NITE Nightstar Therapeutics Plc ADS

Knight Capital Group Announces GAAP Loss of $0.04 Per Diluted Share for Second Quarter 2005 GAAP loss includes $0.04 per diluted share of non-operating real estate and regulatory charges recorded within the company's two operating business segments, Equity Markets and Asset Management JERSEY CITY, N.J., July 20 /PRNewswire-FirstCall/ -- Knight Capital Group, Inc. (NASDAQ:NITE) today reported a GAAP loss of $4.2 million for the second quarter of 2005, or a loss of $0.04 per diluted share. For the second quarter of 2005, the company recorded charges of $4.2 million, net of tax, or $0.04 per diluted share, including $2.7 million, net of tax, relating to real estate charges and a writedown of fixed assets for its 525 Washington Boulevard facility; and $1.5 million, net of tax, relating to regulatory and related matters. Excluding these charges, the firm had a net operating loss from continuing operations of approximately $100,000 for the second quarter of 2005. Included within the net operating loss for the second quarter of 2005, the company recognized a gain of $6.1 million, net of tax, or $0.06 per diluted share, relating to its investments in The Nasdaq Stock Market, Inc. For the second quarter of 2004, the company reported a GAAP loss of $47.9 million, or a loss of $0.42 per diluted share, which included a net loss from continuing operations of $51.6 million, or a loss of $0.46 per diluted share, and income from discontinued operations of $3.7 million, net of tax, or $0.03 per diluted share. During the second quarter of 2004, the company recorded charges for excess real estate capacity, writedowns of fixed assets and regulatory and related matters of $58.0 million, net of tax, or $0.51 per diluted share. Excluding these charges, the firm had operating earnings from continuing operations of $6.4 million, or $0.06 per diluted share, for the second quarter of 2004. "Continuing operations" include the company's two operating business segments, Equity Markets and Asset Management. Continuing operations also include a Corporate segment, encompassing corporate investments and overhead expenses. Amounts reported as "discontinued operations" include the company's former Derivative Markets business segment, the sale of which was completed to Citigroup at the close of business on December 9, 2004. Revenues for the second quarter of 2005 were $114.1 million, compared to $140.0 million from continuing operations for the second quarter of 2004. "Knight had a rough start to the second quarter, but we worked hard to narrow losses through June and we continue to regain ground so far in July," said Thomas M. Joyce, Chairman and Chief Executive Officer of Knight Capital Group. "Miserable market conditions in April and May impacted profitability in both our Equity Markets and Asset Management businesses. During those challenging months, Knight management made some of its most far-reaching and considerable changes to date to the broker-dealer business as part of the ongoing effort to counteract revenue capture decline. The company dramatically increased its use of automation and instituted pricing structure adjustments that included a significant reduction in payment for order flow on Nasdaq, S&P 500, listed and Bulletin Board securities." Q2 2005 Q2 2004 Revenues ($) 114,096,109 140,036,160 Net loss from continuing operations ($) (4,210,577) (51,597,576) Income from discontinued operations, net of tax ($) - 3,736,622 Net loss ($) (4,210,577) (47,860,954) Diluted EPS from continuing operations ($) (0.04) (0.46) Diluted EPS from discontinued operations ($) - 0.03 Diluted EPS ($) (0.04) (0.42) U.S. equity dollar value traded (in $ millions) 445,808 416,798 U.S. equity trades executed (in thousands) 48,150 49,058 Average daily U.S. equity trades (in thousands) 752 791 Nasdaq and Listed equity shares traded (in millions) 25,363 28,936 OTC Bulletin Board and Pink Sheet shares traded (in millions) 154,050 376,142 Average revenue capture per U.S. equity dollar value traded (bps) 1.5 2.5 Average month-end balance of assets under management ($ millions) 3,268.5 2,895.1 Quarterly fund return to investors* -1.3% 0.1% * Quarterly fund return represents the blended quarterly return across all assets under