Institutional Financial Markets, Inc. (NYSE AMEX: IFMI), an investment firm specializing in credit-related fixed income investments, today reported financial results for the quarter and nine months ended September 30, 2011.
Adjusted operating loss was $4.3 million, or $0.27 per diluted share, for the three months ended September 30, 2011, as compared to adjusted operating income of $6.6 million, or $0.42 per diluted share, for the three months ended September 30, 2010. Adjusted operating income was $2.9 million, or $0.18 per diluted share, for the nine months ended September 30, 2011, as compared to $20.7 million, or $1.32 per diluted share, for the nine months ended September 30, 2010. Adjusted operating income / (loss) is not a measure recognized under generally accepted accounting principles (“GAAP”). See Note 1 on page 3.
Throughout the third quarter, IFMI implemented significant initiatives designed to reduce expenses, streamline operations, and reduce risk and balance sheet positions. These initiatives included the elimination of duplicative costs arising from the PrinceRidge transaction, as well as net reductions in overall costs to address adverse market conditions. IFMI has eliminated 31 positions and reduced compensation and benefits for certain of the remaining staff. Additional cost savings were generated by subleasing and terminating duplicative leases, lowering subscription costs, and other measures. These efforts are expected to generate in excess of $10 million in annual cost savings. In the third quarter, IFMI incurred costs of $1.8 million related to these initiatives, which included employee severance and termination payments of $1.2 million, lease termination costs of $0.5 million, and other contract termination costs of $0.1 million. These expenses were included as a component of operating expenses for the three months ended September 30, 2011.
“Our entire industry has been impacted by difficult market conditions that have persisted throughout 2011, and that we expect to continue in the near-term. Our results this quarter were negatively affected by the continued deterioration of trading volumes within the fixed income market,” said Daniel G. Cohen, Chairman and Chief Executive Officer of IFMI. “While IFMI’s balance sheet remains healthy, we are glad that we have taken steps to adjust to the current business environment, and believe we have made real progress in reducing our fixed expenses and overhead and preserving our franchise. These initiatives will help to ensure that we preserve our capital and are in the best possible position to take advantage of eventual market improvement.”