EX-99.1 2 c56870_ex99-1.htm c56870_ex99-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 99.1

NEWS RELEASE

Financial Dynamics
Julie Prozeller / Hannah Sloane
212-850-5600

 

Rodman & Renshaw Capital Group, Inc. Announces Financial Results for the Fourth Quarter and
Year Ended December 31, 2008

New York, NY, March 9, 2009 – Rodman & Renshaw Capital Group, Inc. (NASDAQ: RODM) today announced its results for the fourth quarter and year ended December 31, 2008.

Total revenues for the fourth quarter were $12.8 million, excluding non-cash principal transactions losses. Including non-cash principal transaction losses of $16.9 million, total revenues for the fourth quarter were $(4.1) million, compared to $14.4 million in the fourth quarter of 2007. On a U.S. GAAP basis, the Company reported a net loss of $41.7 million, or $(1.23) per share, for the quarter, compared to a net loss of $1.6 million, or $(0.05) per share, for the fourth quarter of 2007.

Adjusting for certain non-cash events related to principal transactions losses and the impairment of goodwill and intangible assets, the Company reported a net loss on a non-U.S. GAAP basis of $4.1 million, or $(0.12) per share, for the quarter, compared to a net loss of $1.1 million, or ($0.03) per basic share, for the fourth quarter of 2007. A reconciliation between GAAP results and non-GAAP measures is contained in the tables that accompany this release, under “Non-GAAP Financial Measures.”

Total revenues for the year ended 2008 decreased to $49.2 million, compared to $70.0 million for the year ended 2007. On a U.S. GAAP basis, the Company reported a net loss of $37.4 million, or $(1.12) per share, for the year ended 2008, compared to net income of $4.8 million, or $0.20 per share, for the year ended 2007. The Company reported a net loss on a non-U.S. GAAP basis of $2.7 million, or ($0.08) per share, for the year ended 2008.

“Market conditions deteriorated rapidly in the fall, and our performance has been impacted negatively by the downward spiral” stated Edward Rubin, Rodman’s chief executive officer and president. Rubin added: “To strive to be well-positioned when the capital markets and global economy experience a recovery, we will continue to focus on high margin businesses and reducing fixed costs. Although, we are not able to evaluate when this recovery will occur and it is difficult for us to predict how our business will perform during the on-going economic crisis, we continue to work hard to manage through the current financial storm.”

BUSINESS HIGHLIGHTS

Investment Banking

Investment banking revenue was $9.4 million for the fourth quarter, compared to $8.6 million in investment banking revenue for the fourth quarter of 2007.

  • Private placement and underwriting revenue for the fourth quarter was $6.1 million, compared to $7.9 million for the fourth quarter of 2007.

  • Strategic advisory fees for the fourth quarter were $3.3 million, compared to $0.7 million for the fourth quarter of 2007.

Sales & Trading

  • Commissions for the fourth quarter were $1.8 million, compared to $2.0 million for the fourth quarter of 2007.

  • Principal transaction losses for the fourth quarter were $16.9 million, compared to principal transaction revenue of $1.6 million for the fourth quarter of 2007.

Conference Fees

  • Conference fee revenue for the fourth quarter was $1.6 million, compared to $1.8 million for the fourth quarter of 2007.

Operating Expenses

  • Compensation Expense

   

  • Employee compensation and benefits expense for the fourth quarter was $7.9 million, compared to $10.0 million for the fourth quarter of 2007.
     
       

  • Employee compensation and benefits expense for the fourth quarter represented 62% of transaction related revenue (revenue excluding principal transactions), compared to 78% for the fourth quarter of 2007.

    • Non-Compensation Expense

       

  • Non-compensation expense for the fourth quarter, excluding impairment of goodwill and other intangible assets, was $10.3 million, compared to $7.6 million for the fourth quarter of 2007.

    Cost Savings Initiatives / Fixed Costs

    • The Company has undertaken to reduce its fixed costs. In order to accomplish this, since December 31, 2008, the Company has:

       

  • Cut annualized fixed compensation expense by approximately $2.5 million and reduced headcount by approximately 8%;
     
       

  • Suspended its Spring 2009 European Investor Conference in recognition of budget constraints of both issuers and investors, which is expected to result in $3.0 million of cost savings; and
           
       

  • Terminated or modified certain vendor relationships to align with market driven needs which is expected to result in $1.0 million in cost savings.
           

