- 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|
|(In thousands of dollars)||2012||2012||2011||2012||2011|
|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|
|Net revenues - operating segments||43,200||62,126||54,585||105,326||140,758|
|Pre-tax (loss)/income from continuing operations:|
|MBS & Rates||(1,746||)||5,487||6,542||3,741||25,407|
|Pre-tax (loss)/income - operating segments||(778||)||4,175||*||9,450||3,397||30,670|
|*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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