UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2017
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Numbers: 0-28191, 1-35591
BGC Partners, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware |
13-4063515 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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499 Park Avenue, New York, NY |
10022 |
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(Address of principal executive offices) |
(Zip Code) |
(212) 610-2200
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an “emerging growth company”. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
(Do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
On August 1, 2017, the registrant had 251,519,405 shares of Class A common stock, $0.01 par value, and 34,848,107 shares of Class B common stock, $0.01 par value, outstanding.
TABLE OF CONTENTS
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Page |
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ITEM 1 |
6 |
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Condensed Consolidated Statements of Financial Condition—At June 30, 2017 and December 31, 2016 |
6 |
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7 |
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8 |
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9 |
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Condensed Consolidated Statements of Changes in Equity—For the Year Ended December 31, 2016 |
11 |
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Condensed Consolidated Statements of Changes in Equity—For the Six Months Ended June 30, 2017 |
12 |
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13 |
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ITEM 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
53 |
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ITEM 3 |
103 |
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ITEM 4 |
105 |
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ITEM 1 |
106 |
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ITEM 1A |
106 |
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ITEM 2 |
107 |
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ITEM 3 |
107 |
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ITEM 4 |
107 |
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ITEM 5 |
107 |
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ITEM 6 |
108 |
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109 |
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SPECIAL NOTE ON FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act.” Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,” “strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions are intended to identify forward-looking statements.
Our actual results and the outcome and timing of certain events may differ significantly from the expectations discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, the factors set forth below and may impact either or both of our operating segments:
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• |
market conditions, including trading volume and volatility, potential deterioration of equity and debt capital markets and markets for commercial real estate and related services, and our ability to access the capital markets; |
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• |
pricing, commissions and fees, and market position with respect to our products and services and those of our competitors; |
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the effect of industry concentration and reorganization, reduction of customers, and consolidation; |
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• |
liquidity, regulatory, and clearing capital requirements and the impact of credit market events; |
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• |
our relationships and transactions with Cantor Fitzgerald, L.P. and its affiliates, which we refer to as “Cantor,” including Cantor Fitzgerald & Co., which we refer to as “CF&Co,” and Cantor Commercial Real Estate Company, L.P., which we refer to as “CCRE,” any related conflicts of interest, any impact of Cantor’s results on our credit ratings and associated outlooks, any loans to or from us or Cantor, our acquisition of Berkeley Point (defined below) from and our investment in Real Estate LP (defined below) with CCRE, CF&Co’s acting as our sales agent or underwriter under our controlled equity or other offerings, Cantor’s holdings of our debt securities, CF&Co’s acting as a market maker in our debt securities, CF&Co’s acting as our financial advisor in connection with potential business combinations, dispositions, or other transactions, our participation in various investments, stock loans or cash management vehicles placed by or recommended by CF&Co, and any services provided by or to other arrangements with CCRE; |
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• |
economic or geopolitical conditions or uncertainties, the actions of governments or central banks, including uncertainty regarding the U.K. exit from the European Union following the referendum and related rulings, and the impact of terrorist acts, acts of war or other violence or political unrest, as well as natural disasters or weather-related or similar events, including power failures, communication and transportation disruptions, and other interruptions of utilities or other essential services; |
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• |
the effect on our businesses, our clients, the markets in which we operate, and the economy in general of possible shutdowns of the U.S. government, sequestrations, uncertainties regarding the debt ceiling and the federal budget, and other potential political impasses, as well as the economic and market response to the Republican party control of both the U.S. Presidency and Congress; |
