UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event
Reported): March 12, 2015
FXCM Inc.
(Exact Name of Registrant as Specified in
its Charter)
| Delaware |
|
001-34986 |
|
27-3268672 |
| (State or Other Jurisdiction of |
|
(Commission File Number) |
|
(IRS Employer |
| Incorporation) |
|
|
|
Identification No.) |
55 Water Street, FL 50 New York, NY,
10041
(Address of Principal Executive Offices)
(Zip Code)
(646) 432-2986
(Registrant’s Telephone Number, Including
Area Code)
Not Applicable
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and
Financial Condition
On March 12, 2015, FXCM Inc. (“the Company”) issued
a press release announcing financial results for its fourth quarter and year ended December 31, 2014. The Company also released
its monthly business metrics for February 2015. A copy of this press release is furnished as Exhibit 99.1 to this Form
8-K and is hereby incorporated by reference in this Item 2.02.
The information in this Current Report on Form 8-K and the Exhibit
attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure
The information set forth under Item 2.02, “Results of
Operations and Financial Condition”, is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| (a) |
Financial statements of businesses acquired: None |
| (b) |
Pro forma financial information: None |
| (c) |
Shell company transactions: None |
| (d) |
Exhibits: Press release, dated March 12, 2015 issued by FXCM Inc. |
| Exhibit No. |
|
Exhibit Description |
| |
|
|
| 99.1** |
|
Press Release dated March 12, 2015 |
** Furnished herewith.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
FXCM INC. |
| |
|
| |
By: |
/s/Robert Lande |
| |
|
Name: |
Robert Lande |
| |
|
Title: |
Chief Financial Officer |
Date: March 12, 2015
Exhibit Index
| Exhibit No. |
|
Description |
| |
|
|
| 99.1 |
|
Press Release dated as of March 12, 2015 |
Exhibit 99.1
FXCM Inc. Announces
Fourth Quarter 2014 Results
Releases February
2015 Operating Metrics
Fourth Quarter 2014 Highlights:
| · | U.S.
GAAP revenues of $134.7 million, up 19% versus the same period in 2013 and up 16% from
the third quarter 2014 |
| · | U.S.
GAAP net income attributable to FXCM Inc. of $15.8 million or $0.35 per fully diluted
share versus $0.08 per fully diluted share for the same period in 2013 and $0.05 per
fully diluted share in the third quarter 2014 |
| · | Adjusted
EBITDA of $40.8 million, up 53% versus the same period in 2013 and up 43% from the third
quarter 2014 |
| · | Net
income on an adjusted basis of $16.1 million or $0.20 per fully exchanged, fully diluted
share up 120% and 100% respectively versus the same period in 2013 and versus $8.4 million
or $0.11 per share in the third quarter 2014 |
| · | Adding
back tax-effected amortization and stock based compensation, Net income on an adjusted
basis would have been $0.27 per diluted share for the fourth quarter |
Subsequent to Year-End:
| · | On
January 15th, 2015, FXCM customers generated negative equity balances owed to us of approximately
$276 million due to the unprecedented volatility in the Swiss Franc |
| · | On
January 16th, 2015, we entered into a $300 million financing transaction with Leucadia
National Corporation |
| · | FXCM
has since repaid $12 million of the facility and is in the process of disposing of non-core
assets to further repay a portion of the debt |
February 2015 Operating Metrics
Highlights:
| · | Retail
customer trading volume(1) of $267 billion, 12% lower than February 2014 |
| · | Institutional
customer trading volume(1) of $162 billion, unchanged from February 2014 |
NEW YORK – March 12, 2015 –
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, 2014, U.S. GAAP revenues of $134.7 million, compared to $113.3 million for the quarter ended
December 31, 2013, an increase of 19%. U.S. GAAP net income attributable to FXCM Inc. was $15.8 million for the fourth quarter
2014 or $0.35 per fully diluted share, compared to U.S. GAAP net income of $3.0 million or $0.08 per fully diluted share for the
fourth quarter 2013.
For the twelve months ended December
31, 2014, U.S. GAAP revenues were $463.8 million, compared to $489.6 million for the twelve months ended December 31, 2013, a
decrease of 5%. U.S. GAAP net income attributable to FXCM Inc. was $17.2 million for the twelve months ended December 31, 2014
or $0.39 per fully diluted share, compared to U.S. GAAP net income of $14.8 million or $0.44 per fully diluted share for the twelve
months ended December 31, 2013, an increase of 16% and decrease of 11% respectively.
