Thomas Weisel Partners Group, Inc. (NASDAQ: TWPG) (TSX: TWP) today
released results for the quarter ended September 30, 2008,
reporting a net loss of $109.2 million, or $3.41 per share, on net
revenues of $49.0 million. This includes an estimated non-cash
goodwill charge-off of $92.6 million or $2.89 per share. For the
nine months ended September 30, 2008 the firm reported a net loss
of $137.1 million, or $4.22 per share, on net revenues of $158.0
million. As of September 30, 2008, the firm's cash and cash
equivalents were $110.4 million.
Adjusting for certain non-cash events related to its initial
public offering, the amortization of intangible assets acquired in
the purchase of Westwind Partners and the charge-off of goodwill
acquired as a result of the acquisition of Westwind Partners, the
firm reported a non-GAAP net loss of $13.4 million, or $0.42 per
share, for the quarter ended September 30, 2008 and a non-GAAP net
loss of $34.8 million, or $1.07 per share, for the nine months
ended September 30, 2008. A reconciliation between GAAP results and
these non-GAAP measures is discussed below under "Non-GAAP
Financial Measures."
The volatility and uncertainty in the financial markets has had
an effect on the firm's stock price, leading the firm, based on
accounting standards, to take an estimated non-cash goodwill
impairment charge of $92.6 million or $2.89 per share during the
quarter. This non-cash charge-off of goodwill associated with the
Westwind acquisition does not affect reported regulatory capital or
tangible book equity.
"While the market environment remains challenging and uncertain,
we are positioning the firm to weather a protracted downturn. We
have focused our efforts on managing expenses, both compensation
and non-compensation, towards operating at break-even on a cash
basis given currently projected quarterly revenue levels. We have
also enhanced our core franchise with key hires in order to be in a
strong position to build market share when the turn in the market
occurs," said Thomas W. Weisel, Chairman and CEO of Thomas Weisel
Partners.
Third quarter and first nine months of 2008 consolidated results
include Westwind Partners and are compared with historical pro
forma combined results for Thomas Weisel Partners and Westwind
Partners. These historical pro forma amounts are further described
under "Historical Pro Forma Combined Results" below.
Business Highlights
-- Investment Banking Revenues. Investment banking revenues decreased to
$17.5 million in the third quarter of 2008 compared to $38.4 million in the
historical pro forma combined third quarter of 2007. Total transactions
for the third quarter were 13 compared to a historical pro forma combined
total of 32 in the year-ago quarter. Investment banking revenues decreased
to $52.0 million in the first nine months of 2008 compared to $136.9
million in the historical pro forma combined the first nine months of 2007.
Total transactions for the first nine months of 2008 were 68 compared to a
historical pro forma combined total of 137 in the same period of 2007. The
decline in investment banking revenues was due primarily to a challenging
capital markets environment with fewer completed deals than in the
comparable periods.
-- Brokerage Revenues. Brokerage revenues increased to $33.7 million in
the third quarter of 2008 compared to $32.9 million in the historical pro
forma combined third quarter of 2007. Brokerage revenues increased to
$104.6 million in the first nine months of 2008 compared to $95.4 million
in the historical pro forma combined first nine months of 2007, an increase
of 10%. The increase was due in large part to a solid performance in the
firm's U.S. Institutional business, growth on its Electronic Trading and
European platforms and continued improvements in its middle market efforts.
-- Asset Management Revenues. Asset management revenues decreased to a
loss of $2.3 million in the third quarter of 2008 compared to income of
$8.7 million in the historical pro forma combined third quarter of 2007.
Asset management revenues decreased to a loss of $0.1 million in the first
nine months of 2008 compared to income of $33.5 million in the historical
pro forma combined first nine months of 2007.
Management fees were $3.8 million in the third quarter, which were offset
by private equity and other securities net losses of $6.1 million. These
losses were mainly attributable to downward valuations of the firm's
warrant portfolio of $2.8 million, mark-to-market losses of two public
portfolio companies in the firm's Healthcare Venture Partners fund of $1.1
million, write-downs in the firm's Venture Partners fund of $0.8 million
and declines in the firm's other investment securities of $1.4 million.