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• |
the effect on our businesses of worldwide governmental debt issuances, austerity programs, increases or decreases in deficits, and other changes to monetary policy, and potential political impasses or regulatory requirements, including increased capital requirements for banks and other institutions or changes in legislation, regulations and priorities; |
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• |
extensive regulation of our businesses and customers, changes in regulations relating to financial services companies, commercial real estate and other industries, and risks relating to compliance matters, including regulatory examinations, inspections, investigations and enforcement actions, and any resulting costs, increased financial and capital requirements, enhanced oversight, fines, penalties, sanctions, and changes to or restrictions or limitations on specific activities, operations, compensatory arrangements, and growth opportunities, including acquisitions, hiring, and new businesses, products, or services; |
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• |
factors related to specific transactions or series of transactions, including credit, performance, and principal risk, trade failures, counterparty failures, and the impact of fraud and unauthorized trading; |
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• |
costs and expenses of developing, maintaining, and protecting our intellectual property, as well as employment and other litigation and their related costs, including judgments or settlements paid or received and the impact thereof on our financial results and cash flows in any given period; |
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• |
certain financial risks, including the possibility of future losses, reduced cash flows from operations, increased leverage and the need for short- or long-term borrowings, including from Cantor, or other sources of cash relating to acquisitions, |
2
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dispositions, or other matters, potential liquidity and other risks relating to our ability to obtain financing or refinancing of existing debt on terms acceptable to us, if at all, and risks of the resulting leverage, including potentially causing a reduction in our credit ratings and the associated outlooks and increased borrowing costs, including as a result of the Berkeley Point Acquisition (defined below), as well as interest rate and foreign currency exchange rate fluctuations; |
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risks associated with the temporary or longer-term investment of our available cash, including defaults or impairments on our investments, stock loans or cash management vehicles and collectability of loan balances owed to us by partners, employees, or others; |
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our ability to enter new markets or develop new products, trading desks, marketplaces, or services for existing or new customers and to induce such customers to use these products, trading desks, marketplaces, or services and to secure and maintain market share; |
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our ability to enter into marketing and strategic alliances and business combinations or other transactions in the financial services, real estate, and other industries, including acquisitions, tender offers, dispositions, reorganizations, partnering opportunities and joint ventures, and our ability to maintain or develop relationships with independently owned offices in our Real Estate Services business and our ability to grow in other geographic regions, including the Berkeley Point Acquisition and the proposed separation, IPO and distribution of shares related to our Real Estate Services business, the anticipated benefits of any such transactions, relationships or growth and the future impact of any such transactions, relationships or growth on our other businesses and our financial results for current or future periods, the integration of any completed acquisitions and the use of proceeds of any completed dispositions, and the value of and any hedging entered into in connection with consideration received or to be received in connection with such dispositions; |
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our estimates or determinations of potential value with respect to various assets or portions of our businesses, including with respect to the accuracy of the assumptions or the valuation models or multiples used; |
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our ability to hire and retain personnel, including brokers, salespeople, managers, and other professionals; |
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our ability to expand the use of technology for hybrid and fully electronic trading in our product and service offerings; |
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our ability to effectively manage any growth that may be achieved, while ensuring compliance with all applicable financial reporting, internal control, legal compliance, and regulatory requirements; |
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our ability to identify and remediate any material weaknesses in our internal controls that could affect our ability to prepare financial statements and reports in a timely manner, control our policies, practices and procedures, operations and assets, assess and manage our operational, regulatory and financial risks, and integrate our acquired businesses and brokers, salespeople, managers and other professionals; |
