Gleacher & Company Reports Second Quarter 2012 Financial Results

- impairment of goodwill recorded during the second quarter of 2012,

- valuation allowance on deferred tax assets recorded during the second quarter of 2012,

- severance expense recorded during the first quarter of 2012,

- compensation expense related to the resignation of the former interim CEO in the second quarter of 2011, and

- the bargain purchase gain related to the ClearPoint acquisition in the first quarter of 2011.

Impairment of Goodwill

During the second quarter of 2012, the Company recorded a $21.1 million impairment of goodwill relating to both the MBS & Rates (previously captioned MBS/ABS & Rates) and Investment Banking reporting units. The evaluation was performed and the impairment was recognized as a result of the Company’s market capitalization remaining significantly below its book value for an extended period of time.

Deferred Tax Asset – Valuation Allowance

During the second quarter of 2012, the Company provided for a valuation allowance of $32.1 million on its net deferred tax assets, as the Company entered into a cumulative loss in the most recent three-year period, inclusive of the current quarter operating results. Such an assessment generally weighs the Company’s recent financial reporting losses to a greater extent than its projections of future taxable income.

The impairment of goodwill and the valuation allowance on the Company’s deferred tax assets are non-cash charges and had no impact to the Company’s liquidity or the net capital of the Company’s broker-dealer subsidiary.

For detailed information on the adjustments made, and a reconciliation of the non-GAAP financial results included in this press release to the most directly comparable GAAP financial metrics, refer to “Non-GAAP Financial Results” below. While the Company believes that the non-GAAP financial results included herein are instructive, they should only be considered together with their corresponding GAAP financial metrics.

Business Segment Results (including Non-GAAP results)
				Three Months Ended												Six Months Ended
				June				March				June				June				June
(In thousands of dollars)				2012				2012				2011				2012				2011
				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net revenues:
Investment Banking				$	8,730			$	4,533			$	8,956			$	13,263			$	16,600
MBS & Rates 1					5,282				20,331				23,770				25,613				75,476
Credit Products 2					17,872				21,717				14,851				39,589				35,316
ClearPoint					11,316				15,545				7,008				26,861				13,366
Net revenues - operating segments					43,200				62,126				54,585				105,326				140,758
Other					1,447				2,617				1,794				4,064				2,680	*
Total				$	44,647			$	64,743			$	56,379			$	109,390			$	143,438	*
Pre-tax (loss)/income from continuing operations:
Investment Banking				$	2,195			$	579			$	3,728			$	2,774			$	4,991
MBS & Rates					(1,746	)			5,487				6,542				3,741				25,407
Credit Products					1,285				962	*			631				2,247	*			2,843
ClearPoint					(2,512	)			(2,853	)			(1,451	)			(5,365	)			(2,571	)
Pre-tax (loss)/income - operating segments					(778	)			4,175	*			9,450				3,397				30,670
Other					(9,877	)*			(7,807	)			(5,349	)*			(17,684	)*			(14,171	)*
Total				$	(10,655	)*		$	(3,632	)*		$	4,101	*		$	(14,287	)*		$	16,499	*
*Designates non-GAAP financial results. A reconciliation of the Company’s GAAP results to its non-GAAP financial results is set forth below under the caption “Non-GAAP Financial Results.”

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