NEW YORK, Oct. 25 - LaBranche & Co Inc. (NYSE: LAB) today reported financial results for the third quarter and nine months ended September 30, 2005.
Revenue for the 2005 third quarter was $83.7 million, compared to $64.7 million for the 2004 third quarter. Net income available to common stockholders for the 2005 third quarter was $9.2 million, or $0.15 per diluted share, which includes a tax benefit of $3.0 million, or $0.05 per diluted share. By comparison, the Company reported a net loss applicable to common stockholders for the 2004 third quarter of $36.6 million, or $0.61 per diluted share. The 2004 results include a non-cash pre-tax goodwill impairment charge of $37.6 million and a $0.5 million after-tax charge due to the acceleration of the discount accretion with respect to the remaining shares of Series B Preferred Stock repurchased by the Company during the 2004 third quarter. Excluding these charges and a $0.3 million write-up of an investment, the Company's net loss applicable to common stockholders for the 2004 third quarter was $0.8 million, or $0.01 per diluted share.
For the nine months ended September 30, 2005, revenue was $228.8 million, compared to $235.3 million for the comparable prior-year period. Revenue for the nine months ended September 30, 2004, however, included a $24.9 million appreciation in fair value of an investment. Net income available to common stockholders for the nine months ended September 30, 2005 was $20.1 million or $0.33 per diluted share, which includes an aggregate tax benefit of $6.4 million, or $0.11 per diluted share. The Company's net loss applicable to common stockholders for the nine months ended September 30, 2004 was $55.3 million or $0.92 per diluted share, which included charges of $55.9 million in connection with the May 2004 refinancing of the Company's indebtedness, a non- cash charge of $18.3 million in connection with the impairment of the Company's exchange membership and the above-mentioned goodwill impairment and preferred stock discount charges. Excluding the investment write-up and the debt repurchase, exchange membership impairment, goodwill impairment and preferred stock discount charges, the Company's net income available to common stockholders for the nine months ended September 30, 2004 was $7.3 million, or $0.12 per diluted share.
LaBranche has scheduled a conference call to review its 2005 third quarter results today at 10:00 a.m. (Eastern Time). Interested parties may listen to a live audio broadcast of the conference call at http://www.labranche.com. A replay of the call can be accessed approximately two hours after the completion of the call.
Founded in 1924, LaBranche is the leading specialist and market-maker in equities, options and exchange-traded funds ("ETFs") on major securities exchanges. LaBranche acts as a specialist and market-maker for more than 680 companies, 30 of which are in the S&P 100 Index and 107 of which are in the S&P 500 Index. In addition, LaBranche is a specialist and market-maker in U.S.-listed ETFs and is a specialist in over 500 classes of equity and index options.
LaBranche & Co Inc.
Condensed Consolidated Statements of Operations
(all data in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
REVENUES:
Net gain on
principal
transactions $47,212 $38,997 $135,124 $131,740
Commissions 20,123 22,064 64,876 71,311
Net gain on
non-marketable
investments 1,059 178 1,381 24,527
Interest 14,515 2,712 27,752 6,497
Other 822 709 (354) 1,200
Total revenues 83,731 64,660 228,779 235,275
EXPENSES:
Employee compensation
and related
benefits 25,747 21,985 72,527 72,421
Interest 23,285 16,006 58,649 47,700
Exchange, clearing
and brokerage fees 10,559 10,101 30,445 28,684
Lease of exchange
memberships 1,008 3,804 3,003 11,902
Depreciation and
amortization of
intangibles 3,008 3,057 9,100 9,162
Goodwill impairment - 37,600 - 37,600
Exchange memberships
impairment - - - 18,327
Debt repurchase
premium - - - 49,028
Other 9,374 9,941 30,579 29,927
Total expenses 72,981 102,494 204,303 304,751
Income (loss) before
minority interest
and provision
(benefit) for
income taxes 10,750 (37,834) 24,476 (69,476)
MINORITY INTEREST - 161 - 530
Income (loss)
before provision
(benefit) for
income taxes 10,750 (37,995) 24,476 (70,006)
PROVISION (BENEFIT)
FOR INCOME TAXES 1,592 (1,533) 4,330 (16,958)
Net income (loss) $9,158 $(36,462) $20,146 $(53,048)
Preferred dividends
and discount
accretion - 142 - 2,254
Net income (loss)
applicable to
common
stockholders $9,158 $(36,604) $20,146 $(55,302)
Weighted average common
shares outstanding:
Basic 60,624 59,926 60,615 59,852
Diluted 60,964 59,926 60,947 59,852
Earnings (loss) per
share:
Basic $0.15 $(0.61) $0.33 $(0.92)
Diluted $0.15 $(0.61) $0.33 $(0.92)
LaBranche & Co Inc.
