LaBranche & Co Inc. Reports Fourth Quarter and Full Year 2005 Results26 January 2006
LaBranche & Co Inc. (NYSE: LAB) today reported financial results for the fourth quarter and twelve months ended December 31, 2005.
Revenue for the 2005 fourth quarter was $111.4 million, compared to $83.8 million for the 2004 fourth quarter. Net income available to common stockholders for the 2005 fourth quarter was $17.4 million, or $0.28 per diluted share, which includes a $5.4 million after-tax gain upon the release of an escrow in connection with a 2004 disposition of an investment and a tax benefit of $2.2 million. By comparison, the Company reported net income applicable to common stockholders for the 2004 fourth quarter of $9.3 million, or $0.15 per diluted share, which included a tax benefit of $1.6 million.
For the twelve months ended December 31, 2005, revenue was $340.2 million, compared to $319.0 million in 2004. Revenue for the twelve months ended December 31, 2005 and 2004 included pre-tax gains from a 2004 disposition of an investment in the amount of $9.6 million (upon the release of an escrow) and $24.9 million, respectively. Net income available to common stockholders for the twelve months ended December 31, 2005 was $37.5 million, or $0.61 per diluted share, including the above-mentioned $5.4 million after-tax gain upon the release of an escrow in connection with a 2004 disposition of an investment and an aggregate 2005 tax benefit of $8.6 million. Excluding the gain from the investment disposition, the Company's net income available to common stockholders for the twelve months ended December 31, 2005 was $32.1 million, or $0.53 per diluted share. The Company's net loss applicable to common stockholders for the twelve months ended December 31, 2004 was $46.0 million, or $0.77 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 memberships, 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 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 twelve months ended December 31, 2004 was $16.5 million, or $0.27 per diluted share.
LaBranche has scheduled a conference call to review its fourth quarter and full year 2005 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 a 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 650 companies, 30 of which are in the S&P 100 Index and 105 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 600 classes of equity and index options.
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 LaBranche 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. LaBranche 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)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
(unaudited) (audited) (unaudited) (audited)
REVENUES:
Net gain on principal
transactions $59,308 $50,795 $194,432 $182,535
Commissions 19,142 24,734 84,018 96,045
Net gain on non-marketable
investments 9,648 426 11,029 24,953
Interest 22,903 3,388 50,655 9,178
Other 410 4,429 56 6,336
Total revenues 111,411 83,772 340,190 319,047
EXPENSES:
Employee compensation and
related benefits 31,004 26,889 103,531 99,310
Interest 30,855 16,089 89,504 63,789
Exchange, clearing and brokerage
fees 10,219 10,326 40,664 39,010
Lease of exchange memberships 976 3,663 3,979 15,565
Depreciation and amortization of
intangibles 2,993 3,059 12,093 12,221
Goodwill impairment - - - 37,600
Exchange memberships impairment - - - 18,327
Debt repurchase premium - 1 - 49,029
Other 8,735 9,739 39,314 39,665
Total expenses 84,782 69,766 289,085 374,516
Income (loss) before minority
interest and provision (benefit)
for income taxes 26,629 14,006 51,105 (55,469)
MINORITY INTEREST - (175) - 356
Income (loss) before provision
(benefit) for income taxes 26,629 14,181 51,105 (55,825)
PROVISION (BENEFIT) FOR
INCOME TAXES 9,254 4,912 13,584 (12,045)
Net income (loss) $17,375 $9,269 $37,521 $(43,780)
Preferred dividends and discount
accretion - - - 2,253
Net income (loss) applicable to
common stockholders $17,375 $9,269 $37,521 $(46,033)
Weighted average common shares
outstanding:
Basic 60,624 60,065 60,617 59,905
Diluted 61,105 60,361 61,059 59,905
Earnings (loss) per share:
Basic $0.29 $0.15 $0.62 $(0.77)
Diluted $0.28 $0.15 $0.61 $(0.77)
LaBranche & Co Inc.