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the effectiveness of our risk management policies and procedures, and the impact of unexpected market moves and similar events; |
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information technology risks, including capacity constraints, failures, or disruptions in our systems or those of the clients, counterparties, exchanges, clearing facilities, or other parties with which we interact, including cybersecurity risks and incidents and regulatory focus; |
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the fact that the prices at which shares of our Class A common stock are sold in one or more of our controlled equity offerings or in other offerings or other transactions may vary significantly, and purchasers of shares in such offerings or other transactions, as well as existing stockholders, may suffer significant dilution if the price they paid for their shares is higher than the price paid by other purchasers in such offerings or transactions; |
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• |
our ability to meet expectations with respect to payments of dividends and distributions and repurchases of shares of our Class A common stock and purchases or redemptions of limited partnership interests of BGC Holdings, L.P., which we refer to as “BGC Holdings,” or other equity interests in our subsidiaries, including from Cantor, our executive officers, other employees, partners, and others, and the net proceeds to be realized by us from offerings of our shares of Class A common stock; and |
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• |
the effect on the market for and trading price of our Class A common stock and of various offerings and other transactions, including our controlled equity and other offerings of our Class A common stock and convertible or exchangeable securities, the proposed separation, IPO and distribution of shares related to our Real Estate Services business, our repurchases of shares of our Class A common stock and purchases of BGC Holdings limited partnership interests or other equity interests in our subsidiaries, any exchanges by Cantor of shares of our Class A common stock for shares of our Class B common stock, any exchanges or redemptions of limited partnership units and issuances of shares of Class A common stock in connection therewith, including in partnership restructurings, our payment of dividends on our Class A common stock and distributions on BGC Holdings limited partnership interests, convertible arbitrage, hedging, and other transactions engaged in by holders of our outstanding debt or other securities, share sales and stock pledge, |
3
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stock loan, and other financing transactions by holders of our shares (including by Cantor or others), including of shares acquired pursuant to our employee benefit plans, unit exchanges and redemptions, partnership restructurings, acquisitions, conversions of our Class B common stock and our other convertible securities, stock pledge, stock loan, or other financing transactions, and distributions from Cantor pursuant to Cantor’s distribution rights obligations and other distributions to Cantor partners, including deferred distribution rights shares |
The foregoing risks and uncertainties, as well as those risks and uncertainties set forth in this Quarterly Report on Form 10-Q, may cause actual results and events to differ materially from the forward-looking statements. The information included herein is given as of the filing date of this Form 10-Q with the Securities and Exchange Commission (the “SEC”), and future results or events could differ significantly from these forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
4
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document we file at the SEC’s Public Reference Room located at One Station Place, 100 F Street, N.E., Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. These filings are also available to the public from the SEC’s website at www.sec.gov.
Our website address is www.bgcpartners.com. Through our website, we make available, free of charge, the following documents as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC: our Annual Reports on Form 10-K; our proxy statements for our annual and special stockholder meetings; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules 13D filed on behalf of Cantor, CF Group Management, Inc. (“CFGM”), our directors and our executive officers; and amendments to those documents. Our website also contains additional information with respect to our industry and business. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q.
5
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share data)
(unaudited)
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June 30, 2017 |
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December 31, 2016 |
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Assets |
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Cash and cash equivalents |
|
$ |
462,042 |
|
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$ |
502,024 |
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Cash segregated under regulatory requirements |
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|
119,470 |
|
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|
6,895 |
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Reverse repurchase agreements |
|
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— |
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|