The firm added $100 million of assets under management to its Global Growth
Partners fund of funds program in the third quarter, bringing total assets
under management to $1.4 billion. In addition, the firm recently closed a
$10 million institutional account for its Small Cap Growth Strategy run by
Ken Korngiebel in Portland.
-- Compensation and Benefits Expense Ratio. Compensation and benefits
expense decreased to $36.9 million in the third quarter of 2008 compared to
$50.4 million in the historical pro forma combined third quarter of 2007.
The non-GAAP compensation ratio, which is defined below in note (2),
increased to 68% compared to the historical pro forma combined non-GAAP
ratio of 62% in the year-ago period.
Compensation and benefits expense decreased to $119.0 million in the first
nine months of 2008 compared to $159.6 million in the historical pro forma
combined first nine months of 2007. The non-GAAP compensation ratio
increased to 70% compared to the historical pro forma combined non-GAAP
ratio of 60% in the year-ago period.
The increase in the non-GAAP compensation ratio in the third quarter and
first nine months of 2008 compared to the year-ago periods is the result of
lower revenues combined with fixed elements of compensation, such as
salaries, guarantees, taxes, benefits and equity award expense related to
grants made in prior years.
-- Solid Balance Sheet Position. At the end of the third quarter of
2008, shareholders' equity and book value per share, after adjusting for
the charge-off of goodwill, were $237 million and $7.69, respectively, and
tangible shareholders' equity and tangible book value per share were $206
million and $6.68, respectively.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2008
AND PRO FORMA SELECTED FINANCIAL DATA FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Dollar amounts in thousands, except book value per share)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
Pro Forma Pro Forma
2008 2007(5) 2008 2007(5)
--------- --------- --------- ---------
Revenue Detail:
Investment banking
Capital raising $ 3,962 $ 19,666 $ 25,204 $ 86,984
Strategic advisory 13,569 18,724 26,762 49,916
--------- --------- --------- ---------
Total investment banking 17,531 38,390 51,966 136,900
Brokerage 33,652 32,904 104,646 95,414
Asset management
Management fees 3,754 3,928 10,883 11,990
Private equity realized and
unrealized gains and
(losses) - net (2,375) 4,967 (4,133) 20,975
Other securities realized
and unrealized gains and
(losses) - net (3,708) (190) (6,865) 488
--------- --------- --------- ---------
Total asset management (2,329) 8,705 (115) 33,453
Interest income 1,828 3,765 6,701 12,760
Other revenue - - - 920
--------- --------- --------- ---------
Total revenues 50,682 83,764 163,198 279,447
Interest expense (1,636) (2,811) (5,214) (8,223)
--------- --------- --------- ---------
Net revenues $ 49,046 $ 80,953 $ 157,984 $ 271,224
========= ========= ========= =========
Investment Banking
Transactions:
Capital raising 8 24 53 115
Strategic advisory 5 8 15 22
--------- --------- --------- ---------
Total transactions 13 32 68 137
--------- --------- --------- ---------
Revenue per transaction(1) $ 1,349 $ 1,200 $ 764 $ 999
Other Metrics:
Non-GAAP compensation
ratio(2) 68.5% 62.3% 70.3% 59.9%
Non-compensation ratio(3) 268.4% 42.9% 127.7% 35.3%
IPO equity award expense $ 1,670 $ 1,862 $ 5,147 $ 5,585
Shareholders' equity 237,048 n/a 237,048 n/a
Less: Other intangible assets (31,167) n/a (31,167) n/a
--------- ---------
Tangible shareholders' equity 205,881 n/a 205,881 n/a
========= =========
Common shares outstanding(4) 30,806 n/a 30,806 n/a
Book value per share $ 7.69 n/a $ 7.69 n/a
Tangible book value per share $ 6.68 n/a $ 6.68 n/a
(1) Generally, average revenue per investment banking
transaction is lower in Canada than in the U.S.