Adjusted EBITDA for the fourth quarter
2014 was $40.8 million, compared to $26.8 million for the fourth quarter 2013, an increase of 53%. Net income on an adjusted basis
was $16.1 million or $0.20 per fully diluted, fully exchanged share for the fourth quarter 2014, compared to Net income on an
adjusted basis of $7.3 million or $0.10 per fully diluted, fully exchanged share for the fourth quarter 2013, an increase of 120%
and 100% respectively.
Adjusted EBITDA for the twelve months
ended December 31, 2014 was $107.3 million, compared to $158.0 million for the twelve months ended December 31, 2013, a decrease
of 32%. Net income on an adjusted basis was $28.2 million or $0.35 per fully diluted, fully exchanged share for the twelve months
ended December 31, 2014, compared to $57.8 million or $0.76 per fully diluted, fully exchanged share for the twelve months ended
December 31, 2013, a decrease of 51% and 54% respectively.
Adjusted EBITDA, Net income on an adjusted
basis and Net income on an adjusted basis per fully diluted, fully exchanged 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, each as determined in accordance with U.S. GAAP,
and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Non-GAAP
Financial Measures” beginning on A-3 of this release for additional information regarding these Non-GAAP financial measures
and for reconciliations of such measures to the most directly comparable measures calculated in accordance with U.S. GAAP.
FXCM Inc. today announced certain key
operating metrics for February 2015 for its retail and institutional foreign exchange businesses. Monthly activities included:
February 2015 Operating Metrics
Retail Trading Metrics
| · | Retail
customer trading volume(1) of $267 billion in February 2015, 41% lower than
January 2015 and 12% lower than February 2014. |
| · | Average
retail customer trading volume(1) per day of $13.3 billion in February 2015,
38% lower than January 2015 and 13% lower than February 2014. |
| · | An
average of 513,931 retail client trades per day in February 2015, 22% lower than January
2015 and 28% higher than February 2014. |
| · | Tradeable
accounts(2) of 222,719 as of February 28, 2015, a decrease of 360, or 0.2%,
from January 2015, and an increase of 31,997,or 17%, from February 2014. |
Institutional Trading
Metrics
| · | Institutional
customer trading volume(1) of $162 billion in February 2015, 36% lower than
January 2015 and unchanged from February 2014. |
| · | Average
institutional trading volume(1) per day of $8.1 billion in February 2015,
33% lower than January 2015 and unchanged from February 2014. |
| · | An
average of 31,242 institutional client trades per day in February 2015, 13% lower than
January 2015 and 11% lower than February 2014. |
More information, including historical
results for each of the above metrics, can be found on the investor relations page of the Company's corporate website www.fxcm.com.
This operating data is preliminary and
subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation
to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected
in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website www.fxcm.com.
(1) Volume that FXCM customers
traded in period is translated into US dollars.
(2) A Tradeable Account
is an account with sufficient funds to place a trade in accordance with FXCM trading policies.
Selected Operating
Metrics
| | |
(Unaudited) | |
| | |
Three
Months Ended December 31, | | |
Twelve
Months Ended December 31, | |
| | |
2014 | | |
2013 | | |
%
Change | | |
2014 | | |
2013 | | |
%
Change | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Total retail trading
volume ($ in billions) | |
$ | 1,366 | | |
$ | 895 | | |
| 53 | % | |
$ | 4,049 | | |
$ | 4,068 | | |
| 0 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total institutional trading volume
($ in billions) | |
$ | 1,056 | | |
$ | 515 | | |
| 105 | % | |
$ | 3,079 | | |
$ | 2,022 | | |
| 52 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total active accounts | |
| 190,377 | | |
| 183,679 | | |
| 4 | % | |
| 190,377 | | |
| 183,679 | | |
| 4 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Trading days in period | |
| 64 | | |
| 64 | | |
| 0 | % | |
| 258 | | |
| 258 | | |
| 0 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Daily average trades | |
| 590,572 | | |
| 378,316 | | |
| 56 | % | |
| 439,362 | | |
| 437,947 | | |
| 0 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Daily average trades per active
account | |
| 3.1 | | |
| 2.1 | | |
| 48 | % | |
| 2.3 | | |
| 2.4 | | |
| -4 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Retail trading revenue per million
traded | |
$ | 69 | | |
$ | 93 | | |
| -26 | % | |
$ | 84 | | |
$ | 90 | | |
| -7 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total customer equity ($ in millions) | |
$ | 1,331.7 | | |
$ | 1,190.9 | | |
| 12 | % | |
$ | 1,331.7 | | |
$ | 1,191.0 | | |
| 12 | % |
Conference Call
As previously announced, the Company
will host a conference call to discuss the results at 4:45 p.m. (EDT). This conference call will be available to domestic participants
by dialing 877.445.4603 and 443.295.9270 for international participants. The conference ID number is 96698309.