54,659 |
|
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Securities owned |
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33,743 |
|
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|
35,357 |
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Marketable securities |
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|
169,241 |
|
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|
164,820 |
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Receivables from broker-dealers, clearing organizations, customers and related broker-dealers |
|
|
1,647,686 |
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|
497,557 |
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Accrued commissions receivable, net |
|
|
576,595 |
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|
374,734 |
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Loans, forgivable loans and other receivables from employees and partners, net |
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299,595 |
|
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|
267,527 |
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Loan receivables from related parties |
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|
150,000 |
|
|
|
— |
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Fixed assets, net |
|
|
175,737 |
|
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|
165,867 |
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Investments |
|
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35,122 |
|
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|
33,439 |
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Goodwill |
|
|
884,753 |
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|
863,690 |
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Other intangible assets, net |
|
|
316,049 |
|
|
|
247,723 |
|
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Receivables from related parties |
|
|
8,970 |
|
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|
6,967 |
|
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Other assets |
|
|
301,879 |
|
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|
287,141 |
|
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Total assets |
|
$ |
5,180,882 |
|
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$ |
3,508,400 |
|
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Liabilities, Redeemable Partnership Interest, and Equity |
|
|
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|
|
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Short-term borrowings |
|
$ |
150,000 |
|
|
$ |
— |
|
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Securities loaned |
|
|
95,327 |
|
|
|
— |
|
|
Accrued compensation |
|
|
345,425 |
|
|
|
333,144 |
|
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Payables to broker-dealers, clearing organizations, customers and related broker-dealers |
|
|
1,488,148 |
|
|
|
375,152 |
|
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Payables to related parties |
|
|
39,349 |
|
|
|
28,976 |
|
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Accounts payable, accrued and other liabilities |
|
|
900,841 |
|
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|
599,046 |
|
|
Notes payable and collateralized borrowings |
|
|
990,887 |
|
|
|
965,767 |
|
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Total liabilities |
|
|
4,009,977 |
|
|
|
2,302,085 |
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Commitments and contingencies (Note 18) |
|
|
|
|
|
|
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Redeemable partnership interest |
|
|
51,475 |
|
|
|
52,577 |
|
|
Equity |
|
|
|
|
|
|
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Stockholders’ equity: |
|
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|
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Class A common stock, par value $0.01 per share; 750,000 shares authorized; 299,722 and 292,549 shares issued at June 30, 2017 and December 31,2016, respectively; and 251,057 and 244,870 shares outstanding at June 30, 2017 and December 31, 2016, respectively |
|
|
2,997 |
|
|
|
2,925 |
|
|
Class B common stock, par value $0.01 per share; 150,000 shares authorized; 34,848 shares issued and outstanding at June 30, 2017 and December 31, 2016, convertible into Class A common stock |
|
|
348 |
|
|
|
348 |
|
|
Additional paid-in capital |
|
|
1,520,627 |
|
|
|
1,466,586 |
|
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Contingent Class A common stock |
|
|
38,316 |
|
|
|
42,472 |
|
|
Treasury stock, at cost: 48,665 and 47,679 shares of Class A common stock at June 30, 2017 and December 31, 2016, respectively |
|
|
(297,378 |
) |
|
|
(288,743 |
) |
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Retained deficit |
|
|
(415,053 |
) |
|
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(358,526 |
) |
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Accumulated other comprehensive income (loss) |
|
|
(13,001 |
) |
|
|
(23,199 |
) |
|
Total stockholders’ equity |
|
|
836,856 |
|
|
|
841,863 |
|
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Noncontrolling interest in subsidiaries |
|
|
282,574 |
|
|
|
311,875 |
|
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Total equity |
|
|
1,119,430 |
|
|
|
1,153,738 |
|
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Total liabilities, redeemable partnership interest, and equity |
|
$ |
5,180,882 |
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|
$ |
3,508,400 |
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The accompanying Notes to the unaudited Condensed Consolidated Financial Statements
are an integral part of these financial statements.