(2) The firm's Non-GAAP compensation ratio is the ratio of the
firm's compensation and benefits expense (excluding expenses
relating to IPO equity awards) to net revenues (excluding
investment gains and losses attributable to investments in
partnerships and other securities). Without excluding these
amounts, the firm's ratio of compensation and benefits expense to
net revenues is 75.2% and 62.3% for the three months ended
September 30, 2008 and 2007, respectively. Without excluding these
amounts, the firm's ratio of compensation and benefits expense to
net revenues is 75.4% and 58.8% for the nine months ended September
30, 2008 and 2007, respectively.
(3) The firm's non-compensation ratio is the ratio of all
expense (other than compensation and benefits expense and interest
expense) to net revenues.
(4) Includes 6,639,478 exchangeable shares issued by TWP
Acquisition Company (Canada), Inc., the firm's wholly-owned
subsidiary. Each exchangeable share is exchangeable at any time
into a share of common stock of the firm, entitles the holder to
dividend and other rights substantially economically equivalent to
those of a share of common stock, and through a voting trust,
entitles the holder to a vote along with shares of common stock on
matters presented to shareholders.
(5) The pro forma amounts depict results we estimate we would
have had during the three and nine months ended September 30, 2007
if the acquisition of Westwind Partners that we consummated in
January 2008 had been consummated as of January 1, 2007. Further
information regarding these pro forma amounts is set forth below
under "Historical Pro Forma Combined Results."
Historical Pro Forma Combined Results
The firm has reported in this press release an unaudited pro
forma consolidated statement of operations for the three and nine
months ended September 30, 2007 (and information derived
therefrom), which gives effect to the firm's acquisition of
Westwind Partners as if the acquisition had occurred on January 1,
2007. This unaudited pro forma consolidated statement of operations
is based on historical financial statements of Thomas Weisel
Partners and Westwind Partners, giving effect to the acquisition
and applying the assumptions and adjustments discussed in the notes
accompanying the pro forma consolidated statement of operations
attached hereto. The unaudited pro forma consolidated financial
statements should be read in conjunction with the firm's Quarterly
Report on Form 10-Q for the period ended September 30, 2007 and its
Annual Report on Form 10-K for the year ended December 31, 2007, as
well as the historical financial statements of Westwind Partners
that are an annex to the proxy statement the firm filed with the
SEC on November 7, 2007.
The unaudited pro forma consolidated statement of operations for
the three and nine months ended September 30, 2007 was prepared
using the purchase method of accounting with Thomas Weisel Partners
treated as the accounting acquiror. The unaudited pro forma
consolidated statement of operations does not purport to be
indicative of the results of operations that would have actually
been obtained had such transactions been completed as of the
assumed date and for the period presented, or which may be obtained
in the future. The pro forma adjustments are described in the notes
accompanying the unaudited pro forma consolidated statement of
operations attached hereto and are based upon available information
and certain assumptions that management of Thomas Weisel Partners
believes are reasonable.
All amounts presented in the unaudited pro forma consolidated
statement of operations are in U.S. dollars based on the exchange
rate described in the notes accompanying the pro forma consolidated
statement of operations attached hereto.
Non-GAAP Financial Measures
The firm has reported in this press release its net loss for the
third quarter of 2008 on a non-GAAP basis by:
-- excluding $1.0 million of after-tax non-cash expense associated with
its initial grant of restricted stock units made in connection with its
initial public offering;
-- excluding $2.2 million of after-tax non-cash expense associated with
the amortization of intangible assets acquired as a result of its
acquisition of Westwind Partners on January 2, 2008; and
-- excluding $92.6 million of non-cash expense associated with the charge-
off of goodwill acquired as a result of its acquisition of Westwind
Partners.