A live audio webcast, a copy of FXCM's
earnings release, and presentation slides for this conference call will be available at http://ir.fxcm.com/.
Disclosure Regarding Forward-Looking
Statements
In addition to historical information,
this earnings release may contains "forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 and/or the Private Securities Litigation Reform Act of 1995, which
reflect FXCM's current views with respect to, among other things, its operations and financial performance in the future. These
forward-looking statements are not historical facts and are based on current expectations, estimates and projections about FXCM's
industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain
and beyond our control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation,
risks associated with the events that took place in the currency markets on January 15, 2015 and the impact to FXCM's capital
structure, risks associated with FXCM's ability to recover all or a portion of any losses, risks relating to the ability of FXCM
to satisfy the terms and conditions of or make payments pursuant to the terms of its agreements with Leucadia, risks related to
its dependence on FX market makers, market conditions and those other risks described under "Risk Factors" in FXCM Inc.'s
Annual Report on Form 10-K and other reports or documents FXCM files with, or furnishes to, the SEC from time to time, which are
accessible on the SEC website at sec.gov. This information should also be read in conjunction with FXCM's Consolidated Financial
Statements and the Notes thereto contained in FXCM's Annual Report on Form 10-K, and in other reports or documents FXCM files
with, or furnishes to, the SEC from time to time, which are accessible on the SEC website at sec.gov.
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 our SEC filings. 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.
Visit www.fxcm.com and follow
us on Twitter @FXCM, Facebook FXCM, Google+ FXCM or YouTube FXCM.
About FXCM Inc.
FXCM Inc. (NYSE:FXCM) is a leading provider
of online foreign exchange (forex) trading, CFD trading, spread betting and related services. Our mission is to provide global
traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent
trading educators, meeting strict financial standards and striving for the best online trading experience in the market.
Clients have the
advantage of mobile trading, one-click order execution and trading from real-time charts. 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, which may result in losses that could exceed your deposits, therefore
may not be suitable for all investors. Read full disclaimer.
Contacts
Jaclyn Klein, 646-432-2463
Vice-President, Corporate Communications and Investor Relations
jklein@fxcm.com
ANNEX I
| Schedule |
|
Page Number |
| |
|
|
| U.S. GAAP Results |
|
|
| Unaudited U.S. GAAP Condensed Consolidated Statements
of Operations for the Three and Twelve Months Ended December 31, 2014 and 2013 |
|
A-1 |
| Unaudited U.S. GAAP Condensed Consolidated Statements
of Financial Condition As of December 31, 2014 and December 31, 2013 |
|
A-2 |
| |
|
|
| Non-GAAP Financial Measures |
|
A-3 |
| Reconciliation of U.S. GAAP Reported to Non-GAAP
Adjusted Financial Measures |
|
A-5 |
| Reconciliation of Non-GAAP Adjusted Net Income to
Adjusted EBITDA |
|
A-8 |
| Reconciliation of Non-GAAP Measures to Non-GAAP Adjusted
Net Income Excluding Other Stock Compensation and Amortization |
|
A-9 |
FXCM Inc.
