Years Ended 2011 vs. 2010
Net revenues declined by $12.2 million to $68.5 million for the year ended December 31, 2011, compared to $80.7 million in the prior year. The decrease in net revenues was attributable to lower commissions and principal transaction revenues of $12.7 million, primarily due to decreased spreads during the year, partially offset by higher volumes. Pre-tax income of $8.5 million for the year ended December 31, 2011 increased by $4.0 million, compared to non-GAAP pre-tax income of $4.5 million in the prior year. This increase is the result of a larger portion of compensation expense expected to be paid in stock-based compensation compared to the prior year. Non-GAAP pre-tax income of $4.5 million for 2010 was also impacted by higher compensation expense recorded in the fourth quarter, resulting from the previously mentioned change in vesting provisions to equity compensation awards expected to be granted as part of year-end compensation for services in 2010.
Fourth Quarter 2011 vs. 2010Net revenues declined by $8.4 million to $3.3 million for the fourth quarter of 2011, compared to $11.7 million in the fourth quarter of 2010. Advisory revenues decreased $4.9 million to $3.0 million, compared to $7.9 million for the prior-year quarter. Capital markets revenues decreased $3.5 million to $0.3 million for the fourth quarter of 2011, compared to $3.8 million for the prior-year quarter. Pre-tax loss of $1.1 million decreased by $3.7 million, compared to non-GAAP pre-tax loss of $4.8 million in the prior-year quarter. This improvement was a result of lower variable compensation expense recorded in the fourth quarter of 2011 as compared to the prior-year quarter resulting from the realignment of the division, which occurred in the third quarter of 2011. This action better aligned compensation expense as a percentage of revenue with management’s goals. Non-GAAP pre-tax loss for the fourth quarter of 2010, of $4.8 million 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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