The firm has also reported in this press release its basic and
diluted loss per share for the third quarter of 2008 on a non-GAAP
basis by:
-- using a net loss of $13.4 million as the numerator of its non-GAAP
basic and diluted loss per share calculations, which amount is derived by
beginning with its GAAP net loss of $109.2 million and adjusting to exclude
(i) the after-tax non-cash expense associated with its initial grant of
restricted stock units of $1.0 million (ii) the after-tax non-cash expense
associated with the amortization of intangible assets acquired as a result
of its acquisition of Westwind Partners of $2.2 million and (iii) the non-
cash expense associated with the charge-off of goodwill acquired as a
result of its acquisition of Westwind Partners of $92.6 million; and
-- using as the denominator of its non-GAAP basic and diluted loss per
share calculations the basic and diluted weighted average shares used,
respectively, as the denominator of its GAAP basic and diluted loss per
share calculations.
The firm has reported in this press release its net loss for the
first nine months of 2008 on a non-GAAP basis by:
-- excluding $3.0 million of after-tax non-cash expense associated with
its initial grant of restricted stock units made in connection with its
initial public offering;
-- excluding $6.7 million of after-tax non-cash expense associated with
the amortization of intangible assets acquired as a result of its
acquisition of Westwind Partners on January 2, 2008; and
-- excluding $92.6 million of non-cash expense associated with the charge-
off of goodwill acquired as a result of its acquisition of Westwind
Partners.
The firm has also reported in this press release its basic and
diluted loss per share for the first nine months of 2008 on a
non-GAAP basis by:
-- using a net loss of $34.8 million as the numerator of its non-GAAP
basic and diluted loss per share calculations, which amount is derived by
beginning with its GAAP net loss of $137.1 million and adjusting to exclude
(i) the after-tax non-cash expense associated with its initial grant of
restricted stock units of $3.0 million (ii) the after-tax non-cash expense
associated with the amortization of intangible assets acquired as a result
of its acquisition of Westwind Partners of $6.7 million and (iii) the non-
cash expense associated with the charge-off of goodwill acquired as a
result of its acquisition of Westwind Partners of $92.6 million; and
-- using as the denominator of its non-GAAP basic and diluted loss per
share calculations the basic and diluted weighted average shares used,
respectively, as the denominator of its GAAP basic and diluted loss per
share calculations.
The firm views its grant of restricted stock units in connection
with its initial public offering, its acquisition of Westwind
Partners and the related intangible amortization and goodwill
charge-off as one-time events and the firm's management has
utilized a non-GAAP calculation of net loss and non-GAAP
calculations of basic and diluted loss per share that are adjusted
in the manner described above as an additional device to aid in
understanding and analyzing the firm's financial results in the
third quarter and first nine months of 2008. The firm's management
believes that these non-GAAP measures will allow for a better
evaluation of the operating performance of its business and
facilitate meaningful comparison of its results in the current
period to those in prior periods and future periods. The firm's
reference to these measures should not, however, be considered as a
substitute for results that are presented in a manner consistent
with GAAP. These non-GAAP measures are provided to enhance
investors' overall understanding of the firm's current financial
performance and its prospects for the future. Specifically, the
firm's management believes that the non-GAAP measures provide
useful information to both management and investors by excluding
certain items that may not be indicative of the firm's core
operating results and business outlook.
A limitation of utilizing these non-GAAP measures of net loss
and basic and diluted loss per share is that the GAAP accounting
effects of these events do in fact reflect the underlying financial
results of the firm's business and these effects should not be
ignored in evaluating and analyzing the firm's financial results.
Therefore, management believes that both the firm's GAAP measures
of net loss and basic and diluted loss per share and these non-GAAP
measures of the firm's financial performance should be considered
together.
