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Gleacher & Company Reports First Quarter 2012 Financial Results

A limitation of utilizing these non-GAAP financial results is that the GAAP accounting effects of these excluded items do in fact reflect the underlying financial results of the Company’s business, and these effects should not be ignored in evaluating and analyzing its financial results. Therefore, the Company believes that non-GAAP results should always be considered together with their corresponding GAAP results.

   

Reconciliation of GAAP to Non-GAAP Loss from Continuing Operations (2012 - Unaudited)

 
(dollars in thousands, except per share amounts)

Three Months Ended March 31, 2012

GAAP

   

Adjustments

   

Non-GAAP

 
Net Revenues $ 64,743   $ -   $ 64,743  
 
Expenses (excluding interest):
Compensation and benefits 43,719

(1,650

) 1

42,069
Non-compensation expenses   26,306     -     26,306  
Total expenses (excluding interest)   70,025     (1,650 )   68,375  

Loss from continuing operations before income taxes

(5,282 ) 1,650 (3,632 )
Provision for income taxes   (566 )  

703

2

  137  
Net loss from continuing operations $ (4,716 ) $ 947   $ (3,769 )
 
Earnings per share:
Diluted – continuing operations $ (0.04 )

 

$

(0.03

) 3

As a percentage of net revenues:
Compensation and benefits 67.5 % 65.0 %

Loss from continuing operations before income taxes

  (8.2 %)               (5.6 %)
 

1 Represents severance expense (of which $1.0 million is non-cash stock-based compensation).

2 Non-GAAP adjustments multiplied by the Company’s statutory tax rate of approximately 42.6%.

3 Non-GAAP net loss from continuing operations divided by 119.5 million dilutive shares.

   

Reconciliation of GAAP to Non-GAAP Income from Continuing Operations (2011 - Unaudited)

 
(dollars in thousands, except per share amounts) Three Months Ended March 31, 2011

GAAP

 

Adjustments

 

Non-GAAP

 
Net Revenues $ 89,389   $

(2,330

) 1

 

$ 87,059  
 
Expenses (excluding interest):
Compensation and benefits 59,088 - 59,088
Non-compensation expenses   15,573     -     15,573  
Total expenses (excluding interest)   74,661     -     74,661  

Income from continuing operations before income taxes

14,728 (2,330 ) 12,398
Provision for income taxes   6,129    

-

2

  6,129  
Net income from continuing operations $ 8,599   $ (2,330 ) $ 6,269  
 
Earnings per share:
Diluted – continuing operations $ 0.07 $

0.05

3

As a percentage of net revenues:
Compensation and benefits 66.1 % 67.9 %

Income from continuing operations before income taxes

  16.5 %           14.2 %
 

1 Represents the bargain purchase gain related to the ClearPoint acquisition on January 3, 2011.

2 ClearPoint bargain purchase gain was non-taxable.

3 Non-GAAP net income from continuing operations divided by 130.8 million shares.

 

Reconciliation of GAAP to Non-GAAP Pre-Tax (Loss)/Income from Continuing Operations – by Segment

     
Three Months Ended March 31, 2012 Three Months Ended March 31, 2011
Corporate Credit Other
       
(in thousands) (in thousands)
 
Revenues – GAAP $ 21,717 Revenues – GAAP $ 3,217
Expenses – GAAP 22,405 Adjustments

(2,330) 1

Adjustments

(1,650) 2

Revenues – non GAAP 887
Expenses – non GAAP 20,755 Expenses – GAAP 9,709
Pre-tax income from continuing operations – non GAAP $

962

Pre-tax loss from continuing operations – non GAAP $ (8,822)
 

1 Represents the bargain purchase gain related to the ClearPoint acquisition on January 3, 2011.

2 Represents severance expense (of which $1.0 million is non-cash stock-based compensation).

       

Return on Tangible Equity – Annualized (Non-GAAP Unaudited)

 

Presented below is information on the Company’s annualized return on average tangible stockholders’ equity (Non-GAAP):

 
(dollars in thousands) Three Months Ended March 31,
 

2012

2011

 
Net (loss)/income from continuing operations $

(3,769

) 1

$

6,269

1

 
Plus: Amortization of intangibles, net of tax   124     794  
 
Net (loss)/income from continuing operations, adjusted (non-GAAP) (3,645 ) 7,063
 
Net (loss)/income from continuing operations, adjusted (non-GAAP) - annualized $ (14,580 ) $ 28,252  
 
 
Average total stockholders’ equity (GAAP) $ 257,560 $ 351,579
 
Plus: non-GAAP adjustments to net (loss)/income from continuing operations

947

1

(2,330

) 1

 
Less: Average intangible assets   (25,345 )   (121,264 )
 
Average tangible stockholders’ equity (non-GAAP) $ 233,162   $ 227,985  
 
Annualized return on tangible equity (non-GAAP)   (6.3 %)   12.4 %
 

Return on Average Stockholders’ Equity (GAAP)

Presented below is information on the Company’s annualized return on average stockholders’ equity, which is the most directly comparable GAAP metric to the Non-GAAP metric above:

       
(dollars in thousands) Three Months Ended March 31,
   

2012

2011

 
Net (loss)/income from continuing operations $ (4,716 ) $ 8,599  
 
Net (loss)/income from continuing operations - annualized $ (18,864 ) $ 34,396  
 
 
Average total stockholders’ equity $ 257,560   $ 351,579  
 
Annualized return on stockholders’ equity   (7.3 %)   9.8 %
 

1 Designates non-GAAP financial results. A reconciliation of the Company’s GAAP results to non-GAAP financial results is set forth above under the caption “Reconciliation of GAAP to Non-GAAP Income from Continuing Operations.”

Conference Call Information

The Company will hold a conference call today, May 3, 2012, at 5:15 P.M. (EDT). This event can be accessed on the Investor Relations portion of the Gleacher & Company website at www.gleacher.com, as well as through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents ( www.streetevents.com), a password protected event management site. To participate on the call, please dial 888.679.8034 (domestic) or 617.213.4847 (international), participant passcode 23909481, or request the Gleacher & Company earnings call.

Pre-registration is available at any time prior to and during the call, which provides immediate entry into the call. Pre-registration can be accessed at the following website:

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