FXCM Inc (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended December 31, 2010, revenues increased $21.5 million or 29% to $96.1 million, compared to $74.6 million for the corresponding prior year quarter. Adjusted Pro Forma EBITDA for the quarter was $32.3 million, an increase of $9.5 million or 42%, compared to $22.8 million, for the prior year quarter. Adjusted Pro Forma Net Income was $18.1 million, or $0.24 per share on a fully exchanged, fully diluted basis, compared to $13.2 million, or $0.18 per share, for the corresponding prior year quarter, an increase of 37%.

Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC units into FXCM Inc. Class A shares, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity’s tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring compensation charges relating to FXCM Inc.’s initial public offering.

For the year ended December 31, 2010, revenues increased $37.6 million or 12% to $360.3 million, compared to $322.7 million for the corresponding prior year. Adjusted Pro Forma EBITDA for the year was $120.5 million, an increase of $16.9 million or 16%, compared to $103.6 million, for the prior year. Adjusted Pro Forma Net Income was $69.6 million, or $0.92 on a fully exchanged, fully diluted basis, compared to $61.4 million, or $0.82 per share, for the corresponding prior year, an increase of 13%.

U.S. GAAP net income for the fourth quarter 2010 was $20.8 million of which $0.2 million or $0.01 per fully diluted share was attributable to FXCM Inc. for the post-IPO period of December 7, 2010 through December 31, 2010. Following the completion of FXCM Inc.’s initial public offering on December 7, 2010, FXCM Holdings, LLC is consolidated into the results of FXCM Inc. Prior to the initial public offering, FXCM Inc. did not engage in any business or activities except in connection with its formation.

“FXCM delivered strong growth in the quarter – growing tradeable accounts by 25%, revenues by 29% and Adjusted Pro Forma EBITDA by 42% versus the fourth quarter 2009,” said Drew Niv, Chief Executive Officer.

“We also expanded our presence geographically with the acquisition of ODL Group, the third largest FX operator in the U.K. which gives us a much stronger position in Europe,” he continued. “And we are pleased to announce today that we have entered into a Memorandum of Understanding to acquire the retail FX business of GCI Capital of Japan with over 20,000 active accounts and $100 million in customer equity. We intend to merge this business with the Japanese subsidiary of ODL, which would provide FXCM with a major presence in Japan - the world’s largest retail FX market.”

“Lastly, we are pleased to have completed our initial public offering on the New York Stock Exchange in the fourth quarter. We believe that being a public company will give our customers greater comfort in trading through FXCM and further demonstrate that our agency model differentiates us from our competition.”

Consolidated Adjusted Pro Forma and U.S. GAAP Results
    Adjusted Pro Forma (thousands except per share amounts)

Three Months Ended December 31,
   

Twelve Months Ended December 31,
2010   2009   % Change 2010   2009   % Change
 
Total Revenues $

96,127

 
$

74,629

 
29 %

$

360,277

 

$

322,730

 
12 %
 
Referring broker fees 19,685 15,841 24 % 81,365 76,628 6 %
Compensation and benefits 17,026 16,645 2 % 69,349 62,588 11 %
Other expenses   27,145     19,361   40 %   89,101     79,959   11 %
 
EBITDA   32,271     22,782   42 %   120,462     103,555   16 %
 
Depreciation and amortization 4,014 1,742 130 % 9,306 6,542 42 %
 
Income before income taxes   28,257     21,040   34 %   111,156     97,013   15 %
 
Income tax provision 10,117 7,805 30 % 41,507 35,634 16 %
 
Net Income   18,140     13,235   37 %   69,649     61,379   13 %
 
Net income attributable to non-controlling interest - - - - - -
       
Net Income Attributable to FXCM Inc. $ 18,140   $ 13,235   37 % $ 69,649   $ 61,379   13 %
 
Pro forma fully exchanged, fully diluted shares outstanding 75,300 75,300 - 75,300 75,300 -
 
Earnings Per Share $ 0.24   $ 0.18   37 % $ 0.92   $ 0.82   13 %
 
  U.S. GAAP (thousands except per share amounts)

