Gleacher & Company Reports Third Quarter 2013 Financial Results

  Gleacher & Company Reports Third Quarter 2013 Financial Results

Business Wire

NEW YORK -- 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)

                     Three Months Ended            Nine Months Ended
(In thousands,
except for              September     September       September     September
per-share               30,             30,             30,             30,
amounts)
                        2013            2012            2013            2012
Revenue:                (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
Investment
gains/(losses),         $ 92            $  163          $  (338)        $  156
net
Fees and other           163             222            495            710
Total revenue            255             385            157            866
Expenses:
Compensation and          2,876^1          2,968           7,516           9,149
benefits
Professional fees         3,923^2          3,196           9,521           8,543
Communications
and data                  280              480             974             1,525
processing
Occupancy,
depreciation and          344              481             1,109           1,255
amortization
Other                    4,176^3         928            5,376          2,485
Total
non-interest             11,599          8,053          24,496         22,957
expenses
Loss from
continuing
operations before
income
taxes and
discontinued              (11,344)         (7,668)         (24,339)        (22,091)
operations
Income tax               74              (2,223)        228            22,747
expense/(benefit)
Loss from
continuing                (11,418)         (5,445)         (24,567)        (44,838)
operations
(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)
                                                                           
(Loss)/earnings
per share:
Basic
(loss)/income per
share
Continuing              $ (1.85)        $  (0.92)       $  (4.03)       $  (7.54)
operations
Discontinued             (0.92)          0.45           (11.81)        (3.63)
operations
Net loss per            $ (2.77)        $  (0.47)       $  (15.84)      $  (11.17)
share
                                                                           
Diluted
(loss)/income per
share
Continuing              $ (1.85)        $  (0.92)       $  (4.03)       $  (7.54)
operations
Discontinued             (0.92)          0.45           (11.81)        (3.63)
operations
Net loss per            $ (2.77)        $  (0.47)       $  (15.84)      $  (11.17)
share
                                                                           
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



     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
^1  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.

     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
^2   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.

     Includes restructuring charges of approximately (i) $3.2 million related
     to the Company terminating the lease for its headquarters at 1290 Avenue
^4   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 million of severance.



Consolidated Statement of Financial Condition (Unaudited)

(In thousands, except for share and          September 30,   December 31,
per-share amounts)
                                                2013              2012
Assets:
Cash and cash equivalents                       $  63,375         $  44,868
Cash and securities segregated for                 6,000             13,000
regulatory and other purposes
Receivables from
Brokers, dealers and clearing                      9,187             12,824
organizations
Related parties                                    1,546             1,474
Other                                              1,049             12,563
Financial instruments owned, at fair               883               1,096,181
value
Investments                                        17,884            20,478
Office equipment and leasehold                     186               5,311
improvements, net
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                   $  -              $  638,009
organizations
Related parties                                    1,025             2,944
Other                                              2,733             2,251
Securities sold under agreements to                -                 159,386
repurchase
Securities sold, but not yet purchased,            -                 132,730
at fair value
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           1,337             1,337
10,000,000 shares)
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'             $  108,958        $  1,229,638
Equity
                                                                     
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.

Contact:

Gleacher & Company, Inc.
Investor Relations, 212-273-7100
 
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