management in the Deephaven funds YTD 2005 YTD 2004 Revenues ($) 251,652,980 338,355,625 Net income (loss) from continuing operations ($) 1,809,356 (25,619,746) (Loss) income from discontinued operations, net of tax ($) (265,927) 9,604,387 Net income (loss) ($) 1,543,429 (16,015,359) Diluted EPS from continuing operations ($) 0.02 (0.23) Diluted EPS from discontinued operations ($) - 0.08 Diluted EPS ($) 0.01 (0.14) U.S. equity dollar value traded (in $ millions) 916,483 921,413 U.S. equity trades executed (in thousands) 100,999 108,650 Average daily U.S. equity trades (in thousands) 808 876 Nasdaq and Listed equity shares traded (in millions) 54,462 69,863 OTC Bulletin Board and Pink Sheet shares traded (in millions) 449,849 696,708 Average revenue capture per U.S. equity dollar value traded (bps) 1.6 2.7 Average month-end balance of assets under management ($ millions) 3,375.3 2,432.6 Year-to-date fund return to investors* -0.2% 2.1% * Year-to-date fund return represents the blended return across all assets under management in the Deephaven funds Equity Markets During the second quarter of 2005, the Equity Markets business segment generated total revenues of $98.5 million, compared to $131.1 million in the second quarter of 2004. In the second quarter of 2005, the Equity Markets business segment reported a net operating loss of $1.1 million, compared to net operating earnings of $9.4 million in the second quarter of 2004. On June 16, 2005, the company announced the completion of its acquisition of the business of Direct Trading Institutional, Inc., a direct market access firm. In connection with this closing, the company made an initial cash payment of $40.0 million and recorded goodwill of $20.7 million and intangible assets of $20.0 million. Asset Management During the second quarter of 2005, the Asset Management business segment, Deephaven Capital Management, generated $8.0 million in asset management fees, compared to $8.1 million in the same period a year ago. In the second quarter of 2005, the Asset Management business segment reported a net operating loss of approximately $500,000, compared to net operating earnings of $1.3 million in the second quarter of 2004. Asset Management had approximately $3.4 billion under management at June 30, 2005, down slightly from the $3.5 billion under management at March 31, 2005, and up from $3.2 billion at June 30, 2004. "As we start the third quarter, each business has established clear priorities and operational goals," Mr. Joyce said. "We continue to adapt and enhance our broker-dealer operations to meet new regulatory, market and competitive issues. Knight is very committed to remaining an industry leader serving broker-dealer clients. We believe the institutional equities business remains a growth opportunity, and we are confident that Knight's strength in listed market making and in small-to-mid-cap stocks will continue to drive our penetration of the institutional market. Moreover, as Knight integrates our new Electronic Services group, we'll see new opportunities to offer direct market access through Direct Trading Institutional, as well as ECN trade executions and other products and services. And finally, Deephaven continues to expand its offering by adding new single-strategy funds. "In July we're experiencing an early summer rally, and the operating environment looks encouraging over the short term," Mr. Joyce added. "The strategies that Knight implemented in the second quarter, combined with somewhat improved market conditions, are having a positive impact on the profitability of our equity operations. Meanwhile, Deephaven started to see a rebound in returns in late May, which carried through the end of the second quarter. Our enthusiasm is tempered only by the need for greater economic recovery, including lower oil prices and stability in interest rates. We also can't rule out that the seasonal summer slowdown may simply arrive a little later than usual this year." Corporate In the second quarter of 2005, the Corporate segment reported net operating earnings of $1.5 million, compared to a net operating loss of $4.3 million in the second quarter of 2004. The company's investment in the Deephaven funds lost $1.7 million, net of tax, during the second