Three Months Ended December 31,
 

Twelve Months Ended December 31,
2010   2009   % Change 2010   2009   % Change
 
Total Revenues

$

96,127

 

$

74,629

 
29 %

$

360,277

 

$

322,730

 
12 %
 
Referring broker fees 19,685 15,841 24 % 81,365 76,628 6 %
Compensation and benefits 23,872 16,645 43 % 76,195 62,588 22 %
Other expenses   27,145     19,361   40 %   89,101     79,959   11 %
 
EBITDA   25,425     22,782   12 %   113,616     103,555   10 %
 
Depreciation and amortization 4,014 1,742 130 % 9,306 6,542 42 %
 
Income before income taxes   21,411     21,040   2 %   104,310     97,013   8 %
 
Income tax provision 632 2,420 -74 % 4,149 10,053 -59 %
 
Net Income   20,779     18,620   12 %   100,161     86,960   15 %
 
Net income attributable to non-controlling interest 20,633 18,620 11 % 100,015 86,960 15 %
       
Net Income Attributable to FXCM Inc. $ 146   $ -   $ 146   $ -  
 
 

December 7, 2010throughDecember 31, 2010
 
Net Income (in thousands) $ 146  
 
Net Income per Class A Share
Basic and Diluted $ 0.01  
 
Average Class A shares outstanding   17,319  
 

Selected Operating Metrics
    (Unaudited)

Three Months Ended December 31,
     

Twelve Months Ended December 31,
  2010       2009     % Change     2010       2009     % Change  
       
Total trading volume ($ in billions) $

836

 
$

835

 
0.1 % $

3,178

 
$

3,504

 
-9 %
 
Total tradeable accounts 175,240 140,565 25 % 175,240 140,565 25 %
-- Standard account 118,207 86,186 37 % 118,207 86,186 37 %
-- Micro account 57,033 54,379 5 % 57,033 54,379 5 %
 
Total active accounts 136,427 116,919 17 % 136,427 116,919 17 %
 
Trading days in period 66 65 260 259
 
Daily average trades 317,658 313,035 1 % 315,210 347,104 -9 %
 
Daily average trades per active account 2.3 2.7 -15 % 2.5 3.4 -26 %
 
Retail trading revenue per million traded $ 100 $ 80 25 % $ 100 $ 83 20 %
 
Total customer equity ($ in millions) $ 641 $ 354 81 % $ 641 $ 354 81 %

Non-GAAP Financial Measures

Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per fully diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, as determined in accordance with GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures

Declaration of Quarterly Dividend

The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on April 8, 2011 to Class A stockholders of record at the close of business on March 25, 2011.

Conference Call

As previously announced, FXCM Inc. will host a conference call to discuss the results at 8:30 a.m. (EST) today. This conference call will be available by dialing 888-680-0879 and 617-213-4856 for international participants. The conference ID number is 41994767. A live, audio webcast, a copy of FXCM Inc.'s earnings release, results presentation and replay of this conference call will also be available at http://ir.fxcm.com/.

Disclosure Regarding Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s prospectus dated December 1, 2010, filed with the Securities and Exchange Commission in accordance with Rule 424(b) of the Securities Act on December 3, 2010, as such factors may be updated from time to time in FXCM Inc.’s annual report on Form 10-K and other SEC filings, which are accessible on the SEC’s website at sec.gov. In particular, we note that our statements regarding an acquisition by us of GCI Capital of Japan are subject to a number of risks and uncertainties, including the risks that we will simply fail to reach a definitive agreement regarding the proposed acquisition, that the terms of any such agreement will not be favorable to us and that the proposed acquisition will not be completed even if a definitive agreement is entered into.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in the prospectus. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

About FXCM Inc.

FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers world-wide.

At the heart of FXCM's client offering is No Dealing Desk forex trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, also offers CFD products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with forex on one platform. In addition, FXCM offers educational courses on forex trading and provides free news and market research through DailyFX.com.

Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.

