Merriman Curhan Ford Reports Fiscal Year 2009 and Fourth Quarter Results
March 18, 2010 3:34 PM
Merriman Curhan Ford Reports Fiscal Year 2009 and Fourth Quarter Results
PR Newswire
SAN FRANCISCO, March 18
SAN FRANCISCO, March 18 /PRNewswire-FirstCall/ -- Merriman Curhan Ford Group, Inc. (Nasdaq: MERR) today released results for 2009.
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2009 Financial Highlights
- Total 2009 revenue was $49.3 million, an increase of 35% over 2008, a result of the company's improved principal transactions and Institutional Cash Distributors ("ICD") division whose assets were sold in 2009.
- Total 2009 revenue on a non-GAAP, pro-forma basis, which excludes ICD results, whose assets were sold in 2009 unrealized gains and losses was $22.8 million, a 35% decrease from 2008:
- Investment banking revenue was $7.2 million, a 37% decrease from 2008;
- Commission revenue on a pro-forma basis was $12.4 million, a 45% decrease from 2008; and
- Principal transaction revenue on a pro-forma basis had a gain of $1.3 million, a 74% improvement over 2008, comprised primarily of realized gains in the firm's warrant positions and proprietary account.
- Loss from continuing operations for the year was $5.4 million, or $0.42 per diluted share, compared to a loss from continuing operations of $24.5 million for 2008, or $1.95 per diluted share.
- Net loss attributable to common shareholders was $0.84 for 2009, due primarily to the dividends to preferred shareholders.
- Financial condition:
- Total assets were $16.1 million at the end of 2009, compared with $18.9 million at December 31, 2008; and
- Cash and marketable securities were $10.4 million at the end of 2009.
In 2009, Merriman Curhan Ford introduced non-GAAP pro-forma operating measures which exclude the effects of its former division, ICD, the unrealized gain or loss on its portfolio of securities, and the non-operating legal and settlement expenses. Management uses these non-GAAP measures, in addition to GAAP results, to assess the performance of the company's core business. A reconciliation of these non-GAAP measures to GAAP is attached below.
"The team fought hard and survived in 2009, despite extraordinarily difficult circumstances," said Peter Coleman, chief executive officer of Merriman's broker/dealer. "Our $10.2 million strategic transaction that we closed in September, settlements with a selected group of litigants, and positive closure on the SEC matters, gave us an opportunity to reposition the firm by bringing in new financial industry veterans and investors to help us rebuild, while strictly managing our cost structure. This past year we built a foundation for future rapid revenue growth and consistent profitability. Today, we are beginning to see solid demand from our corporate clients and institutional investors as we focus on our core offerings of researching, trading, advising and financing undiscovered, fast-growing companies. Our investment banking pipeline remains strong, and we closed 27 corporate financing and strategic advisory transactions during the year, compared to 20 transactions in 2008."
Fourth Quarter 2009 Financial Highlights
- Quarterly revenue was $13.5 million, representing a growth of 76% over the fourth quarter 2008.
- Quarterly revenue on a non-GAAP, pro-forma basis (excluding ICD), was $6.6 million, a 26% increase from fourth quarter 2008:
- Investment banking revenue was $1.8 million, a 9% decrease from fourth quarter 2008;
- Commission revenue on a pro-forma basis was $3.6 million, a 31% decrease from fourth quarter 2008; and
- Principal transaction revenue on a pro-forma basis had a gain of $925,000 comprised primarily of realized gains in the firm's warrant positions and proprietary account, compared to a loss of $2.1 million in the fourth quarter 2008.
- Income from continuing operations for the quarter was $13.6 million, or $1.07 per diluted share, compared to a loss from continuing operations of $4.3 million for the fourth quarter 2008, or $0.34 per diluted share. Income from continuing operations in the fourth quarter 2009 was a result of the change in warrant liabilities due to the amendment of the warrants issued in connection with the company's September 2009 strategic transaction. Excluding the change in warrant liabilities resulting from the warrant amendment, operating loss from continuing operations was $2.9 million for the quarter, a 32% improvement over the same period 2008.
Jon Merriman, co-founder and chief executive officer of Merriman Curhan Ford Group, Inc., added: "By the fourth quarter, we saw early signs of recovery in our corporate clients' industry sectors. The financing environment for fast-growing companies remains challenging despite the impressive market rally from the 2008 lows. I believe we won't see a full market recovery until small businesses, which are an important growth engine of the U.S. economy, come back and the commercial lending environment normalizes. The universe of corporate clients that need our services has expanded dramatically over the past two difficult years. We continue to work aggressively to help our corporate clients obtain the growth capital they need and we are excited to meet that demand during these uncertain times."