Condensed Consolidated Statements of Financial Condition
(all data in thousands)
September 30, December 31,
2005 2004
ASSETS (unaudited) (audited)
Cash and cash equivalents $489,105 $444,446
Cash and securities segregated under
federal regulations 6,036 13,511
Securities purchased under agreements to
resell 121,000 87,000
Receivable from brokers, dealers and
clearing organizations 637,477 158,421
Receivable from customers 2,420 10,555
Securities owned, at market value:
Corporate equities 822,092 319,378
Options 358,538 110,705
Exchange-traded funds 560,676 128,214
U.S. Government obligations 8 8
Commissions receivable 4,623 5,428
Exchange memberships contributed for use,
at market value 22,880 9,450
Exchange memberships owned, at adjusted
cost (market value of $113,395 and $41,696,
respectively) 59,657 59,332
Goodwill and other intangible assets, net 629,002 636,784
Other assets 46,806 71,865
Total assets $3,760,320 $2,055,097
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to brokers and dealers $162,403 $120,434
Payable to customers 6,727 3,830
Securities sold, but not yet purchased, at
market value:
Corporate equities 1,276,098 265,078
Options 343,670 92,580
Exchange-traded funds 419,346 142,735
U.S. Government obligations 92,925 -
Accrued compensation 25,411 38,195
Accounts payable and other accrued expenses 31,564 18,245
Other liabilities 11,911 12,510
Income taxes payable 6,809 1,671
Deferred tax liabilities 151,305 156,294
Short term debt - 2,000
Long term debt 481,414 481,448
Subordinated liabilities:
Exchange memberships contributed for use,
at market value 22,880 9,450
Other subordinated indebtedness 12,395 17,285
Total liabilities 3,044,858 1,361,755
Minority interest - 356
Total stockholders' equity 715,462 692,986
Total liabilities and stockholders'
equity $3,760,320 $2,055,097
LaBranche & Co Inc. Regulation G Requirement: Reconciliation of Non-GAAP Financial Measures
(all data in thousands, except per share data)
In evaluating the Company's financial performance, management reviews operating 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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
Total revenues $83,731 $64,660 $228,779 $235,275
Less: Lava
write-up (1) - (320) - (24,900)
Pro-forma revenues 83,731 64,340 228,779 210,375
Total expenses 72,981 102,494 204,303 304,751
Less:
Goodwill
impairment (2) - (37,600) - (37,600)
Exchange memberships
impairment (3) - - - (18,327)
Debt repurchase
premium (4) - - - (55,857)
Acceleration of
discount on preferred
stock repurchase (5) - (496) - (496)
Pro-forma expenses 72,981 64,398 204,303 192,471
Income (loss) before
minority interest and
provision(benefit)
for income taxes 10,750 (37,834) 24,476 (69,476)
Minority interest - 161 - 530
Income (loss) before
provision (benefit)
for income taxes 10,750 (37,995) 24,476 (70,006)
Effect of pro-forma
adjustment - 37,776 - 87,380
Pro-forma income before
provision (benefit)
for income taxes 10,750 (219) 24,476 17,374
Provision (benefit)
for income taxes 1,592 (1,533) 4,330 (16,958)
Tax effect of
pro-forma adjustment - 1,933 - 24,800
Pro-forma provision
for income taxes 1,592 400 4,330 7,842
Net income (loss)
applicable to common
shareholders $9,158 $(36,604) $20,146 $(55,302)
Net effect of
pro-forma adjustment - 35,843 - 62,580
Pro-forma net income
available to common
shareholders $9,158 $(761) $20,146 $7,278
Earnings (loss) per share:
Diluted $0.15 $(0.61) $0.33 $(0.92)
Net effect of
pro-forma adjustment - 0.60 - 1.04
Diluted-pro-forma $0.15 $(0.01) $0.33 $0.12
(1) Reflects the write-up in value of an investment.
(2) Relates to the write-down of the carrying value of the Company's
goodwill.
(3) Reflects the write-down to fair value, as determined by management, of
the Company's NYSE exchange memberships.
(4) Reflects expenses and the premium paid related to the Company's
repurchase of a substantial portion of the Company's then-outstanding
$100 million Senior Notes and $250 million Senior Subordinated Notes.
(5) Represents the acceleration of the discount accretion on the
repurchase of the Company's then-remaining outstanding shares of
Series B preferred stock.
LaBranche & Co Inc.
Key Specialist Data
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
NYSE average daily
share volume (millions) 1,532.4 1,326.6 1,576.1 1,440.8
LAB share volume on
NYSE (billions) 24.7 22.1 74.6 71.3
LAB dollar volume on
NYSE (billions) $821.8 $636.3 $2,439.5 $2,076.0
LAB number of principal
trades on the NYSE
(millions) 6.7 6.4 20.1 20.7
LAB principal shares traded
on the NYSE (billions) 4.6 4.9 14.6 16.8
LAB dollar value of principal
shares traded on the
NYSE (billions) $167.4 $148.6 $510.4 $512.9
LAB NYSE common stock listings 571 573 571 573
LAB AMEX common stock listings 94 104 94 104
LAB AMEX option listings 798 234 798 234