6
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
|
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Three Months Ended June 30, |
|
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Six Months Ended June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Revenues: |
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Commissions |
|
$ |
580,033 |
|
|
$ |
498,588 |
|
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$ |
1,127,159 |
|
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$ |
973,675 |
|
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Principal transactions |
|
|
80,360 |
|
|
|
86,448 |
|
|
|
166,103 |
|
|
|
178,887 |
|
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Real estate management services |
|
|
51,589 |
|
|
|
45,529 |
|
|
|
102,219 |
|
|
|
91,587 |
|
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Fees from related parties |
|
|
5,576 |
|
|
|
4,865 |
|
|
|
12,141 |
|
|
|
11,935 |
|
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Data, software and post-trade |
|
|
13,322 |
|
|
|
14,160 |
|
|
|
26,409 |
|
|
|
28,094 |
|
|
Interest income |
|
|
6,001 |
|
|
|
3,778 |
|
|
|
9,304 |
|
|
|
6,162 |
|
|
Other revenues |
|
|
876 |
|
|
|
402 |
|
|
|
1,852 |
|
|
|
4,084 |
|
|
Total revenues |
|
|
737,757 |
|
|
|
653,770 |
|
|
|
1,445,187 |
|
|
|
1,294,424 |
|
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Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
|
454,099 |
|
|
|
420,264 |
|
|
|
891,590 |
|
|
|
830,539 |
|
|
Allocations of net income and grant of exchangeability to limited partnership units and FPUs |
|
|
50,237 |
|
|
|
40,975 |
|
|
|
113,430 |
|
|
|
73,899 |
|
|
Total compensation and employee benefits |
|
|
504,336 |
|
|
|
461,239 |
|
|
|
1,005,020 |
|
|
|
904,438 |
|
|
Occupancy and equipment |
|
|
49,296 |
|
|
|
50,963 |
|
|
|
99,159 |
|
|
|
102,658 |
|
|
Fees to related parties |
|
|
5,404 |
|
|
|
3,642 |
|
|
|
11,781 |
|
|
|
9,967 |
|
|
Professional and consulting fees |
|
|
20,736 |
|
|
|
14,336 |
|
|
|
40,316 |
|
|
|
30,054 |
|
|
Communications |
|
|
31,915 |
|
|
|
31,281 |
|
|
|
63,609 |
|
|
|
62,579 |
|
|
Selling and promotion |
|
|
29,389 |
|
|
|
25,546 |
|
|
|
52,774 |
|
|
|
51,204 |
|
|
Commissions and floor brokerage |
|
|
10,203 |
|
|
|
10,097 |
|
|
|
20,373 |
|
|
|
19,140 |
|
|
Interest expense |
|
|
16,676 |
|
|
|
14,624 |
|
|
|
31,497 |
|
|
|
28,082 |
|
|
Other expenses |
|
|
30,759 |
|
|
|
23,713 |
|
|
|
58,747 |
|
|
|
46,554 |
|
|
Total expenses |
|
|
698,714 |
|
|
|
635,441 |
|
|
|
1,383,276 |
|
|
|
1,254,676 |
|
|
Other income (losses) , net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on divestiture and sale of investments |
|
|
— |
|
|
— |
|
|
|
557 |
|
|
— |
|
||
|
Gains (losses) on equity method investments |
|
|
1,602 |
|
|
|
863 |
|
|
|
1,839 |
|
|
|
1,751 |
|
|
Other income (loss) |
|
|
4,855 |
|
|
|
10,012 |
|
|
|
9,944 |
|
|
|
7,095 |
|
|
Total other income (losses), net |
|
|
6,457 |
|
|
|
10,875 |
|
|
|
12,340 |
|
|
|
8,846 |
|
|
Income (loss) from operations before income taxes |
|
|
45,500 |
|
|
|
29,204 |
|
|
|
74,251 |
|
|
|
48,594 |
|
|
Provision (benefit) for income taxes |
|
|
16,547 |
|
|
|
10,548 |
|
|
|
23,206 |
|
|
|
15,388 |
|
|
Consolidated net income (loss) |
|
$ |
28,953 |
|
|
$ |
18,656 |
|
|
$ |
51,045 |
|
|
$ |
33,206 |
|
|
Less: Net income (loss) attributable to noncontrolling interest in subsidiaries |
|
|
7,185 |
|
|
|
4,189 |
|
|
|
11,062 |
|
|
|
6,234 |
|
|
Net income (loss) available to common stockholders |
|
$ |
21,768 |
|
|
$ |
14,467 |
|
|
$ |
39,983 |
|
|
$ |
26,972 |
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
21,768 |
|
|
$ |
14,467 |
|
|
$ |
39,983 |
|
|
$ |
26,972 |
|
|
Basic earnings (loss) per share |
|
|
0.08 |
|
|
$ |
0.05 |
|
|
|
0.14 |
|
|
$ |
0.10 |
|
|
Basic weighted-average shares of common stock outstanding |
|
|
286,840 |
|
|
|
275,997 |
|
|
|
285,129 |
|
|
|
274,895 |
|
|
Fully diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for fully diluted shares |
|
$ |
33,094 |
|
|
$ |
23,452 |
|
|
$ |
60,704 |
|
|
$ |
43,904 |
|
|
Fully diluted earnings (loss) per share |
|
|
0.07 |
|
|
$ |
0.05 |
|
|
|
0.14 |
|
|
$ |
0.10 |
|
|
Fully diluted weighted-average shares of common stock outstanding |
|
|
451,857 |
|
|
|
437,257 |
|
|
|
448,347 |
|
|
|
435,963 |
|
|
Dividends declared per share of common stock |
|
|
0.18 |
|
|
$ |
0.16 |
|
|
|
0.34 |
|
|
$ |
0.30 |
|
|
Dividends declared and paid per share of common stock |
|
|
0.18 |
|
|
$ |
0.16 |
|
|
|
0.34 |
|
|
$ |
0.30 |
|
The accompanying Notes to the unaudited Condensed Consolidated Financial Statements
are an integral part of these financial statements.