Conference Call for the 2009 Results
In conjunction with this announcement, Merriman Curhan Ford will host a discussion of the company's 2009 results with investors and financial analysts today, Thursday, March 18, 2010, at 2 PM (PT) / 5 PM (ET). Interested listeners and participants may access the live conference call by dialing (800) 762-8779 or may access the live web broadcast at the company's website, www.mcfco.com. An archived version of the discussion will be available on the company's website following the conclusion of the live conference call.
About Merriman Curhan Ford
Merriman Curhan Ford (NASDAQ: MERR) is a financial services firm focused on fast-growing companies and the institutions that invest in them. The company offers high-quality investment banking, equity research, institutional services and corporate & venture services, and specializes in five growth industry sectors: CleanTech, Consumer, Media & Internet, Health Care, Natural Resources and Technology. For more information, please go to www.mcfco.com.
Note to Investors
This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of the Company. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our Form 10-K filed on March 18, 2010. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," and "would" or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. The Form 10-K filed on March 18, 2010, together with this press release and the financial information contained herein, is available on our website, www.mcfco.com. Please click on "Investor Relations."
MERRIMAN CURHAN FORD GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
2009 | 2008 | |||
Revenue: | ||||
Commissions | $ 40,180,288 | $ 33,678,706 | ||
Principal transactions | (21,702) | (9,040,218) | ||
Investment banking | 7,236,059 | 11,432,454 | ||
Advisory and other | 1,868,397 | 496,894 | ||
Total revenue | 49,263,042 | 36,567,836 | ||
Operating expenses: | ||||
Compensation and benefits | 41,733,106 | 36,670,457 | ||
Brokerage and clearing fees | 994,312 | 3,042,133 | ||
Professional services | 2,514,225 | 9,161,729 | ||
Occupancy and equipment | 2,148,733 | 2,303,944 | ||
Communications and technology | 3,364,171 | 3,762,954 | ||
Depreciation and amortization | 477,729 | 705,883 | ||
Travel and entertainment | 1,507,107 | 2,921,196 | ||
Legal services and litigation settlement expense | 7,776,917 | - | ||
Other | 2,326,095 | 4,411,128 | ||
Total operating expenses | 62,842,395 | 62,979,424 | ||
Operating loss | (13,579,353) | (26,411,588) | ||
Other income | 2,000,000 | - | ||
Change in warrant liability | 6,910,656 | - | ||
Interest income | 15,658 | 375,949 | ||
Interest expense | (1,341,753) | (72,304) | ||
Loss from continuing operations before income taxes | (5,994,792) | (26,107,943) | ||
Income tax benefit | 627,923 | 1,635,214 | ||
Loss from continuing operations | (5,366,869) | (24,472,729) | ||
Loss from discontinued operations | (94,894) | (5,801,076) | ||
Net loss | (5,461,763) | (30,273,805) | ||
Preferred stock deemed dividend | $ (5,066,702) | $ - | ||
Preferred stock cash dividend | $ (192,100) | $ - | ||
Net loss attributable to common shareholders | $ (10,720,565) | $ (30,273,805) | ||
Basic and diluted net loss per share: | ||||
Loss from continuing operations | $ (0.42) | $ (1.95) | ||
Loss from discontinued operations | (0.01) | (0.46) | ||
Net loss | $ (0.43) | $ (2.41) | ||
Net loss attributable to common shareholders | $ (0.84) | $ (2.41) | ||
Weighted average number of common shares: | ||||
Basic and diluted | 12,693,648 | 12,550,872 | ||
MERRIMAN CURHAN FORD GROUP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) | ||||
ASSETS | 2009 | 2008 | ||
Cash and cash equivalents | $ 5,656,750 | $ 6,358,128 | ||
Securities owned: | ||||
Marketable, at fair value | 4,728,940 | 4,622,577 | ||
Not readily marketable, at estimated fair value | 272,463 | 366,061 | ||
Other | 67,448 | 185,065 | ||
Restricted cash | 1,072,086 | 1,131,182 | ||
Due from clearing broker | 2,546,581 | 1,752,535 | ||
Accounts receivable, net | 470,992 | 612,234 | ||
Prepaid expenses and other assets | 801,946 | 619,759 | ||
Equipment and fixtures, net | 506,535 | 1,260,011 | ||
Assets held for sale | - | 1,958,038 | ||
Total assets | $ 16,123,741 | $ 18,865,590 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Liabilities: | ||||
Accounts payable | $ 346,220 | $ 712,591 | ||
Commissions and bonus payable | 4,133,924 | 3,182,941 | ||
Accrued expenses | 2,755,831 | 3,637,345 | ||