    • As a result, the Company has reduced its quarterly fixed cash costs to approximately $7.5 million. The Company will continue to review its operations going forward and will make additional reductions if considered necessary.

    Capital

    • At December 31, 2008 stockholders’ equity was $30.5 million. Cash and cash equivalents was $21.8 million. Liquid assets were $27.7 million, consisting of cash and cash equivalents, “Level I” assets and current receivables. Book value per common share was $0.72. Book value per common share is based on common shares outstanding including unvested and vested restricted stock and restricted stock units.

    • At February 28, 2009, cash and cash equivalents was approximately $12.5 million. The decrease since year end is a result of 2008 year end bonuses of $2.7 million that were paid to Rodman employees in February 2009, contingent payments of $2.5 million related to transactions consummated in 2008, severance payments of $500 thousand and losses from operations of $3.6 million. The Company is cognizant of its liquidity position and will take appropriate action if considered necessary to manage this during 2009.

    2

    Conference Call details

    A conference call with management to discuss the financial results for the fourth quarter of 2008 will be held today at 9:00 AM Eastern time. Investors can participate in the conference call by dialing (888)-713-4214 (domestic) or (617)-213-4866 (international). The passcode for the call is 66565661. Participants may pre-register at: https://www.theconferencingservice.com/prereg/key.process?key=PC7776U87 Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

    The conference will be replayed in its entirety beginning at 1:00 PM on March 9, 2009, through to 11:59 PM on March 16, 2009. If you wish to listen to the replay of this conference call, please dial (888)-286-8010 (domestic) or (617)-801-6888 (international) and enter passcode 60928505.

    About Rodman & Renshaw Capital Group, Inc.

    Rodman & Renshaw Capital Group, Inc. is a holding company with a number of direct and indirect subsidiaries, including Rodman & Renshaw, LLC.

    Rodman & Renshaw, LLC is a full service investment bank dedicated to providing investment banking services to companies that have significant recurring capital needs due to their growth and development strategies, along with research and sales and trading services to investor clients that focus on such companies. Rodman is a leading investment banking firm with particular emphasis on “essential” industries with significant capital needs, including health care (especially life science), energy (especially upstream oil and gas) and metals/mining (ferrous and non-ferrous metals), as well as a leader in the PIPE (private investment in public equity) and RD (registered direct placements) transaction markets.

    MEMBER FINRA, SIPC

    Cautionary Note Regarding Forward Looking Statements

    This press release contains forward-looking statements regarding future events and financial performance. In some cases, you can identify these statements by words such as “may,” “might,” “will,” “should,” “except,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms and other comparable terminology. These statements involve a number of risks and uncertainties and are based on numerous assumptions involving judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. There are or may be important factors that could cause our actual results to materially differ from our historical results or from any future results expressed or implied by such forward looking statements.

    These factors include, but are not limited to, those discussed under the section entitled “Risk Factors” in our Annual Report on Form 10-K, filed March 14, 2008, which is available at the Securities and Exchange Commission website at www.sec.gov. The forward-looking statements in this press release are based upon management's reasonable belief as of the date hereof. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

    3

    RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH AND
    TWELVE MONTH PERIODS ENDED DECEMBER 31, 2008 AND 2007

       
    For the Three Months Ended
    For the Year Ended
    		 
       
    December 31
    December 31
    		 
         
    2008
    		 
    2007
    		 
    2008
    		 
    2007
    		 
    Revenues:    
    (Unaudited)
    		   
    		     
    (Unaudited)
    		     
    		    
       Investment banking  
    $
    		9,363,924    
    $8,581,509
    		   
    $
    		52,473,187    
    $
    		55,829,294  
       Principal transactions    
    		 (16,906,310)    
    1,664,817
    		     
    		 (13,048,463 )    
    		 3,872,162  
       Commissions    
    		 1,797,395    
    1,981,232
    		     
    		 6,491,981      
    		 6,913,476  
       Conference fees    
    		 1,552,510    
    1,753,004
    		     
    		 2,395,375      
    		 2,472,013  
       Interest and other income    
    		 105,169    
    410,316
    		     
    		 876,316      
    		 883,071  
         Total revenues
    		 
    $
    		(4,087,312 ) $
    14,390,878
    		   
    $
    		49,188,396    
    $
    		69,970,016  
     
    Operating expenses:    
    		      
    		     
    		        
