax rate for the first nine months of 2010 was 31% on a GAAP and non-GAAP basis compared with 37% in the same period of 2009. The reduction in the effective tax rate in comparison to the first nine months of 2009 is due to a shift in the geographic mix of earnings towards jurisdictions with lower tax rates.

Earnings

On a GAAP basis, GFI’s net loss for the third quarter of 2010 was $2.5 million, or $0.02 per diluted share (including a loss before taxes and non-controlling interests of $2.0 million for Kyte). On a non-GAAP basis, there was net income of $3.7 million, or $0.03 per diluted share. In the third quarter of 2009, GFI’s net income was $2.8 million on a GAAP basis, or $0.02 per diluted share, and non-GAAP net income was $6.9 million on a non-GAAP basis, or $0.06 per diluted share.

Nine-Month Results

For first nine months of 2010, total GAAP revenues were $640.1 million (including $26.4 million of total revenues from Kyte) compared with $633.1 million for same period of 2009. GAAP net income for the first nine months of 2010 was $21.3 million or $0.17 per diluted share. For the first nine months of 2009, GAAP net income was $30.7 million or $0.25 per diluted share. On a non-GAAP basis, total revenues for the first nine months of 2010 were $644.0 million compared with $630.2 million for the first nine months of 2009. Net income for the first nine months of 2010 on a non-GAAP basis was $30.1 million or $0.24 per diluted share. For first nine months of 2009, GFI’s non-GAAP net income was $34.5 million or $0.28 per diluted share.

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 operating expenses, non-GAAP net income, non-GAAP diluted earnings per share, and adjusted EBITDA. 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 third quarter of 2010, the difference between GAAP and non-GAAP revenues was $4.9 million and the difference between the GAAP net loss and the non-GAAP net income was $6.2 million and reflected for non-GAAP purposes:


--  The exclusion from revenues of a $4.1 million mark-to-market unrealized
    loss on forward hedges of future foreign currency revenues;
--  The exclusion from revenues of a $0.8 million fair value mark-to-market
    adjustment on the future purchase commitment related to the Kyte
    transaction;
--  The exclusion of $2.1 million of amortization on all acquired
    intangible assets;
--  The exclusion of $2.0 million of professional and other non-recurring
    fees related to the Kyte acquisition and integration and other business
    development projects; and
--  The effect of adjusting for these items would increase the Company's
    income tax expense by $2.8 million.

In the third quarter of 2009, the difference between GAAP and non-GAAP revenues was $5.2 million and the difference between GAAP and non-GAAP net income was $4.1 million and reflected for non-GAAP purposes:


--  The exclusion from revenues of a $5.2 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; and
--  The effect of adjusting for these items would increase the Company's
    income tax expense by $2.4 million.

In the first nine months of 2010, the difference between GAAP and non-GAAP revenue was $3.9 million and the difference between GAAP and non-GAAP net income was $8.8 million and reflected for non-GAAP purposes:


--  The exclusion from revenues of a $3.1 million mark-to-market unrealized
    loss on forward hedges of future foreign currency revenues;
--  The exclusion from revenues of a $0.8 million fair value mark-to-market
    adjustment on the future purchase commitment related to the Kyte
    transaction;
--  The exclusion of $4.9 million of amortization on all acquired
    intangible assets;
--  The exclusion of $3.9 million of professional and other fees related to
    the Kyte acquisition and integration and, other business development
    projects; and
--  The effect of adjusting for these items would increase the Company's
    income tax expense by $3.9 million.

In the first nine months of 2009, the difference between GAAP and non-GAAP revenue was $2.9 million and the difference between GAAP and non-GAAP net income was $3.7 million and reflected for non-GAAP purposes:


--  The exclusion from revenues of:
      --  $2.2 million mark-to-market unrealized gains on forward hedges of
          future foreign currency revenues; and
      --  a $0.7 million gain on the Company's exchange of its investment
          in The Clearing Corporation for an investment in a holding
          company of ICE Trust;
--  The exclusion of $4.1 million of amortization on all acquired
    intangible assets;
--  The exclusion of $4.6 million related to severance and other
    restructuring initiatives, including an $0.8 million charge relating to
    the termination of a joint venture; and
--  The effect of adjusting for these items would increase the Company's
    income tax expense by $2.1 million.

