Exhibit 99.1
GLEACHER & COMPANY REPORTS THIRD QUARTER
2013 FINANCIAL RESULTS
NEW YORK, N.Y., November 8, 2013 — Gleacher & Company, Inc. (Nasdaq: GLCH) today reported a net loss of $17.1 million for the third quarter of 2013 and a loss per share of ($2.77).
Overview
Historically, Gleacher & Company, Inc. (“Gleacher” or the “Company”) operated an investment banking business, predominately fixed-income sales and trading and financial advisory services, through three principal business units: Investment Banking, MBS & Rates and Credit Products. The Company also engaged in residential mortgage lending operations through ClearPoint Funding, Inc. (“ClearPoint”). As of June 30, 2013, these businesses had been discontinued, and the Company currently has no meaningful revenue-producing operating activities. As of November 7, 2013, the Company had approximately 20 employees.
The Company is evaluating several strategic alternatives in order to preserve and maximize stockholder value. These include:
· pursuing a strategic transaction with a third party, such as a merger or sale of the Company;
· reinvesting the Company’s liquid assets into favorable opportunities; and
· winding down the Company’s remaining operations and distributing its net assets, after making appropriate reserves, to its stockholders.
As of September 30, 2013, the Company had total assets of approximately $109 million, a majority of which is in cash ($63 million) and other liquid assets. The Company’s liquidity needs will depend to a large extent on decisions it makes regarding the alternatives described above. The Company’s available liquidity, which consists primarily of cash, is currently anticipated to be sufficient to meet its ongoing financial obligations for a reasonable period of time.
Not reflected in total assets referenced above are pre-tax federal net operating losses (“NOLs”) of approximately $135 million. The Company has provided a full valuation allowance against these NOLs. In order to realize any value of these NOLs, the Company cannot experience an ownership change as defined by Internal Revenue Code Section 382.
Consolidated Statements of Operations (Unaudited)
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Three Months Ended |
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Nine Months Ended |
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|
|
September 30, |
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September 30, |
|
September 30, |
|
September 30, |
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(In thousands, except for per-share amounts) |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| ||||
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Revenue: |
|
|
|
|
|
|
|
|
| ||||
|
Investment gains/(losses), net |
|
$ |
92 |
|
$ |
163 |
|
$ |
(338 |
) |
$ |
156 |
|
|
Fees and other |
|
163 |
|
222 |
|
495 |
|
710 |
| ||||
|
Total revenue |
|
255 |
|
385 |
|
157 |
|
866 |
| ||||
|
Expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Compensation and benefits |
|
2,876 |
(1) |
2,968 |
|
7,516 |
|
9,149 |
| ||||
|
Professional fees |
|
3,923 |
(2) |
3,196 |
|
9,521 |
|
8,543 |
| ||||
|
Communications and data processing |
|
280 |
|
480 |
|
974 |
|
1,525 |
| ||||
|
Occupancy, depreciation and amortization |
|
344 |
|
481 |
|
1,109 |
|
1,255 |
| ||||
|
Other |
|
4,176 |
(3) |
928 |
|
5,376 |
|
2,485 |
| ||||
|
Total non-interest expenses |
|
11,599 |
|
8,053 |
|
24,496 |
|
22,957 |
| ||||
|
Loss from continuing operations before income taxes and discontinued operations |
|
(11,344 |
) |
(7,668 |
) |
(24,339 |
) |
(22,091 |
) | ||||
|
Income tax expense/(benefit) |
|
74 |
|
(2,223 |
) |
228 |
|
22,747 |
| ||||
|
Loss from continuing operations |
|
(11,418 |
) |
(5,445 |
) |
(24,567 |
) |
(44,838 |
) | ||||
|
(Loss)/income from discontinued operations, net of taxes |
|
(5,728 |
)(4) |
2,677 |
|
(72,044 |
) |
(21,587 |
) | ||||
|
Net loss |
|
$ |
