The Company has announced that it is pursuing a sale of this business. See “ClearPoint Recent Developments” below for additional information.
Net revenues were $1.2 million for the quarter ended September 30, 2012, relatively flat compared to the second quarter of 2012 and a decline of $3.7 million compared to the third quarter of 2011. The reduction in net revenues when compared to the third quarter of 2011 was primarily due to the changes in value of the Company’s FATV investment.
Consolidated Compensation and Benefits Expenses (including Non-GAAP results)Compensation and benefits expense was $25.5 million ($26.9 million on a non-GAAP basis) for the third quarter of 2012, a decline of $7.1 million ($5.8 million on a non-GAAP basis) compared to compensation and benefits expense in the second quarter of 2012, and a decline of $7.2 million ($3.9 million on a non-GAAP basis) compared to compensation and benefits expense in the third quarter of 2011. Compensation and benefits expense as a percentage of net revenues was 58.9% (62.0% on a non-GAAP basis) for the third quarter of 2012, compared to 73.0% for the second quarter of 2012 and 60.3% (56.8% on a non-GAAP basis) for the third quarter of 2011. The improvement in the Company’s non-GAAP compensation as a percentage of net revenue when compared to the second quarter of 2012 was primarily a result of the improved performance of the MBS & Rates division and reduced compensation expense in ClearPoint resulting from the rightsizing plan implemented in the second quarter. The non-GAAP compensation to revenue ratio for the prior-year quarter included approximately $5.6 million of compensation reductions. These reductions, which were previously disclosed, included $3.8 million of reduced cash compensation accruals under the expectation that annual compensation for leaders of the Company’s business segments and members of senior management would be more heavily weighted toward stock-based compensation. In addition, compensation expense in the prior-year quarter decreased by approximately $1.8 million due to changes in the vesting and forfeiture provisions of stock-based compensation to be granted in connection with annual bonus compensation of the prior year. The changes resulted in compensation expense being recognized over a future vesting period, which was initially being fully recognized in that current year.