7
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
Consolidated net income (loss) |
|
$ |
28,953 |
|
|
$ |
18,656 |
|
|
$ |
51,045 |
|
|
$ |
33,206 |
|
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
4,571 |
|
|
|
(149 |
) |
|
|
11,052 |
|
|
|
4,117 |
|
|
Available for sale securities |
|
|
978 |
|
|
|
(1,923 |
) |
|
|
691 |
|
|
|
32 |
|
|
Total other comprehensive income (loss), net of tax |
|
|
5,549 |
|
|
|
(2,072 |
) |
|
|
11,743 |
|
|
|
4,149 |
|
|
Comprehensive income (loss) |
|
|
34,502 |
|
|
|
16,584 |
|
|
|
62,788 |
|
|
|
37,355 |
|
|
Less: Comprehensive income (loss) attributable to noncontrolling interest in subsidiaries, net of tax |
|
|
7,961 |
|
|
|
3,787 |
|
|
|
12,607 |
|
|
|
6,070 |
|
|
Comprehensive income (loss) attributable to common stockholders |
|
$ |
26,541 |
|
|
$ |
12,797 |
|
|
$ |
50,181 |
|
|
$ |
31,285 |
|
The accompanying Notes to the unaudited Condensed Consolidated Financial Statements
are an integral part of these financial statements.
8
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Consolidated net income (loss) |
|
$ |
51,045 |
|
|
$ |
33,206 |
|
|
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Fixed asset depreciation and intangible asset amortization |
|
|
40,707 |
|
|
|
39,029 |
|
|
Employee loan amortization and reserves on employee loans |
|
|
15,885 |
|
|
|
21,089 |
|
|
Equity-based compensation and allocations of net income to limited partnership units and FPUs |
|
|
128,560 |
|
|
|
83,374 |
|
|
Deferred compensation expense |
|
|
6,208 |
|
|
|
9,780 |
|
|
Losses (gains) on equity method investments |
|
|
(1,839 |
) |
|
|
(1,751 |
) |
|
Amortization of discount (premium) on notes payable |
|
|
(1,265 |
) |
|
|
(1,014 |
) |
|
Unrealized (gain) loss on marketable securities |
|
|
(10,243 |
) |
|
|
2,937 |
|
|
Impairment of fixed assets, intangible assets and equity method investments |
|
|
1,638 |
|
|
|
3,169 |
|
|
Deferred tax provision (benefit) |
|
|
2,975 |
|
|
|
(7,671 |
) |
|
Sublease provision adjustment |
|
|
— |
|
|
|
(549 |
) |
|
Realized losses (gains) on marketable securities |
|
|
(1,222 |
) |
|
|
(9,606 |
) |
|
Change in estimated acquisition earn-out payables |
|
|
(3,770 |
) |
|
|
(748 |
) |
|
Forfeitures of Class A common stock |
|
|
(224 |
) |
|
|
(99 |
) |
|
Other |
|
|
(557 |
) |
|
|
(391 |
) |
|
Consolidated net income (loss), adjusted for non-cash and non-operating items |
|
|
227,898 |
|
|
|
170,755 |
|
|
Decrease (increase) in operating assets: |
|
|
|
|
|
|
|
|
|
Cash segregated under regulatory requirements |
|
|
(29,939 |
) |
|
|
(13,288 |
) |
|
Reverse repurchase agreements |
|
|
54,659 |
|
|
|
— |
|
|
Securities owned |
|
|
1,614 |
|
|
|
(286,219 |
) |
|
Receivables from broker-dealers, clearing organizations, customers and related broker-dealers |
|
|
(1,148,076 |
) |
|
|
(1,207,984 |
) |
|
Accrued commissions receivable, net |
|
|
(78,145 |
) |
|
|
(25,454 |
) |
|
Loans, forgivable loans and other receivables from employees and partners, net |
