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Gleacher & Company Reports Fourth Quarter And Year End 2011 Financial Results

Stocks in this article: GLCH

Pre-tax loss from continuing operations of $61.3 million for the year ended December 31, 2011 increased by $35.5 million compared to pre-tax loss from continuing operations of $25.8 million for the year ended December 31, 2010. Non-GAAP pre-tax income from continuing operations increased by $17.4 million to $20.9 million for the year ended December 31, 2011, compared to the comparable non-GAAP pre-tax income from continuing operations of $3.5 million for the year ended December 31, 2010.

Business Segment Results (including Non-GAAP results)

Three Months Ended

December 31,

Years Ended

December 31,

(In thousands) 2011   2010   2011   2010
(unaudited) (unaudited)
Net revenues:    
MBS/ABS & Rates $ 14,301 $ 32,147 $ 99,933 $ 117,144
Corporate Credit 19,975 18,592 68,521 80,676
Investment Banking 3,346 11,658 33,070 45,441
ClearPoint   20,815       -     46,924       -
Net revenues - operating segments 58,437 62,397 248,448 243,261
Other   3,403       2,988   10,994 *     5,321
Total $ 61,840     $ 65,385   $259,442 *   $ 248,582
Pre-tax income/(loss) from continuing operations:
MBS/ABS & Rates $ 3,309 $6,120 * $ 31,452 $34,942 *
Corporate Credit 3,393 88 * 8,532 4,477 *
Investment Banking (1,086 ) (4,801) * 7,458 * 4,640 *
ClearPoint   (779 )     -     (3,686 )     -
Pre-tax income - operating segments 4,837 1,407 * 43,756 * 44,059 *
Other   (4,473 )   (10,032) *   (22,889) *   (40,528) *
Total $ 364     $(8,625) *   $20,867 *   $3,531 *
*Designates non-GAAP financial results. A reconciliation of the Company’s GAAP results to non-GAAP financial results is set forth below under the caption “Non-GAAP Financial Results.”

MBS/ABS & Rates

Fourth Quarter 2011 vs. 2010

Net revenues declined by $17.8 million to $14.3 million for the quarter ended December 31, 2011, compared to $32.1 million in the fourth quarter of 2010. The decrease in net revenues was attributable to lower commissions and principal transactions revenues of $20.9 million due to losses of $2.5 million on asset-backed securities, compared to gains of $11.9 million in the prior year period, as well as lower trading volumes in the current period. Partially offsetting this decline was an increase in net interest income of $3.2 million due to higher inventory levels. Pre-tax income of $3.3 million for the quarter ended December 31, 2011 declined by $2.8 million, compared to non-GAAP pre-tax income of $6.1 million for the fourth quarter of 2010. This reduction is a direct result of the lower revenues, partially offset by lower variable compensation expense (as a result of the lower revenues). Non-GAAP pre-tax income of $6.1 million for the fourth quarter of 2010 was also impacted by higher compensation expense resulting from a change in vesting provisions to equity compensation awards expected to be granted as part of year-end compensation for services in 2010, which is further described below as part of the “Consolidated Compensation and Benefits Expenses” discussion.

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