(17,146 |
) |
$ |
(2,768 |
) |
$ |
(96,611 |
) |
$ |
(66,425 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
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(Loss)/earnings per share: |
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|
|
|
|
|
|
|
| ||||
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Basic (loss)/income per share |
|
|
|
|
|
|
|
|
| ||||
|
Continuing operations |
|
$ |
(1.85 |
) |
$ |
(0.92 |
) |
$ |
(4.03 |
) |
$ |
(7.54 |
) |
|
Discontinued operations |
|
(0.92 |
) |
0.45 |
|
(11.81 |
) |
(3.63 |
) | ||||
|
Net loss per share |
|
$ |
(2.77 |
) |
$ |
(0.47 |
) |
$ |
(15.84 |
) |
$ |
(11.17 |
) |
|
|
|
|
|
|
|
|
|
|
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Diluted (loss)/income per share |
|
|
|
|
|
|
|
|
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|
Continuing operations |
|
$ |
(1.85 |
) |
$ |
(0.92 |
) |
$ |
(4.03 |
) |
$ |
(7.54 |
) |
|
Discontinued operations |
|
(0.92 |
) |
0.45 |
|
(11.81 |
) |
(3.63 |
) | ||||
|
Net loss per share |
|
$ |
(2.77 |
) |
$ |
(0.47 |
) |
$ |
(15.84 |
) |
$ |
(11.17 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
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Weighted average number of shares of common stock: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
6,187 |
|
5,935 |
|
6,098 |
|
5,948 |
| ||||
|
Diluted |
|
6,187 |
|
5,935 |
|
6,098 |
|
5,948 |
| ||||
(1) Includes (i) a charge of approximately $1.4 million incurred in connection with the Company entering into key employee retention agreements with the Company’s General Counsel and Secretary and its Controller and (ii) approximately $0.2 million of fees paid to Capstone Advisory Group LLC (“Capstone”) associated with services provided by Mr. Christopher J. Kearns in connection with his role as the Company’s Chief Restructuring Officer and Chief Executive Officer.
(2) Includes (i) expense reimbursements to MatlinPatterson of approximately $1.1 million incurred in connection with the preparation, distribution and solicitation of its proxy materials associated with the Company’s 2013 Annual Meeting of Stockholders (evaluated by the Company’s Audit Committee and approved on August 2, 2013) and (ii) approximately $0.7 million of advisory fees paid to Capstone, which excludes the previously mentioned fees classified within compensation expense.
(3) Includes a charge of approximately $3.2 million in connection with the settlement of compensation and other claims brought by a former employee.
(4) Includes restructuring charges of approximately (i) $3.2 million related to the Company terminating the lease for its headquarters at 1290 Avenue of the Americas, New York, New York, (ii) $0.6 million related to terminating third party vendor contracts, (iii) $0.5 million related to the impairment of fixed assets associated with the previously mentioned lease termination and (iv) $0.3 of severance.
Consolidated Statement of Financial Condition (Unaudited)
|
|
|
September 30, |
|
December 31, |
| ||
|
(In thousands, except for share and per-share amounts) |
|
2013 |
|
2012 |
| ||
|
Assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
63,375 |
|
$ |
44,868 |
|
|
Cash and securities segregated for regulatory and other purposes |
|
6,000 |
|
13,000 |
| ||
|
Receivables from |
|
|
|
|
| ||
|
Brokers, dealers and clearing organizations |
|
9,187 |
|
12,824 |
| ||
|
Related parties |
|
1,546 |
|
1,474 |
| ||
|
Other |
|
1,049 |
|
12,563 |
| ||
|
Financial instruments owned, at fair value |
|
883 |
|
1,096,181 |
| ||
|
Investments |
|
17,884 |
|
20,478 |
| ||
|
Office equipment and leasehold improvements, net |
|
186 |
|
5,311 |
| ||
|
Goodwill |
|
— |
|
1,212 |
| ||
|
Intangible assets |
|
— |
|
5,303 |
| ||
|
Income taxes receivable |
|
4,387 |
|
7,394 |
| ||
|
Deferred tax assets, net |
|
— |
|
— |
| ||
|
Other assets |
|
4,461 |
|
9,030 |
| ||
|
Total Assets |
|
$ |
108,958 |
|
$ |
1,229,638 |
|