    		    
       Employee compensation and benefits    
    		 7,937,990    
    9,988,576
    		     
    		 34,638,783      
    		 41,332,945  
       Other employee benefits    
    		 341,642    
    175,520
    		     
    		 764,289      
    		 498,032  
       Conference fees    
    		 3,491,209    
    3,550,428
    		     
    		 6,223,308      
    		 5,903,295  
       Broker dealer commissions    
    		 93,653    
    53,186
    		     
    		 304,332      
    		 196,725  
       Professional and consulting fees    
    		 1,884,154    
    1,336,810
    		     
    		 6,275,641      
    		 4,731,834  
       Business development    
    		 561,106    
    915,428
    		     
    		 2,925,523      
    		 3,005,706  
       Advertising    
    		 219,066    
    -
    		     
    		 809,311      
    		 -  
       Communication and market research    
    		 763,240    
    516,019
    		     
    		 2,645,701      
    		 1,980,612  
       Office supplies    
    		 177,757    
    175,492
    		     
    		 569,347      
    		 717,052  
       Occupancy and equipment rentals    
    		 1,005,591    
    131,768
    		     
    		 2,910,129      
    		 1,085,393  
       Clearance and execution charges    
    		 82,198    
    297,922
    		      
    		 424,590    
     
    		504,789  
       Depreciation and amortization    
    		 1,167,812    
    138,700
    		     
    		 2,384,115      
    		 604,868  
       Impairment of goodwill and other intangible assets    
    		 20,654,282    
    -
    		     
    		 21,719,282      
    		 375,717  
       Other    
    		 472,855    
    297,128
    		     
    		 1,548,586      
    		 959,307  
         Total operating expenses
    		   
    		 38,852,555    
    17,576,977
    		     
    		 84,142,937      
    		 61,896,275  
     
     Operating (loss) income    
    		 (42,939,867 )  
    (3,186,099
    		)    
    		 (34,954,541 )    
    		 8,073,741  
     
       Interest expenses    
    		 -    
    -
    		      
    		 -      
    		 (3,771,570 )
     
     (Loss) Income from continuing operations before    
    		      
    		     
    		        
    		    
    income taxes    
    		 (42,939,867 )  
    (3,186,099
    		)    
    		 (34,954,541 )    
    		 4,302,171  
       Income tax benefit (expense)    
    		 1,251,625    
    1,641,509
    		     
    		 (2,482,494 )    
    		 440,066  
       (Loss) Income from continuing operations    
    		 (41,688,242 )  
    (1,544,590
    		)    
    		 (37,437,035 )    
    		 4,742,237  
     (Loss) Income from discontinued operations    
    		 -    
    (28,492
    		 )    
    		 -      
    		 16,596  
     Net (loss) income  
    $
    		(41,688,242 ) $
    (1,573,082
    		)  
    $
    		(37,437,035 )  
    $
    		4,758,833  
     
    Weighted average common shares outstanding:    
    		      
    		     
    		        
    		    
       Basic    
    		 33,824,319    
    31,347,826
    		     
    		 33,375,012      
    		 23,039,216  
       Diluted    
    		 33,824,319    
    31,347,826
    		     
    		 33,375,012      
    		 24,023,897  
     
    Net (loss) per share – basic    
    		      
    		     
    		        
    		    
       Income (loss) from continuing operations  
    $
    		(1.23 ) $
    (0.05
    		)  
    $
    		(1.12 )  
    $
    		0.21  
       Income (loss) from discontinued operations    
    		 -    
    -
    		      
    		 -      
    		 -  
       Net income (loss)  
    $
    		(1.23 ) $
    (0.05
    		)  
    $
    		(1,12 )  
    $
    		0.21  
     
    Net income per share – diluted    
    		      
    		     
    		        
    		    
       Income (loss) from continuing operations  
    $
    		(1.23 ) $
    $(0.05
    		)  
    $
    		(1.12 )  
    $
    		0.20  
       Income (loss) from discontinued operations    
    		 -            
    		 -      
    		 -  
       Net (loss) income  
    $
    		(1.23 ) $
    (0.05
    		)  
    $
    		(1.12 )  
    $
    		0.20  

    4

    RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF DECEMBER 31, 2008
    AND DECEMBER 31, 2007

       
    December 31
    		 
    December 31,
    		 
         
    2008
    		 
    		 
    2007
    		 
       
    (Unaudited)
    		   