ANNEX I

 
Schedule  

PageNumber
     
U.S. GAAP Results    

Unaudited U.S. GAAP Consolidated Statements of Operations for the Three andTwelve Months Ended December 31, 2010 and 2009
  A-1

Unaudited U.S. GAAP Consolidated Statements of Financial Conditions As ofDecember 31, 2010 and 2009
  A-2
     
Adjusted Pro Forma Results   A-3

Unaudited Adjusted Pro Forma and U.S. GAAP Consolidated Statements ofOperations for the Three Months Ended December 31, 2010 and 2009
  A-4

Unaudited Adjusted Pro Forma and U.S. GAAP Consolidated Statements ofOperations for the Twelve Months Ended December 31, 2010 and 2009
  A-5
     
Reconciliation of EBITDA to U.S. GAAP Net Income   A-6
 
FXCM Inc.Consolidated Statement of Operations(In thousands, except per share amounts)(Unaudited )
 
 

Three Months Ended December 31,
 

Years Ended December 31,
  2010       2009     2010       2009  
Revenues  

 
Retail trading revenues $

83,865

 

 
$

66,437

 
$

318,472

 
$

291,668

 
Institutional trading revenues 7,054 5,740 27,833 21,107
Interest Income 880 367 2,373 1,289
Other Income   4,328     2,085     11,599     8,666  
 
Total revenues   96,127     74,629     360,277     322,730  
 
Expenses
 
Referring broker fees 19,685 15,841 81,365 76,628
Compensation and benefits 23,872 16,645 76,195 62,588
Advertising and marketing 6,873 5,004 23,788 29,355
Communication and technology 7,948 6,429 27,120 24,026
General and administrative 12,285 7,903 38,077 26,453
Depreciation and amortization 4,014 1,742 9,306 6,542
Interest expense   39     25     116     125  
 
Total expenses   74,716     53,589     255,967     225,717  
 
Income before income taxes 21,411 21,040 104,310 97,013
Income tax provision   632     2,420     4,149     10,053  
Net income 20,779 18,620 100,161 86,960
Net income attributable to non-controlling interest   20,633     18,620     100,015     86,960  
Net income attributable to FXCM, Inc. $ 146   $ -   $ 146   $ -  
 
 
December 7, 2010throughDecember 31, 2010
 
Net Income (in thousands) $ 146  
 
Net Income per Class A Share
Basic and Diluted $ 0.01  
 
Average Class A shares outstanding   17,319  
 

A-1
 
FXCM Inc.Consolidated Statements of Financial ConditionAs of December 31, 2010 and 2009(Amounts in thousands)(Unaudited)
     

December 31,2010
 

December 31,2009
 
Assets
 
Current assets
Cash and cash equivalents $

193,330

 
$

139,858

 
Cash and cash equivalents, held for customers 641,152 353,825
Due from brokers 125 1,581
Accounts receivables 18,324 2,892
Deferred tax asset   7,625       -  
 
Total current assets 860,556 498,156
 
Deferred tax asset 90,107 480
Tax receivable 1,643 -
Office, communication and computer equipment, net 18,755 10,121
Intangible assets and goodwill, net 64,888 1,823
Other assets   12,368     7,356  
 
Total assets $ 1,048,317   $ 517,936  
 
Liabilities and Equity
 
Current liabilities
Customer account liabilities $ 641,152 $ 353,825
Accounts payable and accrued expenses 37,470 20,559
Due to brokers 13,314 764
Deferred tax liability - current 1,844 -
Due to related parties - pursuant to tax receivable agreement 3,817 -
Deferred revenue   6,000     6,000  
Total current liabilities   703,597     381,148  
 
Deferred tax liability 5,826
Due to related parties - pursuant to tax receivable agreement 70,419
Deferred revenue   -     6,000  
 
Total liabilities   779,842     387,148  
 
Commitments and Contingencies
 
Stockholders' equity
Class A common stock, par value $0.01 per share; 173 -
3,000,000 shares authorized, 17,319,000 and 0 shares issued
and outstanding as of December 31, 2010 and 2009, respectively
Class B common stock, par value $0.01 per share; - -
1,000,000 shares authorized, 100 and 0 shares issued
and outstanding as of December 31, 2010 and 2009, respectively
Additional paid-in-capital 101,956 -
Retained earnings 146 -
Accumulated other comprehensive income   27     -  
Total stockholders' equity of FXCM, Inc. 102,302 -
Non-controlling interest 166,173 -
FXCM Holdings, LLC members' equity prior to reorganization     130,788  
 