Dividend Declaration

The Board of Directors of GFI Group has declared a quarterly cash dividend of $0.05 per share payable on November 30, 2010 to shareholders of record on November 15, 2010.

Conference Call

GFI has scheduled an investor conference call to discuss the results at 8:30 a.m. (Eastern Time) on Friday, October 29. Those wishing to listen to the live conference call via telephone should dial 800-510-0219 in North America, passcode 22534621; and +1 617-614-3451 in Europe, same passcode.

A live audio web cast of the conference call will be available on the Investor Relations section of GFI’s Website. For web cast registration information, please visit: 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.

In addition, the Company has posted selected financial data for Kyte for the third quarter of 2010 on the Investor Relations page of its web site also under Supplementary Financial Information. It is being provided at this time to assist analysts and investors in assessing the impact of Kyte on GFI’s financial statements. The Company does not undertake a responsibility to continue to provide or update such information.

About GFI Group Inc. www.GFIgroup.com

GFI Group Inc. (NYSE: GFIG) is a leading provider of wholesale brokerage, clearing services, electronic execution and trading support products for global financial markets. GFI Group Inc. provides brokerage services, market data, trading platform and analytics software products to institutional clients in markets for a range of fixed income, financial, equity and commodity instruments.

Headquartered in New York, GFI was founded in 1987 and employs more than 1,900 people with additional offices in London, Paris, Hong Kong, Seoul, Tokyo, Singapore, Sydney, Cape Town, Santiago, Dubai, Dublin, Tel Aviv, Calgary, Los Angeles, Englewood (NJ) and Sugar Land (TX). GFI Group Inc. provides services and products to over 2,400 institutional clients, including leading investment and commercial banks, corporations, insurance companies and hedge funds. Its brands include GFI(SM), GFInet(R), CreditMatch(R), GFI ForexMatch(R), EnergyMatch(R), FENICS(R), Starsupply(R), Amerex(R), Trayport(R) and Kyte(R).

