Although the current-year periods include revenue from the PrinceRidge Holdings LP and JVB Financial Holdings, LLC consolidated subsidiaries, which were acquired in 2011, the extreme weakness in the current capital markets more than offset the impact of these acquisitions. Revenue was $20.9 million for the three months ended September 30, 2011, as compared to $23.1 million for the three months ended September 30, 2010. The third quarter year-over-year decrease was also the result of a reduction in gains on principal transactions of $2.1 million. In the third quarter of 2010, IFMI recognized gains on its investment in the first Strategos Deep Value fund of $2.1 million; that fund was substantially liquidated in 2010. Revenue was $76.6 million for the nine months ended September 30, 2011, as compared to $100.6 million for the nine months ended September 30, 2010. The year-over-year decrease is also due to a reduction in gains on principal transactions of $22.3 million and a reduction in asset management revenue of $2.5 million, offset by a net increase of net trading and new issue revenue of $0.8 million. In the nine months ended September 30, 2010, IFMI recognized gains on its investment in the first Strategos Deep Value Fund of $4.5 million, and on its investment in Star Asia of $13.4 million, versus comparable current year losses of $0.0 million and $1.1 million, respectively.
Net loss attributable to IFMI was $4.0 million, or $0.38 per diluted share, for the three months ended September 30, 2011, and $7.0 million, or $0.65 per diluted share, for the nine months ended September 30, 2011, as compared to net income of $0.0 million, or $0.00 per diluted share, for the three months ended September 30, 2010 and $5.0 million, or $0.48 per diluted share, for the nine months ended September 30, 2010.
Total Permanent Equity and Dividend Declaration
Other Material Events
- At September 30, 2011, total permanent equity was $81.8 million, as compared to $89.5 million as of December 31, 2010.
- The Company’s Board of Directors has declared a dividend of $0.05 per share. The dividend will be payable on December 6, 2011 to stockholders of record on November 22, 2011.
As announced on July 20, 2011, the Company completed its exchange offer for its outstanding 7.625% Contingent Convertible Senior Notes due 2027 (the “Old Notes”). At the commencement of the exchange offer, IFMI had $19.5 million principal amount of the Old Notes outstanding. Pursuant to the exchange offer, $7.6 million aggregate principal amount of the Old Notes were tendered for exchange, representing approximately 39% of the principal amount of the Old Notes outstanding. IFMI issued $7.6 million aggregate principal amount of a new series of 10.50% Contingent Convertible Senior Notes due 2027 in exchange for the $7.6 million aggregate principal amount of the Old Notes that were tendered. A total of $11.9 million principal amount of Old Notes remained outstanding after the exchange offer was completed. The purpose of the exchange offer was to improve IFMI’s financial flexibility by extending the first date at which holders can require IFMI to repurchase the notes from May 15, 2012 to May 15, 2014.
Privately Negotiated Exchange.
In October 2011, the Company completed a privately negotiated exchange of $0.5 million in aggregate principal balance of Old Notes. The terms of this exchange were identical to those offered in the exchange offer. A total of $11.4 million principal amount of Old Notes are currently outstanding.
On August 17, 2011, the Company repurchased 647,701 shares (the “Shares”) of its common stock, par value $0.001 per share, from an unrelated third-party in a privately negotiated transaction. The aggregate purchase price was $1,457,327, which represents a per share price of $2.25. The Company repurchased the Shares using cash on hand.
Management will hold a conference call this morning at 10:00 AM EST to discuss these results. The conference call will also be available via webcast. Interested parties can access the live webcast by clicking the webcast link on the Company's homepage at
. Those wishing to listen to the conference call with operator assistance can dial (877) 686-9573 (domestic) or (706) 643-6983 (international), participant pass code 25005676, or request the IFMI earnings call. A recording of the call will be available for two weeks following the call by dialing (800) 585-8367 (domestic) or (404) 537-3406 (international), participant pass code 25005676.
IFMI is a financial services company specializing in credit-related fixed income investments. IFMI was founded in 1999 as an investment firm focused on small-cap banking institutions, but has grown to provide an expanding range of asset management, capital markets, and investment banking solutions to institutional investors and corporations. IFMI’s primary operating segments are Capital Markets and Asset Management. The Capital Markets segment consists of credit-related fixed income sales and trading as well as new issue placements in corporate and securitized products, operating primarily through IFMI’s subsidiaries PrinceRidge Holdings LP and JVB Financial Holdings, LLC. The Asset Management segment manages assets through listed and private companies, funds, managed accounts, and collateralized debt obligations. As of September 30, 2011, IFMI managed approximately $8.5 billion in credit-related fixed income assets in a variety of asset classes including U.S. trust preferred securities, European hybrid capital securities, Asian commercial real estate debt, and mortgage- and asset-backed securities. For more information, please visit
Note 1: Adjusted operating income / (loss) and adjusted operating income / (loss) per share are non-GAAP measures of performance. Please see the discussion of non-GAAP measures of performance below. Also see the tables below for the reconciliations of non-GAAP measures of performance to their corresponding GAAP measures of performance.