Total stockholders' equity / members' equity   268,475     130,788  
 
Total liabilities and stockholders' equity $ 1,048,317   $ 517,936  
 

A-2

Adjusted Pro Forma Results

Throughout the discussion of FXCM Inc.’s results, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), adjusted to exclude certain items relating to the initial public offering of FXCM Inc. and reflects the conversion of all units of FXCM Holdings, LLC for shares of Class A common stock of FXCM Inc. FXCM believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare FXCM’s results across several periods and facilitate an understanding of FXCM’s operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:
1. Assumed Exchange of Units of FXCM Holdings, LLC for FXCM Inc. Class A Shares. As a result of the exchange of FXCM Holdings units, the non-controlling interest related to these units is converted to controlling interest. The Company’s management believes that it is useful to provide the per-share effect associated with the assumed exchange of all FXCM Holdings units.
 
2. Initial Public Offering Related Expense. The Company has reflected charges in relation to its initial public offering. The Company’s management believes that this adjustment results in a more meaningful comparison with prior period results.
 
3. Income Taxes. FXCM was prior to the initial public offering organized as a series of limited liability companies and foreign corporations, and even following the initial public offering not all of the Company’s income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted Pro Forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are made directly to stockholders’ equity. This assumption is consistent with the assumption that all FXCM Holdings units are exchanged for shares of FXCM Inc. Class A common stock, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.

A-3

 
FXCM Inc.Adjusted Pro Forma Consolidated Statement of Operations(In thousands, except per share amounts)(Unaudited )
  Three Months Ended December 31,
2010   2009
AsReported       Adjustments   AdjustedPro Forma AsReported       Adjustments     AdjustedPro Forma
Revenues
 
Retail trading revenues $ 83,865 - $ 83,865 $ 66,437 - $ 66,437
Institutional trading revenues 7,054 - 7,054 5,740 - 5,740
Interest Income 880 - 880 367 - 367
Other Income   4,328   -     4,328   2,085   -     2,085
 
Total revenues   96,127   -     96,127   74,629   -     74,629
 
Expenses
 
Referring broker fees 19,685 - 19,685 15,841 - 15,841
Compensation and benefits 23,872 (6,846 )

(1)
17,026 16,645 - 16,645
Advertising and marketing 6,873 - 6,873 5,004 - 5,004
Communication and technology 7,948 - 7,948 6,429 - 6,429
General and administrative 12,285 - 12,285 7,903 - 7,903
Depreciation and amortization 4,014 - 4,014 1,742 - 1,742
Interest expense   39   -     39   25   -     25
 
Total expenses   74,716   (6,846 )   67,870   53,589   -     53,589
 
Income before income taxes 21,411 6,846 28,257 21,040 - 21,040
Income tax provision   632   9,485  

(2)
  10,117   2,420  

5,385
 

(2)
  7,805
Net income 20,779 (2,639 ) 18,140 18,620 (5,385 ) 13,235
Net income attributable to non-controlling interest   20,633   (20,633 )

(3)
  -   18,620   (18,620 )

(3)
  -
Net income attributable to FXCM, Inc. $ 146 $ 17,994   $ 18,140 $ - $ 13,235   $ 13,235
 
 
Pro Forma fully exchanged, fully diluted shares outstanding   75,300

 (4)
  75,300

 (4)
 
Adjusted Pro Forma net income per fully exchanged, fully diluted shares outstanding $ 0.24 $ 0.18
 
 
(1) Represents the elimination of onetime charges associated with certain arrangements with a former employee and our CFO as a result of the IPO as well as the equity-based compensation associated with the IPO.
 
(2) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 35.8% and 37.1% for the three months ended December 31, 2010 and 2009, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders membership units of Class B common stock of the Company into Class A common stock of the Company.
 