Condensed Consolidated Statements
of Operations
(In thousands, except per share amounts)
(Unaudited)
| | |
Three Months Ended December 31, | | |
Twelve Months Ended December 31, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| Revenues | |
| | | |
| | | |
| | | |
| | |
| Retail trading revenue | |
$ | 93,813 | | |
$ | 82,989 | | |
$ | 338,035 | | |
$ | 365,285 | |
| Institutional trading revenue | |
| 30,845 | | |
| 21,790 | | |
| 103,199 | | |
| 103,994 | |
| Trading revenue | |
| 124,658 | | |
| 104,779 | | |
| 441,234 | | |
| 469,279 | |
| | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| 632 | | |
| 728 | | |
| 2,525 | | |
| 2,614 | |
| Brokerage interest expense | |
| (255 | ) | |
| (71 | ) | |
| (714 | ) | |
| (258 | ) |
| Net interest income | |
| 377 | | |
| 657 | | |
| 1,811 | | |
| 2,356 | |
| | |
| | | |
| | | |
| | | |
| | |
| Other income | |
| 9,640 | | |
| 7,907 | | |
| 20,712 | | |
| 17,953 | |
| Total net revenues | |
| 134,675 | | |
| 113,343 | | |
| 463,757 | | |
| 489,588 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Compensation and benefits | |
| 25,433 | | |
| 26,541 | | |
| 111,716 | | |
| 105,470 | |
| Allocation of income to Lucid members for services provided | |
| 2,635 | | |
| 3,290 | | |
| 9,406 | | |
| 21,290 | |
| Total compensation and benefits | |
| 28,068 | | |
| 29,831 | | |
| 121,122 | | |
| 126,760 | |
| Referring broker fees | |
| 24,235 | | |
| 19,750 | | |
| 80,850 | | |
| 84,231 | |
| Advertising and marketing | |
| 4,014 | | |
| 7,278 | | |
| 22,666 | | |
| 27,091 | |
| Communication and technology | |
| 10,712 | | |
| 10,210 | | |
| 48,396 | | |
| 38,441 | |
| Trading costs, prime brokerage and clearing fees | |
| 9,571 | | |
| 7,113 | | |
| 33,828 | | |
| 30,821 | |
| General and administrative | |
| 13,910 | | |
| 14,387 | | |
| 62,808 | | |
| 68,230 | |
| Depreciation and amortization | |
| 14,152 | | |
| 16,425 | | |
| 54,945 | | |
| 53,729 | |
| Total operating expenses | |
| 104,662 | | |
| 104,994 | | |
| 424,615 | | |
| 429,303 | |
| Total operating income | |
| 30,013 | | |
| 8,349 | | |
| 39,142 | | |
| 60,285 | |
| Other Expense | |
| | | |
| | | |
| | | |
| | |
| Loss on equity method investments, net | |
| 398 | | |
| 24 | | |
| 1,308 | | |
| 752 | |
| Interest on borrowings | |
| 3,065 | | |
| 2,697 | | |
| 12,186 | | |
| 7,673 | |
| Income before income taxes | |
| 26,550 | | |
| 5,628 | | |
| 25,648 | | |
| 51,860 | |
| Income tax provision | |
| 4,353 | | |
| 231 | | |
| 6,001 | | |
| 17,024 | |
| Net income | |
| 22,197 | | |
| 5,397 | | |
| 19,647 | | |
| 34,836 | |
| Net income attributable to non-controlling interest in FXCM Holdings, LLC | |
| 7,204 | | |
| 3,660 | | |
| 8,960 | | |
| 24,850 | |
| Net loss attributable to other non-controlling interests | |
| (767 | ) | |
| (1,233 | ) | |
| (6,464 | ) | |
| (4,846 | ) |
| Net income attributable to FXCM Inc. | |
$ | 15,760 | | |
$ | 2,970 | | |
$ | 17,151 | | |
$ | 14,832 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average Class A shares outstanding - Basic | |
| 44,150 | | |
| 38,085 | | |
| 41,637 | | |
| 32,789 | |
| Weighted average Class A shares outstanding - Diluted | |
| 45,511 | | |
| 39,055 | | |
| 44,010 | | |
| 33,957 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income per Class A Share | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | 0.36 | | |
$ | 0.08 | | |
$ | 0.41 | | |
$ | 0.45 | |
| Diluted | |
$ | 0.35 | | |
$ | 0.08 | | |
$ | 0.39 | | |
$ | 0.44 | |
FXCM Inc.
Condensed Consolidated Statements
of Financial Condition
As of December 31, 2014 and December
31, 2013
(Amounts in thousands except share
data)
| | |
(Unaudited) | | |
| |
| | |
December 31, | | |
December 31, | |
| | |
2014 | | |
2013 | |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 338,814 | | |
$ | 365,245 | |
| Cash and cash equivalents, held for customers | |
| 1,331,723 | | |
| 1,190,880 | |
| Restricted time deposits | |
| 3,336 | | |
| - | |
| Trading securities | |
| 26 | | |
| - | |
| Due from brokers | |
| 37,298 | | |
| 5,450 | |
| Accounts receivables, net | |
| 10,481 | | |
| 9,953 | |
| Deferred tax asset | |
| 9,923 | | |
| 11,910 | |
| Notes receivable | |
| - | | |
| 5,992 | |
| Tax receivable | |
| 2,446 | | |
| 3,861 | |
| Total current assets | |
| 1,734,047 | | |
| 1,593,291 | |
| | |
| | | |
| | |
| Restricted time deposits | |
| 5,005 | | |
| - | |
| Deferred tax asset | |
| 179,698 | | |
| 166,576 | |
| Office, communication and computer equipment, net | |
| 48,194 | | |
| 49,165 | |