quarter of 2005, down from earnings of $300,000, net of tax, during the second quarter of 2004. At the end of the second quarter of 2005, the company had $227.2 million invested in the Deephaven funds. On July 1, 2005, Knight invested an additional $40 million in the Deephaven funds, bringing the total corporate investment to $267.2 million. During the second quarter of 2005, the company recognized a gain of $6.1 million, net of tax, or $0.06 per diluted share, relating to its investments in The Nasdaq Stock Market, Inc. The company had $794.9 million in stockholders' equity as of June 30, 2005, equivalent to a book value of $7.25 per diluted share. As of June 30, 2005, the company had $236.5 million in cash and cash equivalents and a $227.2 million investment in funds managed by Deephaven, its Asset Management business segment. During the second quarter of 2005, the company repurchased 4.0 million shares for approximately $32.9 million under the company's $320 million stock repurchase program. To date, the company has repurchased 32.3 million shares for $252 million. The company cautions that there are no assurances that any further repurchases may actually occur. On July 11, 2005, the company filed an SEC Form 8-K to announce its decision to correct its method of accounting for property lease transactions, and to restate its financial statements for the years ended December 31, 2002, 2003 and 2004, included in the company's 2004 Annual Report on Form 10-K. The interim financial statements included in the company's Form 10-Q for the quarterly period ended March 31, 2005 will also be restated. Accordingly, the unaudited financial data in this release reflects the restatement of these prior periods. Copies of this earnings release and other information on the company can be obtained at the company's Web site, http://www.knight.com/. The company will conduct its second quarter 2005 earnings conference call for analysts, investors and the media at 9:00 a.m. Eastern Daylight Time (EDT) today, July 20, 2005. The conference call will be Webcast live at 9:00 a.m. EDT for all investors and interested parties on Knight's Web site. In addition, the company will release its monthly volume statistics for June 2005 on its Web site before the start of trading today. About Knight Capital Group Knight is a leading provider of comprehensive trade execution and asset management services. Our Equity Markets business offers institutions and broker-dealers high quality trade execution and capital commitment across the depth and breadth of the equity market. Our Asset Management business, Deephaven Capital Management, is a market-neutral investment manager focused on delivering risk-adjusted returns with low volatility for institutions and high net worth individuals. Knight strives to be a valued partner by providing superior service and continually enhancing its offering to meet client needs. More information about Knight can be obtained at http://www.knight.com/. Presentation of Information in this Press Release In an effort to provide investors with additional information regarding the Company's results as determined by generally accepted accounting principles (GAAP), the Company also discloses certain non-GAAP information which management believes provides useful information to investors. Within this press release, the Company has disclosed its net income (loss) amounts for certain reporting periods before charges, writedowns and discontinued operations to assist the reader in understanding the impact of these charges, writedowns and discontinued operations on the Company's financial results, thereby facilitating more useful period-to-period comparisons of the Company's businesses. Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management. 