Due to clearing and other brokers | 7,185 | 28,022 | ||
Securities sold, not yet purchased | 161,461 | 903,217 | ||
Deferred revenue | 304,334 | 709,691 | ||
Capital lease obligation | 397,958 | 923,683 | ||
Liabilities held for sale | - | 1,052,899 | ||
Total liabilities | 8,106,913 | 11,150,389 | ||
Stockholders’ equity: | ||||
Convertible Preferred stock, Series A–$0.0001 par value; 2,000,000 shares | ||||
authorized; 2,000,000 shares issued and 0 shares outstanding as of | ||||
December 31, 2009 and 2008; aggregate liquidation | ||||
preference of $0 | - | - | ||
Convertible Preferred stock, Series B–$0.0001 par value; 12,500,000 shares | ||||
authorized; 8,750,000 shares issued and 0 shares outstanding as of | ||||
December 31, 2009 and 2008; aggregate liquidation preference of $0 | - | - | ||
Convertible Preferred stock, Series C–$0.0001 par value; 14,200,000 shares | ||||
authorized; 11,800,000 shares issued and 0 shares outstanding as of | ||||
December 31, 2009 and 2008; aggregate liquidation preference of $0 | - | - | ||
Convertible Preferred stock, Series D–$0.0001 par value; 24,000,000 | ||||
shares authorized, 23,720,916 shares issued and 23,720,916 shares | ||||
outstanding as of December 31, 2009; and 0 shares authorized, issued | ||||
and outstanding as of December 31, 2008; aggregate liquidation | ||||
preference of $10,199,994 prior to conversion, and pari passu with | ||||
common stock on conversion | 2,372 | - | ||
Common stock, $0.0001 par value; 300,000,000 shares authorized; | ||||
12,988,073 and 12,756,656 shares issued and 12,786,496 and | ||||
12,730,218 shares outstanding as of December 31, 2009 and | ||||
2008, respectively | 1,299 | 1,278 | ||
Additional paid-in capital | 133,054,192 | 127,193,195 | ||
Treasury stock | (225,613) | (125,613) | ||
Accumulated deficit | (124,815,422) | (119,353,659) | ||
Total stockholders’ equity | 8,016,828 | 7,715,201 | ||
Total liabilities and stockholders’ equity | $ 16,123,741 | $ 18,865,590 | ||
MERRIMAN CURHAN FORD GROUP, INC. RECONCILIATION OF NON-GAAP TO GAAP MEASURES – THREE MONTHS (unaudited) | ||||||||||||||||
Three Months Ended December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
As Reported | Less ICD | Less Other | Pro-Forma | As Reported | Less ICD | Less Other | Pro-Forma | |||||||||
Revenue: | ||||||||||||||||
Commissions | $ 11,287,720 | $ 7,714,682 | $ - | $ 3,573,038 | $ 9,325,010 | $ 4,132,373 | $ - | $ 5,192,637 | ||||||||
Principal transactions | 109,318 | (685) | (815,183) | 925,186 | (3,759,668) | - | (1,669,516) | (2,090,152) | ||||||||
Investment banking | 1,824,596 | - | - | 1,824,596 | 2,008,788 | - | - | 2,008,788 | ||||||||
Advisory and other fees | 250,116 | - | - | 250,116 | 90,267 | - | - | 90,267 | ||||||||
Total revenue | 13,471,750 | 7,713,997 | (815,183) | 6,572,936 | 7,664,397 | 4,132,373 | (1,669,516) | 5,201,540 | ||||||||
Operating expenses: | ||||||||||||||||
Compensation and | ||||||||||||||||
benefits | 12,045,620 | 6,979,109 | - | 5,066,511 | 5,465,311 | 2,535,574 | - | 2,929,737 | ||||||||
Brokerage and | ||||||||||||||||
clearing fees | 202,905 | 16,923 | - | 185,982 | 999,305 | 39,355 | - | 959,950 | ||||||||
Professional services | 718,928 | 210,286 | - | 508,642 | 1,980,129 | 35,420 | 1,172,607 | 772,102 | ||||||||
Occupancy and | ||||||||||||||||
equipment | 531,386 | 12,672 | - | 518,714 | 702,839 | 21,702 | - | 681,137 | ||||||||
Communications | ||||||||||||||||
and technology | 921,192 | 195,869 | - | 725,323 | 1,206,302 | 213,324 | - | 992,978 | ||||||||
Depreciation and | ||||||||||||||||
amortization | 104,816 | - | - | 104,816 | 168,717 | - | - | 168,717 | ||||||||
Travel and | ||||||||||||||||
entertainment | 448,267 | 147,744 | - | 300,523 | 393,113 | 174,152 | - | 218,961 | ||||||||
Legal and litigation | ||||||||||||||||
settlement expense | 1,140,860 | - | 717,089 | 423,771 | - | - | - | - | ||||||||
Other expenses | 694,661 | 115,337 | - | 579,324 | 1,114,028 | 29,706 | - | 1,084,322 | ||||||||
Total operating | ||||||||||||||||
expenses | 16,808,635 | 7,677,940 | 717,089 | 8,413,606 | 12,029,744 | 3,049,233 | 1,172,607 | 7,807,904 | ||||||||
Operating income/(loss) | $ (3,336,885) | $ 36,057 | $ (1,532,272) | $ (1,840,670) | $ (4,365,347) | $ 1,083,140 | $ (2,842,123) | $ (2,606,364) | ||||||||
Note – The column headed "Less Other" includes unrealized gains/losses in "Principal transactions" revenues, and litigation settlement and approximate legal expenses paid as related to the Del Biaggio/Cacchione matters.