| Goodwill | |
| 323,887 | | |
| 307,936 | |
| Other intangible assets, net | |
| 57,567 | | |
| 76,713 | |
| Notes receivable | |
| 9,381 | | |
| 5,950 | |
| Other assets | |
| 29,648 | | |
| 24,316 | |
| Total assets | |
$ | 2,387,427 | | |
$ | 2,223,947 | |
| | |
| | | |
| | |
| Liabilities and Stockholders' Equity | |
| | | |
| | |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Customer account liabilities | |
$ | 1,331,723 | | |
$ | 1,190,880 | |
| Accounts payable and accrued expenses | |
| 56,039 | | |
| 69,697 | |
| Credit agreement | |
| 25,000 | | |
| - | |
| Notes payable | |
| - | | |
| 9,800 | |
| Due to brokers | |
| 16,313 | | |
| 8,652 | |
| Securities sold, not yet purchased | |
| 4,239 | | |
| - | |
| Due to related parties pursuant to tax receivable agreement | |
| 5,352 | | |
| 18,588 | |
| Total current liabilities | |
| 1,438,666 | | |
| 1,297,617 | |
| Deferred tax liability | |
| 2,835 | | |
| 3,687 | |
| Due to related parties pursuant to tax receivable agreement | |
| 145,224 | | |
| 131,670 | |
| Senior convertible notes | |
| 151,578 | | |
| 146,303 | |
| Other liabilities | |
| 6,108 | | |
| 9,289 | |
| Total liabilities | |
| 1,744,411 | | |
| 1,588,566 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders' Equity | |
| | | |
| | |
| Class A common stock, par value $0.01 per share; 3,000,000,000 shares authorized, 47,889,964 and 44,664,884 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | |
| 479 | | |
| 447 | |
| Class B common stock, par value $0.01 per share; 1,000,000 shares authorized, 34 and 41 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | |
| 1 | | |
| 1 | |
| Additional paid-in capital | |
| 273,708 | | |
| 245,426 | |
| Retained earnings | |
| 22,379 | | |
| 16,352 | |
| Accumulated other comprehensive loss | |
| (11,879 | ) | |
| (5,344 | ) |
| Total stockholders' equity, FXCM Inc. | |
| 284,688 | | |
| 256,882 | |
| Non-controlling interests | |
| 358,328 | | |
| 378,499 | |
| Total stockholders' equity | |
| 643,016 | | |
| 635,381 | |
| Total liabilities and stockholders' equity | |
$ | 2,387,427 | | |
$ | 2,223,947 | |
Non-GAAP
Financial Measures
We use Non-GAAP
financial measures to evaluate our operating performance, as well as the performance of individual employees. Management believes
that the disclosed Non-GAAP measures 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. 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, each as determined in accordance with U.S. GAAP,
and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies.
Adjusted Non-GAAP
results begin with information prepared in accordance with U.S. GAAP, adjusted to exclude certain items and reflects the conversion
of all units of FXCM Holdings, LLC (“Holdings”) for shares of Class A common stock of FXCM Inc. 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 Non-GAAP and U.S. GAAP results are as follows:
| 1. | Assumed
Exchange of Units of Holdings for FXCM Inc. Class A Shares. As a result of
the exchange of 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 Holdings
units. |
| 2. | Compensation
Expense. Adjustments have been made to eliminate expense relating to stock based
compensation relating to the Company’s IPO, costs associated with the negotiation
of an employee contract, as well as costs associated with the acquisition of V3 Markets,
LLC. Given the nature of these expenses, they are not viewed by management as expenses
incurred in the ordinary course of business and management believes it is useful to provide
the effects of eliminating these expenses. |
| 3. | Lucid
Minority Interest/Compensation Expense. Our reported U.S. GAAP results reflect the
portion of the 49.9% of Lucid earnings allocated among the non-controlling members of
Lucid based on services provided as a component of compensation expense under Allocation
of income to Lucid members for services provided. Adjustments have been made to reclassify
this allocation of Lucid's earnings attributable to non-controlling members to “Net
(loss) income attributable to other non-controlling interests”. The Company's management
believes that this reclassification provides a more meaningful view of the Company's
operating expenses and the Company's economic arrangement with Lucid's non-controlling
members. This adjustment has no impact on net income as reported by the Company. |
| 4. | Acquisition
Costs/Income. Adjustments have been made to eliminate certain acquisition
related costs/income. Given the nature of these items, they are not viewed by management