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. Since such statements involve risks and uncertainties, the actual results and performance of the Company may turn out to be materially different from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein; however, readers should carefully review reports or documents the Company files from time to time with the Securities and Exchange Commission including, without limitation, the risks and uncertainties detailed under the headings "Certain Factors Affecting Results of Operations" and "Risks Affecting our Business" in the Company's Annual Report on Form 10-K. KNIGHT CAPITAL GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS* (Unaudited) For the three months ended For the six months ended June 30, June 30, 2005 2004 2005 2004 REVENUES Net trading revenue $27,051,166 $61,234,847 $64,472,995 $161,962,704 Commissions and fees 68,022,217 68,568,535 138,138,228 145,206,054 Asset management fees 8,036,861 8,106,756 25,917,529 22,038,887 Interest and dividends, net 2,216,039 771,956 4,555,840 1,629,917 Investment income and other 8,769,826 1,354,066 18,568,388 7,518,063 Total revenues 114,096,109 140,036,160 251,652,980 338,355,625 EXPENSES Employee compensation and benefits 48,193,801 53,250,738 105,051,243 118,354,526 Execution and clearance fees 23,348,038 28,682,313 46,894,821 66,444,613 Soft dollar and commission recapture expense 14,649,781 14,236,854 30,134,356 30,012,769 Payments for order flow 3,582,088 9,843,017 10,986,162 22,861,456 Communications and data processing 8,151,261 6,962,602 15,965,223 13,716,379 Depreciation and amortization 3,734,419 3,560,345 8,036,831 7,480,028 Occupancy and equipment rentals 2,829,725 4,388,032 6,947,116 8,736,809 Professional fees 4,550,021 3,950,860 8,331,745 7,307,132 Business development 1,707,779 1,825,410 3,001,115 3,868,379 Writedown of assets and lease loss accrual 4,545,895 2,623,986 4,545,895 2,623,986 Regulatory charges and related matters 2,000,000 79,200,000 2,000,000 79,200,000 Other 3,425,759 2,189,722 6,079,506 4,938,852 Total expenses 120,718,567 210,713,879 247,974,013 365,544,929 (Loss) income from continuing operations before income taxes (6,622,458) (70,677,719) 3,678,967 (27,189,304) Income tax (benefit) expense (2,411,881) (19,080,143) 1,869,611 (1,569,558) Net (loss) income from continuing operations (4,210,577) (51,597,576) 1,809,356 (25,619,746) Income (loss) from discontinued operations, net of tax - 3,736,622 (265,927) 9,604,387 Net (loss) income $(4,210,577) $(47,860,954) $1,543,429 $(16,015,359) Basic and diluted earnings per share from continuing operations $(0.04) $(0.46) $0.02 $(0.23) Basic and diluted earnings per share from discontinued operations $- $0.03 $- $0.08 Basic and diluted earnings per share $(0.04) $(0.42) $0.01 $(0.14) Shares used in computation of basic earnings per share 104,335,490 112,971,307 106,584,672 113,222,334 Shares used in computation of diluted earnings per share 104,335,490 112,971,307 109,579,944 113,222,334 * Certain prior period amounts have been reclassified to conform to the current period presentation. KNIGHT CAPITAL GROUP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) June 30, 2005 December 31, 2004 ASSETS Cash and cash equivalents $236,483,470 $445,539,282 Securities owned, held at clearing brokers, at market value 368,690,244 254,473,209 Receivable from brokers and dealers 791,509,982 244,881,065 Investment in Deephaven sponsored funds 227,221,471 215,329,959 Fixed assets and leasehold improvements at cost, less accumulated depreciation and amortization 63,773,595 54,382,503 Strategic investments 65,865,078 29,266,796 Goodwill 39,859,776 19,182,248 Intangible assets, less accumulated amortization 31,235,694 11,546,528 Other assets 74,255,144 119,418,725 Total assets $1,898,894,454 $1,394,020,315 LIABILITIES & STOCKHOLDERS' EQUITY Liabilities Securities sold, not yet purchased, at market value $321,559,724 $221,420,569 Payable to brokers and dealers 644,999,033 88,480,788 Accrued compensation expense 62,098,705 123,664,383 Accrued expenses and other liabilities 75,343,647 109,252,681 Total liabilities 1,104,001,109 542,818,421 Stockholders' equity Class A common stock 1,381,140 1,339,655 Additional paid-in-capital 463,490,454 427,451,712 Retained earnings 588,696,262 587,152,786 Treasury stock, at cost (249,944,718) (147,636,413) Accumulated other comprehensive income, net of tax 21,672,747 - Unamortized stock-based compensation (30,402,540) (17,105,846) Total stockholders' equity 794,893,345 851,201,894 Total liabilities and stockholders' equity $1,898,894,454 $1,394,020,315 KNIGHT CAPITAL GROUP, INC. RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES* Amounts in millions, except per share data (Unaudited) For the