A reconciliation of the firm's third quarter of 2008 GAAP net
loss to its third quarter of 2008 non-GAAP net loss is set forth
below (in millions):
Net loss $ (109.2)
Exclusion of the after-tax non-cash expense associated with
initial grant of restricted stock units 1.0
Exclusion of the after-tax non-cash expense associated with the
amortization of intangible assets acquired as a result of the
firm's acquisition of Westwind Partners 2.2
Exclusion of the non-cash expense associated with the
charge-off of goodwill acquired as a result of the firm's
acquisition of Westwind Partners 92.6
----------
Non-GAAP net loss $ (13.4)
==========
A reconciliation of the firm's first nine months of 2008 GAAP
net loss to its first nine months of 2008 non-GAAP net loss is set
forth below (in millions):
Net loss $ (137.1)
Exclusion of the after-tax non-cash expense associated with
initial grant of restricted stock units 3.0
Exclusion of the after-tax non-cash expense associated with the
amortization of intangible assets acquired as a result of the
firm's acquisition of Westwind Partners 6.7
Exclusion of the non-cash expense associated with the
charge-off of goodwill acquired as a result of the firm's
acquisition of Westwind Partners 92.6
----------
Non-GAAP net loss $ (34.8)
==========
The firm calculates loss per share in accordance with FASB
Statement No. 128, Earnings per Share. Basic loss and diluted loss
per share is calculated by dividing net loss by the weighted
average number of common shares outstanding for the period.
The following table sets forth the firm's GAAP basic and diluted
weighted average shares outstanding and its GAAP basic and diluted
loss per share for the third quarter and first nine months of 2008,
as well as non-GAAP loss per share for the third quarter and first
nine months of 2008 after applying the adjustments described
above:
For Three For Nine
Months Ended Months Ended
September 30, September 30,
2008 2008
------------- -------------
Weighted average shares used in computation
of loss per share:
Basic (in thousands) 31,992 32,498
Diluted (in thousands) 31,992 32,498
Loss per share:
Basic $ (3.41) $ (4.22)
Diluted $ (3.41) $ (4.22)
Non-GAAP loss per share:
Basic $ (0.42) $ (1.07)
Diluted $ (0.42) $ (1.07)
Quarterly Earnings Conference Call
Thomas Weisel Partners Group, Inc. will host its third quarter
conference call on Wednesday, October 29, 2008 at 5:00 p.m. Eastern
time (2:00 p.m. Pacific time). The conference call may include
forward-looking statements, including guidance as to future
results.
All interested parties are invited to listen to Thomas Weisel
Partners' Chairman and Chief Executive Officer, Thomas W. Weisel,
President and Chief Operating Officer, Lionel F. Conacher, and
Chief Financial Officer, Shaugn S. Stanley, by dialing (866)
746-9599 (domestic) or (702) 696-4728 (international). The
confirmation code for both the domestic and international lines is:
68908201.
A live web cast of the call, as well as the firm's results, will
be available through the investor relations/webcasts section of its
website, www.tweisel.com. To listen to the live call, please go to
the website at least 15 minutes early to register, download, and
install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will
be available on this site one hour after the call through November
14, 2008.
About Thomas Weisel Partners Group, Inc.
Thomas Weisel Partners Group, Inc. is an investment bank,
founded in 1998, focused principally on the growth sectors of the
economy. Thomas Weisel Partners Group, Inc. generates revenues from
three principal sources: investment banking, brokerage and asset
management. The investment banking group is comprised of two
disciplines: corporate finance and strategic advisory. The
brokerage group provides equity and convertible debt securities
sales and trading services to institutional investors, and offers
brokerage, advisory and cash management services to high-net-worth
individuals and corporate clients. The asset management group
consists of: private equity, public equity and distribution
management. Thomas Weisel Partners is headquartered in San
Francisco with additional offices in Baltimore, Boston, Calgary,
Chicago, Cleveland, Denver, New York, Portland, Silicon Valley,
Toronto, London, Mumbai and Zurich. For more information, please
visit www.tweisel.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, which
are subject to risks, uncertainties and assumptions about us. In
some cases, you can identify these statements by forward-looking
words such as "may," "might," "will," "should," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "optimistic,"
"potential," "future" or "continue," the negative of these terms
and other comparable terminology. These statements are only
predictions based on our current expectations about future events.