as expenses/income incurred in the ordinary course of business and management believes
it is useful to provide the effects of eliminating these items. |
| 5. | Regulatory
Costs. Adjustments have been made to eliminate certain costs (including
client reimbursements) associated with ongoing discussions and settling certain regulatory
matters. Given the nature of these expenses, they are not viewed by management as expenses
incurred in the ordinary course of business and management believes it is useful to provide
the effects of eliminating these expenses. |
| 6. | Income
Taxes. Prior to the IPO, FXCM was organized as a series of limited liability
companies and foreign corporations, and even following the IPO, not all of the Company's
income is subject to corporate-level taxes. As a result, adjustments have been made 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. This assumption is
consistent with the assumption that all of 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. In addition, adjusted income tax provision
reflects the tax effect of any Non-GAAP adjustments. |
| | |
Reconciliation
of U.S. GAAP Reported to Non-GAAP Adjusted Financial Measures(1) | |
| | |
Three Months
Ended December 31, | |
| | |
2014 | | |
2013 | |
| | |
GAAP
Basis
As Reported | | |
Non-GAAP
Adjustments | | |
Non-GAAP
Measures | | |
GAAP
Basis
As Reported | | |
Non-GAAP
Adjustments | | |
Non-GAAP
Measures | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Net revenues(2) | |
$ | 134,675 | | |
$ | (7,103 | ) | |
$ | 127,572 | | |
$ | 113,343 | | |
$ | (5,750 | ) | |
$ | 107,593 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Compensation
and benefits(3) | |
$ | 28,068 | | |
$ | (4,147 | ) | |
$ | 23,921 | | |
$ | 29,831 | | |
$ | (5,843 | ) | |
$ | 23,988 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| General and
administrative(4) | |
$ | 13,910 | | |
$ | - | | |
$ | 13,910 | | |
$ | 14,387 | | |
$ | (1,908 | ) | |
$ | 12,479 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Depreciation
and amortization(5) | |
$ | 14,152 | | |
$ | - | | |
$ | 14,152 | | |
$ | 16,425 | | |
$ | (3,454 | ) | |
$ | 12,971 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total operating income | |
$ | 30,013 | | |
$ | (2,956 | ) | |
$ | 27,057 | | |
$ | 8,349 | | |
$ | 5,455 | | |
$ | 13,804 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income taxes | |
$ | 26,550 | | |
$ | (2,956 | ) | |
$ | 23,594 | | |
$ | 5,628 | | |
$ | 5,455 | | |
$ | 11,083 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax
provision(6) | |
$ | 4,353 | | |
$ | 1,245 | | |
$ | 5,598 | | |
$ | 231 | | |
$ | 1,480 | | |
$ | 1,711 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 22,197 | | |
$ | (4,201 | ) | |
$ | 17,996 | | |
$ | 5,397 | | |
$ | 3,975 | | |
$ | 9,372 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income
attributable to non-controlling interest in FXCM Holdings, LLC(7) | |
$ | 7,204 | | |
$ | (7,204 | ) | |
$ | - | | |
$ | 3,660 | | |
$ | (3,660 | ) | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (loss)
income attributable to other non-controlling interests(8) | |
$ | (767 | ) | |
$ | 2,635 | | |
$ | 1,868 | | |
$ | (1,233 | ) | |
$ | 3,290 | | |
$ | 2,057 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income attributable to FXCM Inc. | |
$ | 15,760 | | |
$ | 368 | | |
$ | 16,128 | | |
$ | 2,970 | | |
$ | 4,345 | | |
$ | 7,315 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted weighted average shares
outstanding as reported and Non-GAAP fully exchanged, fully diluted weighted average shares outstanding(9) | |
| 45,511 | | |
| | | |
| 80,370 | | |
| 39,055 | | |
| | | |
| 76,887 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted net income per share as reported and adjusted
Non-GAAP net income per fully exchanged, fully diluted weighted average shares outstanding | |
$ | 0.35 | | |
$ | (0.15 | ) | |
$ | 0.20 | | |
$ | 0.08 | | |
$ | 0.02 | | |
$ | 0.10 | |
| | |
Reconciliation
of U.S. GAAP Reported to Non-GAAP Adjusted Financial Measures(1) | |
| | |
Twelve Months
Ended December 31, | |
| | |
2014 | | |
2013 | |
| | |
GAAP
Basis
As Reported | | |
Non-GAAP
Adjustments | | |
Non-GAAP
Measures | | |
GAAP
Basis
As Reported | | |
Non-GAAP
Adjustments | | |
Non-GAAP
Measures | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Net revenues(2) | |
$ | 463,757 | | |
$ | (11,136 | ) | |
$ | 452,621 | | |
$ | 489,588 | | |
$ | (5,750 | ) | |
$ | 483,838 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Compensation