Forward-looking statement

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 GFI Group Inc. (the “Company”) and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: 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; uncertainties relating to litigation and the Company’s ability to assess and integrate acquisition prospects. 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 Operations (unaudited)
              (In thousands except share and per share data)
                        ------------------------  ------------------------
                           Three Months Ended         Nine Months Ended
                              September 30,             September 30,
                            2010         2009         2010         2009
                        -----------  -----------  -----------  ------------
REVENUES:
   Brokerage revenues:
    Agency commissions  $   125,011  $   119,396  $   406,465  $    366,283
    Principal
     transactions            49,677       64,989      166,499       216,770
                        -----------  -----------  -----------  ------------
     Total brokerage
      revenues              174,688      184,385      572,964       583,053
   Clearing services
    revenue                  21,553            -       21,553             -
   Equity in earnings
    of unconsolidated
    brokerage businesses      1,632            -        1,632             -
   Software, analytics
    and market data          14,905       13,627       44,324        39,698
   Interest income              914          172        1,231           895
   Other (loss) income       (3,945)      (5,938)      (1,594)        9,501
                        -----------  -----------  -----------  ------------
    Total revenues          209,747      192,246      640,110       633,147
                        -----------  -----------  -----------  ------------
EXPENSES:
   Compensation and
    employee benefits       133,345      135,139      419,117       427,262
   Execution, clearing
    and settlement fees      26,616        7,153       41,594        23,366
   Communications and
    market data              13,788       11,661       36,369        34,399
   Travel and promotion       8,665        8,280       26,899        24,310
   Rent and occupancy         5,867        5,470       16,553        14,982
   Depreciation and
    amortization              8,851        7,680       24,879        23,534
   Professional fees          7,055        4,508       19,899        13,728
   Interest                   3,204        2,769        8,509         7,895
   Other expenses             5,741        5,170       15,183        14,880
                        -----------  -----------  -----------  ------------
    Total expenses          213,132      187,830      609,002       584,356
                        -----------  -----------  -----------  ------------
(LOSS) INCOME BEFORE
 (BENEFIT FROM)
 PROVISION FOR          -----------  -----------  -----------  ------------
 INCOME TAXES                (3,385)       4,416       31,108        48,791
                        -----------  -----------  -----------  ------------
(BENEFIT FROM) PROVISION
 FOR INCOME TAXES            (1,050)       1,633        9,643        18,052
NET (LOSS) INCOME
 BEFORE ATTRIBUTION TO
 NON-CONTROLLING        -----------  -----------  -----------  ------------
 SHAREHOLDERS                (2,335)       2,783       21,465        30,739
                        -----------  -----------  -----------  ------------
Less: Net income
 attributable to
 non-controlling
 interests                      151            -          151             -
                        -----------  -----------  -----------  ------------
GFI's NET (LOSS) INCOME $    (2,486) $     2,783  $    21,314  $     30,739
                        ===========  ===========  ===========  ============
Basic (loss) earnings
 per share              $     (0.02) $      0.02  $      0.18  $       0.26
                        ===========  ===========  ===========  ============
Diluted (loss) earnings
 per share              $     (0.02) $      0.02  $      0.17  $       0.25
                        ===========  ===========  ===========  ============
Weighted average shares
 outstanding - basic    121,943,158  118,062,749  120,059,960   118,117,384
Weighted average shares
 outstanding - diluted  121,943,158  122,552,882  124,665,379   121,382,317
                      GFI Group Inc. and Subsidiaries
            Consolidated Statements of Operations (unaudited)
                    As a Percentage of Total Revenues
                                       Three Months Ended Nine Months Ended
                                          September 30,     September 30,
                                          2010     2009     2010     2009
                                        -------  -------  -------  -------
REVENUES:
   Brokerage revenues:
    Agency commissions                     59.6%    62.1%    63.5%    57.9%
    Principal transactions                 23.7%    33.8%    26.0%    34.2%
                                        -------  -------  -------  -------
     Total brokerage revenues              83.3%    95.9%    89.5%    92.1%
   Clearing services revenue               10.3%       -      3.4%       -
   Equity in earnings of unconsolidated
     brokerage businesses                   0.8%       -      0.3%       -
   Software, analytics and market data      7.1%     7.1%     6.9%     6.3%