    		   
    Assets  
    		     
    		   
    Cash and cash equivalents  
    		     
    		   
         Unrestricted
    		 
    $
    		18,383,224    
    $
    		54,834,189  
         Restricted
    		   
    		 3,371,108      
    		 -  
    Total cash and cash equivalents  
    		21,754,332    
    		54,834,189  
    Financial instruments owned, at fair value  
    		13,872,184    
    		9,011,405  
    Private placement and other fees receivable  
    		1,974,571    
    		967,473  
    Due from clearing broker  
    		2,713,594    
    		1,888,854  
    Prepaid expenses  
    		439,377    
    		688,550  
    Deferred tax assets  
    		-    
    		2,258,301  
    Property and equipment, net  
    		1,389,705    
    		913,645  
    Other assets  
    		2,632,256    
    		244,790  
    Goodwill and other intangible assets    
    		2,906,436      
    		 1,065,000  
    Total Assets  
    $
    		47,682,455    
    $
    		71,872,207  
     
    Liabilities and Stockholders’ Equity  
    		     
    		   
    Accrued compensation payable  
    $
    		4,882,422    
    $
    		6,140,839  
    Accounts payable and accrued expenses  
    		5,556,374    
    		2,929,072  
    Acquisition related payments  
    		4,950,000    
    		-  
    Conference deposits  
    		-    
    		15,443  
    Financial instruments sold, not yet purchased, at fair value  
    		1,360,767    
    		147,663  
    Distributions payable  
    		-    
    		1,440,000  
    Due to affiliate  
    		398,169    
    		382,963  
    Income tax payable    
    		-      
    		 48,067  
    Total Liabilities  
    $
    		17,147,732    
    $
    		11,104,047  
     
    Stockholders’ Equity  
    		     
    		   
    Common stock, $0.001, par value; 100,000,000 shares authorized;  
    		     
    		   
      35,044,670 and 33,750,000 issued as of December 31, 2008  
    		     
    		   
      and December 31, 2007, respectively
    		 
    		35,045    
    		33,750  
    Preferred stock, $0.001 par value; 1,000,000 authorized; none issued  
    		-    
    		-  
    Additional paid-in capital  
    		70,441,027    
    		62,345,072  
    Treasury stock, 534,500 shares  
    		(1,034,409 )  
    		-  
    Accumulated other comprehensive loss  
    		-    
    		(140,757 )
    Deficit    
    		 (38,906,940 )    
    		(1,469,905 )
    Total Stockholders’ Equity    
    		30,534,723      
    		60,768,160  
     
    Total Liabilities and Stockholders’ Equity  
    $
    		47,682,455    
    $
    		71,872,207  

    5

    RODMAN & RENSHAW CAPITAL GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008

         
    For The Year Ended
    		 
         
    December 31
    		 
         
    2008
    		 
          (Unaudited)  
    Cash flows from operating activities        
     Net loss   $ (37,437,035 )
           Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
                   Depreciation and amortization     2,384,115  
                   Restricted cash     (3,371,108 )
                   Stock based compensation     5,604,576  
                   Realized gain on available for sale investments     140,757  
                   Impairment of goodwill and other intangible assets     21,719,282  
                   Deferred taxes, net     2,258,301  
           Changes in operating assets and liabilities:
    		       
                   Financial instruments owned, at fair value     (710,456 )
                   Private placement and other fees receivable     (1,007,098 )
                   Due from clearing broker     (824,740 )
                   Prepaid expenses     249,173  
                   Other assets, net     (2,387,466 )
                   Financial instruments sold not yet purchased, at fair value     1,213,104  
                   Accrued compensation payable     (1,258,417 )
                   Accounts payable and accrued expenses     2,424,801  
                   Due to affiliate     15,206  
                   Income taxes payable     (48,067 )
                   Conferences deposits     (15,443 )
    Net cash used in operating activities     (11,050,515 )
     
    Cash flows from investing activities        
     Purchases of property and equipment     (1,183,024 )
     Acquisition of Miller & Mathis LLC     (4,508,065 )
     Purchases of trademark     (7,585 )
     Acquisition of COSCO Capital Management LLC     (8,077,044 )
     Purchase of customer relationship intangible asset     (5,000,000 )
     Investments     (4,150,323 )
    Net cash used in investing activities     (22,926,041 )
     
    Cash flows from financing activities        
     Purchase of treasury stocks     (1,034,409 )
     Distributions to members     (1,440,000 )
    Net cash used in financing activities     (2,474,409 )
     