|
|
(46,395 |
) |
|
|
(111,519 |
) |
|
Receivables from related parties |
|
|
(4,099 |
) |
|
|
1,203 |
|
|
Other assets |
|
|
(8,159 |
) |
|
|
(15,942 |
) |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
|
Securities loaned |
|
|
95,327 |
|
|
|
(117,967 |
) |
|
Accrued compensation |
|
|
(32,575 |
) |
|
|
(12,657 |
) |
|
Payables to broker-dealers, clearing organizations, customers and related broker-dealers |
|
|
1,109,096 |
|
|
|
1,141,883 |
|
|
Payables to related parties |
|
|
10,373 |
|
|
|
4,075 |
|
|
Accounts payable, accrued and other liabilities |
|
|
81,444 |
|
|
|
(9,995 |
) |
|
Net cash provided by (used in) operating activities |
|
$ |
233,023 |
|
|
$ |
(483,109 |
) |
The accompanying Notes to the unaudited Condensed Consolidated Financial Statements
are an integral part of these financial statements.
9
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
(in thousands)
(unaudited)
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
|
$ |
(21,346 |
) |
|
$ |
(22,727 |
) |
|
Capitalization of software development costs |
|
|
(14,341 |
) |
|
|
(10,267 |
) |
|
Purchase of cost and equity method investments |
|
|
(888 |
) |
|
|
(1,112 |
) |
|
Proceeds from equity method investments |
|
|
243 |
|
|
|
— |
|
|
Payments for acquisitions, net of cash acquired |
|
|
(63,295 |
) |
|
|
(113,151 |
) |
|
Purchase of marketable securities |
|
|
— |
|
|
|
(63,341 |
) |
|
Proceeds from sale of marketable securities |
|
|
7,829 |
|
|
|
566,319 |
|
|
Capitalization of trademarks, patent defense and registration costs |
|
|
(249 |
) |
|
|
(363 |
) |
|
Net cash provided by (used in) investing activities |
|
$ |
(92,047 |
) |
|
$ |
355,358 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Repayments of collateralized borrowings |
|
$ |
(3,523 |
) |
|
$ |
(3,400 |
) |
|
Issuance of senior notes, net of deferred issuance costs |
|
|
— |
|
|
|
295,762 |
|
|
Issuance of collateralized borrowings, net of deferred issuance costs |
|
|
29,907 |
|
|
|
— |
|
|
Earnings distributions |
|
|
(68,304 |
) |
|
|
(41,154 |
) |
|
Redemption and repurchase of limited partnership interests |
|
|
(24,156 |
) |
|
|
(20,896 |
) |
|
Dividends to stockholders |
|
|
(96,510 |
) |
|
|
(81,910 |
) |
|
Repurchase of Class A common stock |
|
|
(10,590 |
) |
|
|
(69,730 |
) |
|
Cancellation of restricted stock units in satisfaction of withholding tax requirements |
|
|
(52 |
) |
|
|
(30 |
) |
|
Proceeds from issuance of Class A common stock, net of costs |
|
|
— |
|
|
|
14,961 |
|
|
Deemed contribution due to acquisition of Lucera |
|
|
— |
|
|
|
10,145 |
|
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
86 |
|
|
Proceeds from short-term borrowings |
|
|
150,000 |
|
|
|
— |
|
|
Loans to related parties |
|
|
(150,000 |
) |
|
|
— |
|
|
Payments on acquistions earn-outs |
|
|
(10,509 |
) |
|
|
(4,852 |
) |
|
Net cash provided by (used in) financing activities |
|
|
(183,737 |
) |
|
|
98,982 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