Condensed Consolidated Statements of Financial Condition
(all data in thousands)
December 31, December 31,
2005 2004
ASSETS (unaudited) (audited)
Cash and cash equivalents $427,284 $444,446
Cash and securities segregated under federal
regulations 6,554 13,511
Securities purchased under agreements to resell 79,000 87,000
Receivable from brokers, dealers and clearing
organizations 658,631 158,421
Receivable from customers 3,659 10,555
Securities owned, at market value:
Corporate equities 1,128,999 319,378
Options 411,887 110,705
Exchange-traded funds 815,250 128,214
Corporate obligations 8 8
Commissions receivable 4,337 5,428
Exchange memberships contributed for use,
at market value 24,500 9,450
Exchange memberships owned, at adjusted cost
(market value of $138,768 and $41,696,
respectively) 59,664 59,332
Goodwill and other intangible assets, net 626,408 636,784
Other assets 38,114 71,865
Total assets $4,284,295 $2,055,097
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to brokers and dealers $79,646 $120,434
Payable to customers 4,858 3,830
Securities sold, but not yet purchased,
at market value:
Corporate equities 1,845,234 265,078
Options 418,315 92,580
Exchange-traded funds 392,713 142,735
U.S. Government obligations 77,263 -
Accrued compensation 22,722 38,195
Accounts payable and other accrued expenses 21,133 18,245
Other liabilities 11,859 12,510
Income taxes payable 10,513 1,671
Deferred tax liabilities 148,263 156,294
Short term debt 3,000 2,000
Long term debt 481,425 481,448
Subordinated liabilities:
Exchange memberships contributed for use,
at market value 24,500 9,450
Other subordinated indebtedness 9,395 17,285
Total liabilities 3,550,839 1,361,755
Minority interest - 356
Total stockholders' equity 733,456 692,986
Total liabilities and stockholders' equity $4,284,295 $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 Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
(unaudited) (audited) (unaudited) (audited)
Total revenues $111,411 $83,772 $340,190 $319,047
Less: Non-marketable investment
disposition (1) (9,581) - (9,581) (24,900)
Pro-forma revenues 101,830 83,772 330,609 294,147
Total expenses 84,782 69,766 289,085 374,516
Less:
Goodwill impairment (2) - - - (37,600)
Exchange memberships
impairment (3) - - - (18,327)
Debt repurchase premium (4) - (1) - (55,858)
Acceleration of discount on
preferred stock repurchase (5) - - - (496)
Pro-forma expenses 84,782 69,765 289,085 262,235
Income (loss) before minority
interest and provision(benefit)
for income taxes 26,629 14,006 51,105 (55,469)
Minority interest - (175) - 356
Income (loss) before provision
(benefit) for income taxes 26,629 14,181 51,105 (55,825)
Effect of pro-forma adjustment (9,581) 1 (9,581) 87,381
Pro-forma income before provision
(benefit) for income taxes 17,048 14,182 41,524 31,556
Provision (benefit) for income
taxes 9,254 4,912 13,584 (12,045)
Tax effect of pro-forma adjustment (4,168) 1 (4,168) 24,800
Pro-forma provision for income
taxes 5,086 4,913 9,416 12,755
Net effect of pro-forma adjustment (5,413) 1 (5,413) 62,581
Net income (loss) applicable to
common shareholders $17,375 $9,269 $37,521 $(46,033)
Earnings (loss) per share- Diluted $0.28 $0.15 $0.61 $(0.77)
Pro-forma net income available to
common shareholders $11,962 $9,270 $32,108 $16,548
Earnings (loss) per share -
Diluted-pro-forma $0.20 $0.15 $0.53 $0.27
(1) Reflects the gains in connection with the disposition of an
investment.
(2) Relates to the write-down 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 Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
NYSE average daily share volume
(millions) 1,680.6 1,476.8 1,602.2 1,456.7
LAB share volume on NYSE (billions) 26.8 24.9 101.4 96.1
LAB dollar volume on NYSE (billions) $915.9 $743.1 $3,355.3 $2,819.1
LAB number of principal trades on
the NYSE (millions) 7.5 6.8 27.6 27.6
LAB principal shares traded on the
NYSE (billions) 5.0 5.5 19.6 22.3
LAB dollar value of principal shares
traded on the NYSE (billions) $182.1 $169.8 $692.5 $682.7
LAB NYSE common stock listings 566 580 566 580
LAB AMEX common stock listings 91 104 91 104
LAB option listings 617 321 617 321
LAB ETF Listings 52 18 52 18
Source: prnewswire
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