    Net decrease cash and cash equivalents     (36,450,965 )
    Cash and cash equivalents – beginning of period     54,834,189  
     
    Cash and cash equivalents – end of period     18,383,224  
     
    Supplemental disclosures of cash flow information        
     Income taxes paid     244,456  
    Non-cash investing and financing activities        
     Accrued liabilities related to the acquisitions of Miller Mathis and COSCO     5,152,501  
     Additional paid-in-capital related to acquisition of COSCO     2,491,261  
     Issuance of restricted stock to former equity holders of COSCO     1,413  
     Issuance of restricted stock to employees     1,537  

    6

    Non-GAAP Financial Measures

    The Company has utilized the non-GAAP information set forth below as an additional device to aid in understanding and analyzing its financial results for the three months and year ended December 31, 2008. Management believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the Company’s business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods. Reference to these non-GAAP measures should not be considered a substitute for results that are presented in a manner consistent with GAAP.

    A limitation of utilizing these non-GAAP measures is that GAAP accounting does in fact reflect the underlying financial results of the Company’s business. Therefore, management believes that the GAAP measures as well as the corresponding non-GAAP measures of the Company’s financial performance should be considered together.

    (in thousands)                
          For the Three Months          
          Ended      
    For the Year Ended
          December 31, 2008      
    December 31, 2008
    Net cash provided by (used in) operating activities:  
    $
    		4,797    
    $
    		(11,051 )
    Adjustments:                
    Reclassification of restricted cash     (2,607 )     3,371  
    2007 bonus paid in 2008     --       6,141  
    2008 bonus paid in 2009     (2,768 )     (2,768 )
    One-time professional fees (a)     497       1,669  
    Acquisition payments recorded as compensation (b)     --       3,100  
    Aceras Start-up Expenses (c)     533       933  
    Non-GAAP net cash provided by operating activities     452       1,395  
                     

    (a) The non-GAAP adjustment represents non-recurring professional and consulting fees due to the change in our independent accounting firm which was effected in August 2008 and an ongoing arbitration proceeding;

    (b) The non-GAAP adjustment represents the issuance of forgivable loans to certain global capital markets employees as a retention vehicle;

    (c) The non-GAAP adjustment represents start-up expenses related to the formation and operation of Aceras BioMedical LLC.

    A reconciliation of the Company’s fourth quarter and year-ended December 31, 2008 GAAP net loss to its fourth quarter and year-ended December 31, 2008 non-GAAP net loss is set forth below (in millions):

    Net loss for the three months ended December 31, 2008  
    $
    		(41.7 )
             
    Exclusion of non-cash principal transaction losses  
    		16.9  
    Exclusion of the non-cash expense associated with the charge-off of goodwill and other  
    		   
    intangible assets  
    		20.7  
             
    Non-GAAP net loss for the three months ended December 31, 2008  
    $
    		(4.1 )
             
    Net loss for year-ended December 31, 2008  
    $
    		(37.4 )
             
    Exclusion of non-cash principal transaction losses  
    		13.0  
             
    Exclusion of the non-cash expense associated with the charge-off of goodwill and other  
    		   
    intangible assets  
    		21.7  
             
    Non-GAAP net income for the year ended December 31, 2008  
    $
    		(2.7 )

    The Company calculates loss per share in accordance with FASB Statement No. 128, Earnings per Share. Basic loss and diluted loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period.

    7

    The following table sets forth the Company’s GAAP basic and diluted weighted average shares outstanding and its GAAP basic and diluted loss per share for the fourth quarter and year ended of 2008, after applying the adjustments described above:

       
    		For Three Months    
    		   
       
    		Ended    
    		For Year-Ended  
       
    		December 31,    
    		December 31,  
       
    2008
    2008
    		 
    Weighted average shares used in computation of loss per share:  
    		     
    		   
    Basic (in thousands)  
    		33,824    
    		33,375  
    Diluted (in thousands)  
    		33,824    
    		33,375  
     
    Loss per share:  
    		     
    		   
    Basic  
    $
    		(1.23 )  
    $
    		(1.12 )
    Diluted  
    $
    		(1.23 )  
    $
    		(1.12 )
     
    Non-GAAP loss per share:  
    		     
    		   
    Basic  
    $
    		(0.12 )  
    $
    		(0.08 )
    Diluted  
    $
    		(0.12 )  
    $
    		(0.08 )

    8