   Interest income                          0.4%     0.1%     0.2%     0.1%
   Other (loss) income                     -1.9%    -3.1%    -0.3%     1.5%
                                        -------  -------  -------  -------
    Total revenues                        100.0%   100.0%   100.0%   100.0%
                                        -------  -------  -------  -------
EXPENSES:
   Compensation and employee benefits      63.6%    70.3%    65.5%    67.5%
   Execution, clearing and settlement
    fees                                   12.7%     3.7%     6.5%     3.7%
   Communications and market data           6.6%     6.1%     5.7%     5.4%
   Travel and promotion                     4.1%     4.3%     4.2%     3.8%
   Rent and occupancy                       2.8%     2.8%     2.6%     2.4%
   Depreciation and amortization            4.2%     4.0%     3.9%     3.7%
   Professional fees                        3.4%     2.3%     3.1%     2.2%
   Interest                                 1.5%     1.4%     1.3%     1.2%
   Other expenses                           2.7%     2.7%     2.4%     2.4%
                                        -------  -------  -------  -------
    Total expenses                        101.6%    97.6%    95.2%    92.3%
                                        -------  -------  -------  -------
(LOSS) INCOME BEFORE (BENEFIT FROM)     -------  -------  -------  -------
 PROVISION FOR INCOME TAXES                -1.6%     2.4%     4.8%     7.7%
                                        -------  -------  -------  -------
(BENEFIT FROM) PROVISION FOR INCOME
 TAXES                                     -0.5%     0.8%     1.5%     2.9%
NET (LOSS) INCOME BEFORE ATTRIBUTION    -------  -------  -------  -------
 TO NON-CONTROLLING SHAREHOLDERS           -1.1%     1.6%     3.3%     4.8%
                                        -------  -------  -------  -------
Less: Net income attributable to
 non-controlling interests                  0.1%       -      0.0%       -
                                        -------  -------  -------  -------
GFI's NET (LOSS) INCOME                    -1.2%     1.6%     3.3%     4.8%
                                        =======  =======  =======  =======
                      GFI Group Inc. and Subsidiaries
                    Selected Financial Data (unaudited)
                          (Dollars in thousands)
                              Three Months Ended      Nine Months Ended
                                 September 30,           September 30,
                               2010        2009        2010        2009
                            ----------- ----------- ----------- -----------
Brokerage Revenues by
 Product Categories:
        Fixed Income        $    52,975 $    68,235 $   185,269 $   223,727
        Financial                39,731      33,166     116,964      97,662
        Equity                   37,172      44,673     131,325     146,920
        Commodity                44,810      38,311     139,406     114,744
                            ----------- ----------- ----------- -----------
           Total brokerage
            revenues        $   174,688 $   184,385 $   572,964 $   583,053
                            =========== =========== =========== ===========
Brokerage Revenues by
 Geographic Region:
        Americas            $    71,224 $    74,986 $   221,108 $   253,034
        Europe, Middle
         East, and Africa        84,078      93,406     293,417     282,616
        Asia-Pacific             19,386      15,993      58,439      47,403
                            ----------- ----------- ----------- -----------
           Total brokerage
            revenues        $   174,688 $   184,385 $   572,964 $   583,053
                            =========== =========== =========== ===========
                           September 30, December 31,
                                2010       2009
                            ----------- -----------
Consolidated Statement of
 Financial Condition Data:
        Cash and cash
         equivalents        $   318,026 $   342,379
        Deposits at clearing
         organizations           38,908      11,065
                            ----------- -----------
        Total Balance sheet
         cash on hand           356,934     353,444
        Balance sheet cash
         per share                 2.93        2.98
        Total assets (1)      1,421,147     952,094
        Total debt, including
         current portion        189,361     173,688
        Stockholders' equity    522,615     484,102
Selected Statistical Data:
        Brokerage personnel
         headcount (2)            1,152       1,082
        Employees                 1,968       1,768
        Broker productivity
         for the period (3) $       150 $       155
(1) Total assets include receivables from brokers, dealers and clearing
    organizations of $401.8 million and $87.7 million at September 30, 2010
    and December 31, 2009, 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, as well as balances with clearing organizations.
    These receivables are substantially offset by corresponding payables to
    brokers, dealers and clearing organizations for these unsettled
    transactions.
(2) Brokerage personnel headcount includes brokers, traders, 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         Nine Months Ended
                              September 30,             September 30,
                            2010         2009         2010         2009