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
| ||
|
Liabilities |
|
|
|
|
| ||
|
Payables to: |
|
|
|
|
| ||
|
Brokers, dealers and clearing organizations |
|
$ |
— |
|
$ |
638,009 |
|
|
Related parties |
|
1,025 |
|
2,944 |
| ||
|
Other |
|
2,733 |
|
2,251 |
| ||
|
Securities sold under agreements to repurchase |
|
— |
|
159,386 |
| ||
|
Securities sold, but not yet purchased, at fair value |
|
— |
|
132,730 |
| ||
|
Secured borrowings, ClearPoint |
|
— |
|
64,908 |
| ||
|
Accrued compensation |
|
3,003 |
|
34,199 |
| ||
|
Restructuring reserve |
|
4,953 |
|
— |
| ||
|
Accounts payable and accrued expenses |
|
5,766 |
|
9,866 |
| ||
|
Income taxes payable |
|
3,970 |
|
3,755 |
| ||
|
Subordinated debt |
|
409 |
|
595 |
| ||
|
Total Liabilities |
|
21,859 |
|
1,048,643 |
| ||
|
Stockholders’ Equity |
|
|
|
|
| ||
|
Common stock ($.01 par value; authorized 10,000,000 shares) |
|
1,337 |
|
1,337 |
| ||
|
Additional paid-in capital |
|
456,003 |
|
453,938 |
| ||
|
Deferred compensation |
|
101 |
|
124 |
| ||
|
Accumulated deficit |
|
(360,188 |
) |
(263,577 |
) | ||
|
Treasury stock, at cost |
|
(10,154 |
) |
(10,827 |
) | ||
|
Total Stockholders’ Equity |
|
87,099 |
|
180,995 |
| ||
|
Total Liabilities and Stockholders’ Equity |
|
$ |
108,958 |
|
$ |
1,229,638 |
|
|
|
|
|
|
|
| ||
|
Common stock (in shares) |
|
|
|
|
| ||
|
Shares issued |
|
6,688,387 |
|
6,688,387 |
| ||
|
Less: Treasury stock |
|
(492,244 |
) |
(466,428 |
) | ||
|
Shares outstanding |
|
6,196,143 |
|
6,221,959 |
| ||
Related Party Matter
On October 14, 2013, the Company entered into a sublease with Capstone, which commences on November 15, 2013 and initially provides for monthly base rental payments of approximately $12,000, based upon the Company’s current space needs. This arrangement provides the Company with flexibility and at a cost that is below other market comparable alternatives. This sublease was evaluated by the Company’s Audit Committee and approved on October 10, 2013, since this is a related-party transaction. The sublease continues on a month-to-month basis and provides the Company with the ability to reduce the occupied space upon not less than 30 days notice to Capstone. Any such reduction would reduce the monthly base rental payments based upon pre-determined rates.
About Gleacher & Company
Gleacher & Company, Inc. (Nasdaq: GLCH) is incorporated under the laws of the State of Delaware. The Company’s common stock is traded on The NASDAQ Global Market under the symbol “GLCH.”
Forward Looking Statements
This press release contains “forward-looking statements.” These statements are not historical facts but instead represent the Company’s belief or plans regarding future events, many of which are inherently uncertain and outside of the Company’s control. The Company often, but not always, identifies forward-looking statements by using words or phrases such as “anticipate,” “estimate,” “plan,” “project,” “target,” “expect,” “continuing,” “ongoing,” “believe” and “intend.” The Company’s forward-looking statements are based on facts as the Company understands them at the time the Company makes any such statement as well as estimates and judgments based on these facts. The Company’s forward-looking statements may turn out to be inaccurate for a variety of reasons, many of which are outside of its control. Factors that could render the Company’s forward-looking statements subsequently inaccurate include the risk that we are unable to preserve or maximize stockholder value through the realization of any of the strategic alternatives being evaluated by the Company and the other risks and factors identified from time to time in the Company’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on forward-looking statements. The Company does not undertake to update any of its forward-looking statements.
Source: Gleacher & Company, Inc.
Gleacher & Company, Inc.
Investor Relations, 212-273-7100