Compensation and Benefits
Compensation and employee benefits expense for the second quarter 2012 decreased to $25.4 million from $25.6 million for the year-ago quarter. As a percentage of net revenue, compensation and benefits decreased to 75.1% from 77.2% of net revenue in the second quarter 2011.
General and Administrative Expenses
General and administrative expenses were $7.1 million, comprising 21.2% of net revenue compared to $6.5 million, or 19.7% of net revenue for the second quarter 2011. The increase was the result of the inclusion of $500,000 of operating expenses from the recent acquisition of the Company’s Latin America affiliate and an increase in the allowance for doubtful accounts due to the increase in accounts receivable.Income Tax Rate The effective income tax rate for the second quarter of 2012 was 47.7% compared to 38.7% for the second quarter of 2011. The increase is due to delays in the realization of foreign income tax payments as credits against the current U.S. tax obligation until foreign taxable income is generated. The Company is taking action in all non-U.S. markets to mitigate the impact of its tax rate going forward. Cash The cash balance at June 30, 2012 was $13.8 million compared to $19.0 million in the second quarter 2011, reflecting the cash used in investing activities related to the purchase of the Company’s Latin America affiliate. The cash balance at March 31, 2012 was $7.2 million. Six-Month Financial Results For the six months ended June 30, 2012, revenue totaled $66.2 million, a 4.1% increase over the $63.6 million reported for the six months ended June 30, 2011. Operating income for the six month period was $1.8 million compared with $2.0 million for the prior year period. For the six months to date, operating margin was 2.6% compared to 3.2% for the year-ago period.