(3) Represents the elimination of the non-controlling interest associates with the ownership by existing unitholders of FXCM Holdings, LLC (excluding FXCM, Inc.), as if the unitholders had fully exchanged their membership units and Class B common stock of the Company for shares of Class A common stock of the Company.
 
(4) Fully diluted shares assuming all unitholders had fully exchanged their membership units and Class B common stock of the Company for shares of Class A common stock of the Company.
 

A-4
FXCM Inc.
Adjusted Pro Forma Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited )
  Year Ended December 31,
2010   2009
AsReported     Adjustments   AdjustedPro Forma AsReported       Adjustments   AdjustedPro Forma
Revenues
 
Retail trading revenues $ 318,472 - $ 318,472 $ 291,668 - $ 291,668
Institutional trading revenues 27,833 - 27,833 21,107 - 21,107
Interest Income 2,373 - 2,373 1,289 - 1,289
Other Income   11,599   -   11,599   8,666   -   8,666
 
Total revenues   360,277   -   360,277   322,730   -   322,730
 
Expenses
 
Referring broker fees 81,365 - 81,365 76,628 - 76,628
Compensation and benefits 76,195 (6,846)

 (1)
69,349 62,588 - 62,588
Advertising and marketing 23,788 - 23,788 29,355 - 29,355
Communication and technology 27,120 - 27,120 24,026 - 24,026
General and administrative 38,077 - 38,077 26,453 - 26,453
Depreciation and amortization 9,306 - 9,306 6,542 - 6,542
Interest expense   116   -   116   125   -   125
 
Total expenses   255,967   (6,846)   249,121   225,717   -   225,717
 
Income before income taxes 104,310 6,846 111,156 97,013 - 97,013
Income tax provision   4,149   37,358

 (2)
  41,507   10,053   25,581

 (2)
  35,634
Net income 100,161 (30,512) 69,649 86,960 (25,581) 61,379
Net income attributable to non-controlling interest   100,015   (100,015)

 (3)
  -   86,960   (86,960)

 (3)
  -
Net income attributable to FXCM, Inc. $ 146 $ 69,503 $ 69,649 $ - $ 61,379 $ 61,379
 
 
Pro Forma fully exchanged, fully diluted shares outstanding   75,300

 (4)
  75,300

 (4)
 
Adjusted Pro Forma net income per fully exchanged, fully diluted shares outstanding $ 0.92 $ 0.82
 
 
 
(1) Represents the elimination of onetime charges associated with certain arrangements with a former employee and our CFO as a result of the IPO as well as the equity-based compensation associated with the IPO.
 
(2) Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 37.3% and 36.7% for the twelve months ended December 31, 2010 and 2009, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders membership units of Class B common stock of the Company into Class A common stock of the Company.
 
(3) Represents the elimination of the non-controlling interest associates with the ownership by existing unitholders of FXCM Holdings, LLC (excluding FXCM, Inc.), as if the unitholders had fully exchanged their membership units and Class B common stock of the Company for shares of Class A common stock of the Company.
 
(4) Fully diluted shares assuming all unitholders had fully exchanged their membership units and Class B common stock of the Company for shares of Class A common stock of the Company.

A-5
FXCM Inc.
Reconciliation of EBITDA to Net Income
(In thousands)
(Unaudited )
               

Three Months Ended December 31,

Twelve Months Ended December 31,
Adjusted Pro Forma U.S. GAAP Adjusted Pro Forma U.S. GAAP
2010 2009 2010 2009 2010 2009 2010 2009
 
Revenues 96,127 74,629 96,127 74,629 360,277 322,730 360,277 322,730
 
Net income attributable to FXCM Inc. 18,140 13,235 146 - 69,649 61,379 146 -
Net income attributable to noncontrolling interest - - 20,633 18,620 - - 100,015 86,960
Provision for income taxes 10,117 7,805 632 2,420 41,507 35,634 4,149 10,053
Depreciation and amortization 4,014 1,742 4,014 1,742 9,306 6,542 9,306 6,542
EBITDA 32,271 22,782 25,425 22,782 120,462 103,555 113,616 103,555

A-6

Copyright Business Wire 2010