2,779 |
|
|
|
2,869 |
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(39,982 |
) |
|
|
(25,900 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
502,024 |
|
|
|
462,134 |
|
|
Cash and cash equivalents at end of period |
|
$ |
462,042 |
|
|
$ |
436,234 |
|
|
Supplemental cash information: |
|
|
|
|
|
|
|
|
|
Cash paid during the period for taxes |
|
$ |
20,758 |
|
|
$ |
35,811 |
|
|
Cash paid during the period for interest |
|
|
33,204 |
|
|
|
27,999 |
|
|
Supplemental non-cash information: |
|
|
|
|
|
|
|
|
|
Issuance of Class A common stock upon exchange of limited partnership interests |
|
$ |
56,443 |
|
|
$ |
28,435 |
|
|
Issuance of Class A and contingent Class A common stock and limited partnership interests for acquisitions |
|
|
4,225 |
|
|
|
1,846 |
|
The accompanying Notes to the unaudited Condensed Consolidated Financial Statements
are an integral part of these financial statements.
10
BGC PARTNERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Year Ended December 31, 2016
(in thousands, except share amounts)
|
|
|
BGC Partners, Inc. Stockholders |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
|
Class A Common Stock |
|
|
Class B Common Stock |
|
|
Additional Paid-in Capital |
|
|
Contingent Class A Common Stock |
|
|
Treasury Stock |
|
|
Retained Deficit |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
|
Noncontrolling Interest in Subsidiaries |
|
|
Total |
|
|||||||||
|
Balance, January 1, 2016 |
|
$ |
2,559 |
|
|
$ |
348 |
|
|
$ |
1,109,000 |
|
|
$ |
50,095 |
|
|
$ |
(212,331 |
) |
|
$ |
(290,208 |
) |
|
$ |
(25,056 |
) |
|
$ |
597,527 |
|
|
$ |
1,231,934 |
|
|
Consolidated net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102,477 |
|
|
|
— |
|
|
|
25,531 |
|
|
|
128,008 |
|
|
Other comprehensive gain, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,857 |
|
|
|
(733 |
) |
|
|
1,124 |
|
|
Equity-based compensation, 637,719 shares |
|
|
6 |
|
|
|
— |
|
|
|
2,999 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,563 |
|
|
|
4,568 |
|
|
Dividends to common stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(170,795 |
) |
|
|
— |
|
|
|
— |
|
|
|
(170,795 |
) |
|
Earnings distributions to limited partnership interests and other noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(62,258 |
) |
|
|
(62,258 |
) |
|
Grant of exchangeability and redemption of limited partnership interests, issuance of 8,705,906 shares |
|
|
87 |
|
|
|
— |
|
|
|
58,751 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
36,844 |
|
|
|
95,682 |
|
|
Issuance of Class A common stock (net of costs), 2,004,533 shares |
|
|
20 |
|
|
|
— |
|
|
|
14,216 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,542 |
|
|
|
17,778 |
|
|
Redemption of FPUs, 460,690 units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,307 |
) |
|
|
(2,307 |
) |
|
Repurchase of Class A common stock, 10,823,942 shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(75,984 |
) |
|
|
— |
|
||||||||||||