and benefits(3) | |
$ | 121,122 | | |
$ | (17,557 | ) | |
$ | 103,565 | | |
$ | 126,760 | | |
$ | (33,579 | ) | |
$ | 93,181 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Communication
and technology(10) | |
$ | 48,396 | | |
$ | (206 | ) | |
$ | 48,190 | | |
$ | 38,441 | | |
$ | - | | |
$ | 38,441 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| General and
administrative(4) | |
$ | 62,808 | | |
$ | (7,860 | ) | |
$ | 54,948 | | |
$ | 68,230 | | |
$ | (16,908 | ) | |
$ | 51,322 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Depreciation
and amortization(5) | |
$ | 54,945 | | |
$ | (1,097 | ) | |
$ | 53,848 | | |
$ | 53,729 | | |
$ | (3,454 | ) | |
$ | 50,275 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total operating income | |
$ | 39,142 | | |
$ | 15,584 | | |
$ | 54,726 | | |
$ | 60,285 | | |
$ | 48,191 | | |
$ | 108,476 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income taxes | |
$ | 25,648 | | |
$ | 15,584 | | |
$ | 41,232 | | |
$ | 51,860 | | |
$ | 48,191 | | |
$ | 100,051 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax
provision(6) | |
$ | 6,001 | | |
$ | 3,761 | | |
$ | 9,762 | | |
$ | 17,024 | | |
$ | 8,783 | | |
$ | 25,807 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 19,647 | | |
$ | 11,823 | | |
$ | 31,470 | | |
$ | 34,836 | | |
$ | 39,408 | | |
$ | 74,244 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income
attributable to non-controlling interest in FXCM Holdings, LLC(7) | |
$ | 8,960 | | |
$ | (8,960 | ) | |
$ | - | | |
$ | 24,850 | | |
$ | (24,850 | ) | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (loss)
income attributable to other non-controlling interests(8) | |
$ | (6,464 | ) | |
$ | 9,696 | | |
$ | 3,232 | | |
$ | (4,846 | ) | |
$ | 21,290 | | |
$ | 16,444 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income attributable to FXCM Inc. | |
$ | 17,151 | | |
$ | 11,087 | | |
$ | 28,238 | | |
$ | 14,832 | | |
$ | 42,968 | | |
$ | 57,800 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted weighted average shares
outstanding as reported and Non-GAAP fully exchanged, fully diluted weighted average shares outstanding(9) | |
| 44,010 | | |
| | | |
| 79,792 | | |
| 33,957 | | |
| | | |
| 76,361 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted net income per share as reported and adjusted
Non-GAAP net income per fully exchanged, fully diluted weighted average shares outstanding | |
$ | 0.39 | | |
$ | (0.04 | ) | |
$ | 0.35 | | |
$ | 0.44 | | |
$ | 0.32 | | |
$ | 0.76 | |
(1) The presentation includes Non-GAAP
financial measures. These Non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles,
and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with U.S.
GAAP.
(2) Represents the elimination of a
$7.4 million benefit in 2014 ($0.3 million Q3 2014 & $7.1 million Q4 2014) and a $1.2 million charge in Q4 2013 attributable
to the remeasurement of our tax receivable agreement liability to reflect a revised effective tax rate and the elimination of
a $3.7 million and $6.9 million benefit recorded to reduce the contingent consideration related to the Faros acquisition in Q1
2014 and Q4 2013 respectively.
(3) Represents the elimination of stock-based
compensation associated with the IPO, expense of $3.5 million connected to the renegotiation of an employment contract in Q3 2013,
the elimination of V3 acquisition costs in Q1 2014 and the reclassification of the 49.9% of Lucid’s earnings allocated among
the non-controlling interests recorded as compensation for U.S. GAAP purposes to Net (loss) income attributable to other non-controlling
interests.
(4) Represents the net expense relating
to pre-August 2010 trade execution practices and other regulatory fees and fines in 2014 & 2013, the charge related to put
option payments for Online Courses in 2014 (Q2 2014 $1.3 million and Q3 2014 $2.3 million) and the elimination of V3 acquisition
costs in Q1 2014.
(5) Represents a $1.1 million and $3.5
million impairment charge to write down the value of an electronic foreign exchange trading platform in Q3 2014 and Q4 2013 respectively.
(6) Represents an adjustment to reflect
the assumed effective corporate tax rate of approximately 23.7% and 15.4% for the three months ended December 31, 2014 and 2013,
respectively, and 23.7% and 25.8% for the twelve months ended December 31, 2014 and 2013, 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’ Holdings units for shares of Class A common stock of FXCM
Inc. and reflects the tax effect of any Non-GAAP adjustments.