three months ended June 30, 2005 Equity Asset Corporate Discontinued Total Markets Management Operations GAAP NET (LOSS) INCOME $(3.7) $(2.0) $1.5 $- $(4.2) Adjustments, net of tax: Writedown of assets and lease loss accrual 2.6 - - - 2.6 Regulatory charges and related matters - 1.5 - - 1.5 Net impact of adjustments 2.6 1.5 - - 4.1 NET OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS $(1.1) $(0.5) $1.5 $- $(0.1) GAAP NET (LOSS) INCOME PER DILUTED SHARE $(0.04) $(0.02) $0.01 $- $(0.04) Adjustments, net of tax: Writedown of assets and lease loss accrual 0.03 - - - 0.03 Regulatory charges and related matters - 0.01 - - 0.01 Net impact of adjustments 0.03 0.01 - - 0.04 NET OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS PER DILUTED SHARE $(0.01) $(0.01) $0.01 $- $(0.00) For the three months ended June 30, 2004 Equity Asset Corporate Discontinued Total Markets Management Operations GAAP NET (LOSS) INCOME $(48.6) $1.3 $(4.3) $3.7 $(47.9) Adjustments, net of tax: Writedown of assets and lease loss accrual 1.5 - - - 1.5 Regulatory charges and related matters 56.4 - - - 56.4 (Income) from discontinued operations - - - (3.7) (3.7) Net impact of adjustments 58.0 - - (3.7) 54.2 NET OPERATING INCOME (LOSS)FROM CONTINUING OPERATIONS $9.4 $1.3 $(4.3) $- $6.4 GAAP NET (LOSS) INCOME PER DILUTED SHARE $(0.43) $0.01 $(0.04) $0.03 $(0.42) Adjustments, net of tax: Writedown of assets and lease loss accrual 0.01 - - - 0.01 Regulatory charges and related matters 0.50 - - - 0.50 (Income) from discontinued operations - - - (0.03) (0.03) Net impact of adjustments 0.51 - - (0.03) 0.48 NET OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS PER DILUTED SHARE $0.08 $0.01 $(0.04) $- $0.06 * Totals may not add due to rounding. KNIGHT CAPITAL GROUP, INC. RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES* Amounts in millions, except per share data (Unaudited) For the six months ended June 30, 2005 Equity Asset Corporate Discontinued Total Markets Management Operations GAAP NET (LOSS) INCOME $(10.3) $0.2 $12.0 $(0.3) $1.5 Adjustments, net of tax: Writedown of assets and lease loss accrual 2.6 - - - 2.6 Regulatory charges and related matters - 1.5 - 1.5 Loss from discontinued operations - - - 0.3 0.3 Net impact of adjustments 2.6 1.5 - 0.3 4.4 NET OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS $(7.7) $1.7 $12.0 $- $5.9 GAAP NET (LOSS) INCOME PER DILUTED SHARE $(0.09) $0.00 $0.11 $(0.00) $0.01 Adjustments, net of tax: Writedown of assets and lease loss accrual 0.02 - - - 0.02 Regulatory charges and related matters - 0.01 - - 0.01 Loss from discontinued operations - - - 0.00 0.00 Net impact of adjustments 0.02 0.01 - 0.00 0.04 NET OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS PER DILUTED SHARE $(0.07) $0.02 $0.11 $- $0.05 For the six months ended June 30, 2004 Equity Asset Corporate Discontinued Total Markets Management Operations GAAP NET (LOSS) INCOME $(24.8) $4.9 $(5.8) $9.6 $(16.0) Adjustments, net of tax: Writedown of assets and lease loss accrual 1.5 - - - 1.5 Regulatory charges and related matters 56.4 - - - 56.4 (Income) from discontinued operations - - - (9.6) (9.6) Net impact of adjustments 58.0 - - (9.6) 48.4 NET OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS $33.2 $4.9 $(5.8) $- $32.3 GAAP NET (LOSS) INCOME PER DILUTED SHARE $(0.22) $0.04 $(0.05) $0.08 $(0.14) Adjustments, net of tax: Writedown of assets and lease loss accrual 0.01 - - - 0.01 Regulatory charges and related matters 0.50 - - - 0.50 (Income) from discontinued operations - - - (0.08) (0.08) Net impact of adjustments 0.51 - - (0.08) 0.43 NET OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS PER DILUTED SHARE $0.29 $0.04 $(0.05) $- $0.29 * Totals may not add due to rounding. DATASOURCE: Knight Capital Group, Inc. CONTACT: Margaret Wyrwas, Senior Managing Director, Corporate Communications & Investor Relations, +1-201-557-6954, , or Kara Fitzsimmons, Vice President, Corporate Communications, +1-201-356-1523, , or Greta Morley, Vice President, Marketing Communications & Public Relations, +1-201-557-6948, , or Molly McDowell, Analyst, Corporate Communications & Investor Relations, +1-201-356-1723, , all of Knight Capital Group, Inc. Web site: http://www.knight.com/

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