MERRIMAN CURHAN FORD GROUP, INC. RECONCILIATION OF NON-GAAP TO GAAP MEASURES – TWELVE MONTHS (unaudited) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
As Reported | Less ICD | Less Other | Pro-Forma | As Reported | Less ICD | Less Other | Pro-Forma | |||||||||
Revenue: | ||||||||||||||||
Commissions | $ 40,180,288 | $ 27,789,003 | $ - | $ 12,391,285 | $ 33,678,706 | $ 11,293,429 | $ - | $ 22,385,277 | ||||||||
Principal transactions | (21,702) | (2,973) | (1,295,475) | 1,276,746 | (9,040,218) | - | (9,774,573) | 734,355 | ||||||||
Investment banking | 7,236,059 | - | - | 7,236,059 | 11,432,454 | - | - | 11,432,454 | ||||||||
Advisory and other fees | 1,868,397 | - | - | 1,868,397 | 496,894 | - | - | 496,894 | ||||||||
Total revenue | 49,263,042 | 27,786,030 | (1,295,475) | 22,772,487 | 36,567,836 | 11,293,429 | (9,774,573) | 35,048,980 | ||||||||
Operating expenses: | ||||||||||||||||
Compensation and | ||||||||||||||||
benefits | 41,733,106 | 25,499,105 | - | 16,234,001 | 36,670,457 | 7,489,738 | - | 29,180,719 | ||||||||
Brokerage and | ||||||||||||||||
clearing fees | 994,312 | 62,652 | - | 931,660 | 3,042,133 | 101,898 | - | 2,940,235 | ||||||||
Professional services | 2,514,224 | 307,283 | - | 2,206,941 | 9,161,729 | 108,900 | 4,191,590 | 4,861,239 | ||||||||
Occupancy and | ||||||||||||||||
equipment | 2,148,733 | 54,278 | - | 2,094,455 | 2,303,944 | 28,742 | - | 2,275,202 | ||||||||
Communications | ||||||||||||||||
and technology | 3,364,171 | 573,709 | - | 2,790,462 | 3,762,954 | 456,501 | - | 3,306,453 | ||||||||
Depreciation and | ||||||||||||||||
amortization | 477,729 | - | - | 477,729 | 705,883 | - | - | 705,883 | ||||||||
Travel and | ||||||||||||||||
entertainment | 1,507,107 | 674,471 | - | 832,636 | 2,921,196 | 620,016 | - | 2,301,180 | ||||||||
Legal and litigation | ||||||||||||||||
settlement expense | 7,776,918 | - | 7,707,548 | 69,370 | - | - | - | - | ||||||||
Other expenses | 2,326,095 | 404,678 | - | 1,921,417 | 4,411,128 | 147,583 | - | 4,263,545 | ||||||||
Total operating | ||||||||||||||||
expenses | 62,842,395 | 27,576,176 | 7,707,548 | 27,558,671 | 62,979,424 | 8,953,378 | 4,191,590 | 49,834,456 | ||||||||
Operating income/(loss) | $ (13,579,353) | $ 209,854 | $ (9,003,023) | $ (4,786,184) | $ (26,411,588) | $ 2,340,051 | $ (13,966,163) | $ (14,785,476) | ||||||||
Note – The column headed "Less Other" includes unrealized gains/losses in "Principal transactions" revenues, and litigation settlement and approximate legal expenses paid as related to the Del Biaggio/Cacchione matters.
SOURCE Merriman Curhan Ford Group, Inc.