(7) Represents the elimination of the
non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM Inc.), as if the unitholders
had fully exchanged their Holdings units for shares of Class A common stock of FXCM Inc.
(8) Represents the reclassification
of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes
to Net (loss) income attributable to other non-controlling interests and the impact of other Non-GAAP adjustments impacting non-controlling
interests.
(9) Assumed exchange of Holdings units
for FXCM Inc. Class A shares. As a result of the exchange of Holdings units, the non-controlling interest related to these units
is converted to controlling interest.
(10) Represents the elimination of V3
acquisition costs in Q1 2014.
FXCM Inc.
Reconciliation of Non GAAP Adjusted
Net Income to Adjusted EBITDA
(In thousands)
(Unaudited )
| | |
Three Months Ended December 31, | | |
Twelve Months Ended December 31, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| Non-GAAP adjusted net income | |
$ | 16,128 | | |
$ | 7,315 | | |
$ | 28,238 | | |
$ | 57,800 | |
| Depreciation and amortization | |
| 14,152 | | |
| 12,971 | | |
| 53,848 | | |
| 50,275 | |
| Interest on borrowings | |
| 3,065 | | |
| 2,697 | | |
| 12,186 | | |
| 7,673 | |
| Income tax provision | |
| 5,598 | | |
| 1,711 | | |
| 9,762 | | |
| 25,807 | |
| Net income attributable to other non-controlling interests | |
| 1,868 | | |
| 2,057 | | |
| 3,232 | | |
| 16,444 | |
| Adjusted EBITDA | |
$ | 40,811 | | |
$ | 26,751 | | |
$ | 107,266 | | |
$ | 157,999 | |
FXCM Inc.
Reconciliation of Non-GAAP Measures
to Non GAAP adjusted net income excluding other stock compensation and amortization
(In thousands)
(Unaudited )
| | |
Three Months Ended December 31, | | |
Twelve Months Ended December 31, | |
| | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| | |
| | |
| | |
| | |
| |
| Non-GAAP adjusted net income | |
$ | 16,128 | | |
$ | 7,315 | | |
$ | 28,238 | | |
$ | 57,800 | |
| All other stock compensation | |
| 1,297 | | |
| 1,467 | | |
| 5,166 | | |
| 5,128 | |
| Amortization of intangibles | |
| 7,846 | | |
| 6,906 | | |
| 29,774 | | |
| 27,902 | |
| Amortization of debt discount | |
| 1,342 | | |
| 1,260 | | |
| 5,276 | | |
| 2,904 | |
| Non-Controlling interest adjustment related to the above adjustments | |
| (3,358 | ) | |
| (3,265 | ) | |
| (13,357 | ) | |
| (12,376 | ) |
| Tax adjustments related to the above | |
| (1,598 | )(1) | |
| (920 | )(1) | |
| (6,151 | )(1) | |
| (5,493 | )(1) |
| Non-GAAP adjusted net income excluding other stock compensation and amortization | |
$ | 21,657 | | |
$ | 12,763 | | |
$ | 48,946 | | |
$ | 75,865 | |
| | |
| | | |
| | | |
| | | |
| | |
| GAAP Weighted average Class A shares outstanding - Diluted | |
| 45,511 | | |
| 39,055 | | |
| 44,010 | | |
| 33,957 | |
| FXCM Holdings Conversion | |
| 34,859 | (2) | |
| 37,832 | (2) | |
| 35,782 | (2) | |
| 42,404 | (2) |
| Non-GAAP Weighted average shares outstanding - Diluted | |
| 80,370 | | |
| 76,887 | | |
| 79,792 | | |
| 76,361 | |
| | |
| | | |
| | | |
| | | |
| | |
| Non-GAAP adjusted net income per Adjusted Non GAAP share - diluted | |
$ | 0.20 | | |
$ | 0.10 | | |
$ | 0.35 | | |
$ | 0.76 | |
| Non-GAAP Adjusted Net Income excluding other stock compensation and amortization per Adjusted Non GAAP Share - Diluted | |
$ | 0.27 | | |
$ | 0.17 | | |
$ | 0.61 | | |
$ | 0.99 | |
(1) Represents an adjustment to reflect
the assumed effective corporate tax rate of approximately 23.7% and 15.4% for the three months ended December 31, 2014 and 2013,
respectively, and 23.7% and 25.8% for the twelve months ended December 31, 2014 and 2013, 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’ Holdings units for shares of Class A common stock of FXCM
Inc. and reflects the tax effect of any Non GAAP adjustments.
(2) Diluted shares assuming all unitholders
had fully exchanged their Holdings units for shares of Class A common stock of FXCM Inc.
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