                        -----------  -----------  -----------  -----------
GAAP revenues           $   209,747  $   192,246  $   640,110  $   633,147
 Gain on exchange of
  cost-method
  investments (a)                 -            -            -         (697)
 Fair value
  mark-to-market on
  future purchase
  commitment (a)                809            -          809            -
 Mark-to-market loss
  (gain) on forward
  hedges of future foreign
  currency revenues (a)       4,078        5,218        3,081       (2,202)
                        -----------  -----------  -----------  -----------
 Total Non-GAAP
  Revenues                  214,634      197,464      644,000      630,248
GAAP expenses               213,132      187,830      609,002      584,356
Non-operating adjustments:
 Amortization of
  intangibles                (2,114)      (1,356)      (4,941)      (4,084)
 Professional and other
  fees for business
  development
  activities                 (2,011)           -       (3,871)           -
 Severance and other
  restructuring                   -            -            -       (4,644)
    Total Non-GAAP
     adjustments (a)         (4,125)      (1,356)      (8,812)      (8,728)
                        -----------  -----------  -----------  -----------
Non-GAAP operating
 expenses                   209,007      186,474      600,190      575,628
GAAP (loss) income
 before (benefit from)
 provision for income
 taxes and non-controlling
 interests                   (3,385)       4,416       31,108       48,791
Sum of Non-GAAP
 items = (a)                  9,012        6,574       12,702        5,829
                        -----------  -----------  -----------  -----------
Non-GAAP income before
 tax provision and
 non-controlling
 interests                    5,627       10,990       43,810       54,620
GAAP (benefit from)
 provision for income
 taxes                       (1,050)       1,633        9,643       18,052
Income tax impact on
 Non-GAAP items (b)           2,794        2,432        3,937        2,116
                        -----------  -----------  -----------  -----------
Non-GAAP provision for
 income taxes                 1,744        4,065       13,580       20,168
Net income attributable
 to non-controlling
 interests                      151            -          151            -
GAAP net (loss) income       (2,486)       2,783       21,314       30,739
Sum of Non-GAAP
 Adjustments
 [ (a) - (b) ]                6,218        4,142        8,765        3,713
                        -----------  -----------  -----------  -----------
Non-GAAP net income     $     3,732  $     6,925  $    30,079  $    34,452
                        ===========  ===========  ===========  ===========
GAAP basic net (loss)
 income per share       $     (0.02) $      0.02  $      0.18  $      0.26
Basic non-operating
 income per share              0.05         0.04         0.07         0.03
                        -----------  -----------  -----------  -----------
Non-GAAP basic net
 income per share       $      0.03  $      0.06  $      0.25  $      0.29
                        ===========  ===========  ===========  ===========
GAAP diluted net (loss)
 income per share       $     (0.02) $      0.02  $      0.17  $      0.25
Diluted non-operating
 income per share              0.05         0.04         0.07         0.03
                        -----------  -----------  -----------  -----------
Non-GAAP diluted net
 income per share       $      0.03  $      0.06  $      0.24  $      0.28
                        ===========  ===========  ===========  ===========
Weighted average
 Non-GAAP shares
 outstanding - basic    121,943,158  118,062,749  120,059,960  118,117,384
Weighted average
 Non-GAAP shares
 outstanding - diluted  127,334,469  122,552,882  124,665,379  121,382,317
GFI Group Inc.
Adjusted EBITDA
                                                                     Last
                                                                    twelve
                                                                    months
($ '000's)             3Q09     4Q09      1Q10     2Q10     3Q10     (LTM)
                     -------  --------  -------  -------  -------  --------
Net income (loss)
 per U.S. GAAP
 before attribution
 to non-controlling
 interests           $ 2,783  $(14,451) $13,376  $10,424  $(2,335)
Plus/Less:
 Extraordinary and
 other non-recurring
 (gains) and losses
 (i.e., non-GAAP
 adjustments)          6,574    31,359    1,495    2,195    9,012
Plus: Interest
 expense               2,769     2,645    2,575    2,730    3,204
Less: Interest
 income                 (172)     (148)    (240)     (77)    (914)
Plus: Income tax
 expense (benefit)     1,633   (11,070)   6,738    3,955   (1,050)
Plus: Depreciation
 and amortization
 expense (excluding
 intangibles)          6,324     6,578    6,787    6,414    6,737
Plus: Amortization
 of RSU's              7,339     6,256    6,784    6,511    6,894
Plus: Amortization
 of cash sign-on
 bonuses               9,184     7,852    5,192    8,344    5,070
Plus: Net (income)
 loss attributable
 to non-controlling
 interests                 -         -        -        -     (151)
                     -------  --------  -------  -------  -------  --------
Adjusted EBITDA      $36,434  $ 29,021  $42,707  $40,496  $26,467  $138,691
                     -------  --------  -------  -------  -------  --------

SOURCE: GFI Group

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