There are important factors that could cause actual results, level
of activity, performance or achievements or other events or
circumstances to differ materially from the results, level of
activity, performance or achievements expressed or implied by these
forward-looking statements. These factors include, but are not
limited to, the state of the financial markets and the economy,
particularly as they relate to the growth sectors that the firm is
focused on, Thomas Weisel Partners' ability to implement its
strategic initiatives and achieve the expected benefits of the
acquisition of Westwind Partners, integrate Westwind Partners'
operations and retain its professionals, as well as other
competitive, economic, political, and market conditions and
fluctuations, government and industry regulation, other risks
relating to the acquisition, including the effect of the completion
of the transaction on the companies' business relationships,
operating results and business generally and other factors. Some of
the other factors are those that are discussed in Item 1A - "Risk
Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2007 and in our Quarterly Reports on Form 10-Q filed
with the SEC thereafter. We do not assume responsibility for the
accuracy or completeness of any forward-looking statement and you
should not rely on forward-looking statements as predictions of
future events. We are under no duty to update any of these
forward-looking statements to conform them to actual results or
revised expectations.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2008
AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, 2007
-----------------------------------------
Three
Months Pro
Ended Thomas Forma Pro
September Weisel Westwind Adjust- Forma
30, 2008 Partners (a) ments Combined
--------- --------- -------- ------- -------
Revenues:
Investment banking $ 17,531 $ 25,542 $ 12,848 $ -- $38,390
Brokerage 33,652 30,344 2,560 -- 32,904
Asset management (2,329) 6,714 1,991 -- 8,705
Interest income 1,828 3,799 438 (472) (b) 3,765
--------- --------- -------- ------- -------
Total revenues 50,682 66,399 17,837 (472) 83,764
Interest expense (1,636) (2,687) (124) -- (2,811)
--------- --------- -------- ------- -------
Net revenues 49,046 63,712 17,713 (472) 80,953
--------- --------- -------- ------- -------
Expenses excluding
interest:
Compensation and
benefits 36,869 38,304 12,145 -- 50,449
Brokerage execution,
clearance and
account
administration 7,461 5,287 411 -- 5,698
Communications and
data processing 5,502 4,642 501 -- 5,143
Depreciation and
amortization of
property and
equipment 1,901 1,536 147 (41) (c) 1,642
Amortization of
other intangible
assets 3,833 -- -- 3,833 (d) 3,833
Goodwill impairment 92,597 -- -- -- --
Marketing and
promotion 3,329 3,868 690 -- 4,558
Occupancy and
equipment 7,588 5,134 378 -- 5,512
Other expense 9,445 7,055 1,297 -- 8,352
--------- --------- -------- ------- -------
Total expenses
excluding
interest 168,525 65,826 15,569 3,792 85,187
--------- --------- -------- ------- -------
Income (loss) before
taxes (119,479) (2,114) 2,144 (4,264) (4,234)
Provision for taxes
(tax benefit) (10,300) (1,314) 782 (1,310) (e) (1,842)
--------- --------- -------- ------- -------
Net income (loss) $(109,179) $ (800) $ 1,362 $(2,954) $(2,392)
========= ========= ======== ======= =======
Earnings (loss) per share:
Basic earnings
(loss) per share $ (3.41) $ (0.03) $ (0.07)
Diluted earnings
(loss) per share $ (3.41) $ (0.03) $ (0.07)
Weighted average
shares used in
computation of per
share data:
Basic weighted
average shares
outstanding 31,992 26,196 7,009 (f) 33,205
Diluted weighted
average shares
outstanding 31,992 26,196 7,009 (f) 33,205
Notes to the Pro Forma Consolidated Statements of Operations for the three
months ended September 30, 2007 are set forth on the final page.
THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2008
AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(In thousands, except per share data)
(Unaudited)
Nine Months Ended September 30, 2007
-----------------------------------------
Nine
Months Pro
Ended Thomas Forma Pro
September Weisel Westwind Adjust- Forma
30, 2008 Partners (a) ments Combined
--------- --------- -------- ------- -------
Revenues:
Investment banking $ 51,966 $ 94,439 $ 42,461 $ -- $136,900
Brokerage 104,646 85,426 9,988 -- 95,414
Asset management (115) 26,711 6,742 -- 33,453
Interest income 6,701 12,686 1,396 (1,322) (b) 12,760
Other revenue -- 920 -- -- 920
--------- --------- -------- ------- --------
Total revenues 163,198 220,182 60,587 (1,322) 279,447
Interest expense (5,214) (8,042) (181) -- (8,223)
--------- --------- -------- ------- --------
Net revenues 157,984 212,140 60,406 (1,322) 271,224
--------- --------- -------- ------- --------
Expenses excluding
interest:
Compensation and
benefits 119,046 119,689 39,873 -- 159,562
Brokerage
execution,
clearance and
account
administration 20,333 14,970 1,173 -- 16,143
Communications and
data processing 17,101 13,794 1,408 -- 15,202
Depreciation and
amortization of
property and
equipment 5,721 4,781 364 (123) (c) 5,022
Amortization of
other intangible
assets 11,564 -- -- 11,564 (d) 11,564
Goodwill impairment 92,597 -- -- -- --
Marketing and
promotion 11,151 10,523 2,080 -- 12,603
Occupancy and
equipment 18,249 13,835 1,013 -- 14,848
Other expense 25,039 17,351 3,084 -- 20,435
--------- --------- -------- ------- --------
Total expenses
excluding
interest 320,801 194,943 48,995 11,441 255,379
--------- --------- -------- ------- --------
Income (loss) before
taxes (162,817) 17,197 11,411 (12,763) 15,845
Provision for taxes
(tax benefit) (25,706) 5,994 4,161 (4,125) (e) 6,030
--------- --------- -------- ------- --------
Net income (loss) $(137,111) $ 11,203 $ 7,250 $(8,638) $ 9,815
========= ========= ======== ======= ========
Earnings (loss) per share:
Basic earnings
(loss) per share $ (4.22) $ 0.43 $ 0.30
Diluted earnings
(loss) per share $ (4.22) $ 0.42 $ 0.29
Weighted average
shares used in
computation of per
share data:
Basic weighted
average shares
outstanding 32,498 26,188 7,009 (f) 33,197
Diluted weighted
average shares
outstanding 32,498 26,539 7,009 (f) 33,548
Notes to the Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 2007 are set forth on the final page.
Notes to the Unaudited Pro Forma Consolidated Statement of
Operations
(a) Westwind statement of operations has been converted from Canadian
dollars to U.S. dollars for the pro forma presentation. Amounts were
converted based on the average monthly exchange rates from January 1,
2007 to September 30, 2007.
(b) An adjustment to interest income for the estimated interest amount that
would not have been recognized by the firm during the three and nine
months ended September 30, 2007 on the $45 million cash portion of the
transaction consideration. The weighted average interest rate for the
three and nine months ended September 30, 2007 is estimated to be 4.20%
and 3.97%, respectively.
(c) Adjustment to depreciation and amortization to reflect fair value on
the date of acquisition.
(d) Reflects the amortization of other intangible assets that were recorded
as a result of the acquisition.
(e) To record an income tax impact on the pre-tax pro forma adjustments.
The firm's combined effective tax rate subsequent to the pro forma tax
adjustment is equal to 44% and 38% for the three and nine months ended
September 30, 2007, respectively.
(f) The issuance of 7,009,112 shares of Thomas Weisel Partners common stock
or exchangeable shares. The fair value of the Thomas Weisel Partners
common stock to be issued was based upon the average of the closing
prices of one share of common stock during the five trading day period
beginning two trading days prior to the date the transaction was
announced.
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