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LaBranche & Co Inc. Reports Third Quarter 2009 Results


  • Press Release
  • Source: LaBranche & Co Inc.
  • On 8:00 am EDT, Tuesday October 20, 2009

NEW YORK--(BUSINESS WIRE)--LaBranche & Co Inc. (NYSE: LAB - News) (the “Company”) today reported financial results for the third quarter and nine months ended September 30, 2009. The Company reported an after-tax net loss of $8.9 million, or $0.17 per share, for the 2009 third quarter, which includes a pre-tax unrealized gain on the Company's shares of NYSE Euronext, Inc. common stock (the "NYX shares") of $5.1 million. This compares to a net loss of $5.6 million, or $0.09 per share, for the 2008 third quarter, which included a $31.9 million pre-tax unrealized loss on the Company's NYX shares.

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On a pro-forma basis, the Company reported a net loss for the third quarter of 2009 of $12.0 million, or $0.22 per share, compared to pro-forma net income of $13.6 million, or $0.22 per share, for the third quarter of 2008. These pro-forma results exclude the unrealized gain on the NYX shares in the third quarter of 2009 and the unrealized loss on the NYX shares in the third quarter of 2008.

The Company reported an after-tax net loss of $25.3 million, or $0.45 per share, for the nine months ended September 30, 2009, which compares to a net loss of $67.2 million, or $1.08 per share, for the nine months ended September 30, 2008.

On a pro-forma basis, the Company reported a net loss for the nine months ended September 30, 2009 of $28.6 million, or $0.51 per share, compared to pro-forma net income of $23.1 million, or $0.37 per share, for the nine months ended September 30, 2008. These pro-forma results exclude both the unrealized (gain) loss on the NYX shares and the income (loss) on early extinguishment of debt as reported in the attached reconciliation of Non-GAAP Financial Measures in each period.

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.

 

LaBranche & Co Inc.

Condensed Consolidated Statements of Operations

(all data in thousands, except per share data)

(unaudited)

 
  Three Months Ended September 30,   Nine Months Ended September 30,
2009   2008 2009   2008

 

REVENUES:
Net gain on principal transactions $ 5,017 $ 84,634 $ 16,039 $ 189,731
Commissions and other fees 17,290 10,890 54,342 30,849
Net gain (loss) on investments 6,183 (35,343 ) 3,222 (153,112 )
Interest income 46 16,129 1,956 63,523
Other   719     1,000     3,238     2,403  
Total revenues   29,255     77,310     78,797     133,394  
 
Interest Expense:
Debt 5,388 6,455 16,445 25,822
Inventory financing   5,270     23,841     16,360     75,461  
Total interest expense   10,658     30,296     32,805     101,283  
Revenues, net of interest expense 18,597 47,014 45,992 32,111
 
EXPENSES:
Employee compensation and related benefits 14,296 34,955 36,022 83,079
Exchange, clearing and brokerage fees 10,491 12,357 28,123 32,758
Lease of exchange memberships and trading license fees 361 429 1,171 1,272
Depreciation and amortization of intangibles 1,033 925 2,980 2,722
Early extinguishment of debt

--

-- (762 ) 6,005
Other   7,439     7,215     22,665     21,483  
Total expenses   33,620     55,851     90,199     147,319  
 
Loss before benefit for income taxes (15,023 ) (8,867 ) (44,207 ) (115,208 )
 
Benefit for income taxes   (6,123 )   (3,280 )   (18,873 )   (48,046 )
 
Loss applicable to common stockholders $ (8,900 ) $ (5,587 ) $ (25,334 ) $ (67,162 )
 
Weighted average common shares outstanding:
Basic 53,638 61,946 55,790 61,931
Diluted 53,638 61,946 55,790 61,931
 
Loss per common share:
Basic $ (0.17 ) $ (0.09 ) $ (0.45 ) $ (1.08 )
Diluted $ (0.17 ) $ (0.09 ) $ (0.45 ) $ (1.08 )
   

LaBranche & Co Inc.

Condensed Consolidated Statements of Financial Condition

(all data in thousands)

 
September 30, 2009 December 31, 2008
ASSETS (unaudited) (audited)
Cash and cash equivalents $ 155,612 $ 304,179
Cash and securities segregated under federal regulations 1,727 1,876
Receivable from brokers, dealers and clearing organizations 60,783 91,354
Receivable from customers 16,664

--

Financial instruments owned, at fair value 3,607,081 3,175,968
Exchange memberships owned, at adjusted cost
(market value of $5,371 and $3,910, respectively) 1,202 1,202
Office equipment and leasehold improvements, at cost, less accumulated
depreciation and amortization of $14,177 and $14,362, respectively 15,232 16,522
Goodwill and other intangible assets, net 109,229 109,229
Deferred tax assets 7,151 --
Income tax receivable 10,318 --
Other assets   18,543   31,285
 
Total assets $ 4,003,542 $ 3,731,615
 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to brokers, dealers and clearing organizations $ 396,250 $ 105,037
Payable to customers 4,859 36
Financial instruments sold, but not yet purchased, at fair value 2,965,290 2,855,420
Accrued compensation 6,371 75,747
Accounts payable and other accrued expenses 27,266 29,179
Other liabilities 12,730 12,840
Income tax payable 3,005 5,834
Deferred tax liabilities -- 5,349
Long term debt   189,323   199,323
 
Total liabilities   3,605,094   3,288,765
 
Total stockholders’ equity   398,448   442,850
 
Total liabilities and stockholders' equity $ 4,003,542 $ 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 September 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

$18,597

$(5,141) (1)

$13,456

$47,014

$31,937 (1)

$78,951

Total expenses 33,620

--

33,620 55,881 -- 55,881
(Loss) income before (benefit) provision for income taxes

 

(15,023)

 

(5,141)

 

(20,164)

 

(8,867)

 

31,937

 

23,070

(Benefit) provision for income taxes

(6,123)

(2,056)

(8,179)

(3,280)

12,775

9,495

(Loss) income applicable to common stockholders

$(8,900)

$(3,085)

$(11,985)

$(5,587)

$19,162

$13,575

Basic per share $(0.17) $(0.05) $(0.22) $(0.09) $0.31 $0.22
Diluted per share $(0.17) $(0.05) $(0.22) $(0.09) $0.31 $0.22
 
Nine Months Ended September 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

$45,992

$(4,734) (1)

$41,258

$32,111

$144,389 (1)

$176,500

Total expenses 90,199 762 (2) 90,961 147,319 (6,005) (2) 141,314
(Loss) income before (benefit) provision for income taxes

 

(44,207)

 

(5,496)

 

(49,703)

 

(115,208)

 

150,394

 

35,186

(Benefit) provision for income taxes (3)

(18,873)

(2,198)

(21,071)

(48,046)

60,158

12,112

(Loss) income applicable to common stockholders

$(25,334)

$(3,298)

$(28,632)

$(67,162)

$90,236

$23,074

Basic per share $(0.45) $(0.06) $(0.51) $(1.08) $1.45 $0.37
Diluted per share $(0.45) $(0.06) $(0.51) $(1.08) $1.45 $0.37
__________________
(1)   Revenue adjustment reflects (gain) loss in each accounting period, based on the change in fair market value of the Company’s 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.

Contact:

LaBranche & Co Inc.
Jeffrey A. McCutcheon, 212-820-6220
Senior Vice President & Chief Financial Officer

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