·

Investment Banking Revenues. Investment banking revenues were $30.3 million in the fourth quarter of 2009 compared with $11.3 million in the fourth quarter of 2008 and $15.6 million in the third quarter of 2009, an increase of 167% and 95%, respectively.  Total transactions for the fourth quarter of 2009 were 49 compared with 14 in the year-ago quarter and 23 in the third quarter of 2009.  The increase in revenues from the third quarter of 2009 was attributable to a significant increase in the number of equity capital raising transactions, as well as strategic advisory transactions with larger values.

·

Brokerage Revenues.  Brokerage revenues were $21.7 million in the fourth quarter of 2009 compared with $27.3 million in the fourth quarter of 2008 and $24.3 million in the third quarter of 2009, a 20% and 10% decrease, respectively.  Revenues in the fourth quarter of 2009 decreased from the third quarter of 2009 due to a decline in U.S. and Canadian equity commissions, which primarily were impacted by lower market volumes.

·

Asset Management Revenues.  Asset management revenues were $8.4 million in the fourth quarter of 2009 compared with net losses of $7.0 million in the fourth quarter of 2008 and revenues of $3.9 million in the third quarter of 2009.  Asset management revenues consisted of management fees of $4.5 million, net realized and unrealized gains in warrants and other securities of $3.1 million and net realized and unrealized private equity gains of $0.8 million.  Assets under management were $1.5 billion as of December 31, 2009.

·	Compensation and Benefits Expenses.  Compensation and benefits expenses were $45.3 million in the fourth quarter of 2009 compared with $28.1 million in the fourth quarter of 2008 and $27.3 million in the third quarter of 2009, a 61% and 66% increase, respectively.

·	Non-compensation Expenses. Non-compensation expenses were $27.6 million in the fourth quarter of 2009 compared with $36.1 million in the fourth quarter of 2008 and $30.3 million in the third quarter of 2009, a decrease of 24% from the year-ago quarter and 9% from the third quarter of 2009.

·

Provision for Taxes.  The firm recorded a tax expense of $0.9 million in the fourth quarter of 2009 related entirely to taxable income attributable to the firm’s Canadian operations.  As of December 31, 2008, the firm recorded a full valuation allowance on its U.S. and U.K. deferred tax assets and, therefore, did not recognize a tax benefit on its net loss in these tax jurisdictions in 2009.

 
 

·	Capital.  As of December 31, 2009, the firm’s cash and cash equivalents were $97.1 million, shareholders’ equity and book value per share were $131.3 million and $4.14, respectively, and tangible shareholders’ equity and tangible book value per share were $114.9 million and $3.63, respectively.

		Three Months Ended December 31,								Year Ended December 31,
		2009				2008				2009				2008
Revenue Detail:
Investment banking
Capital raising		$	18,026			$	2,979			$	45,188			$	28,183
Strategic advisory			12,277				8,360				25,977				35,122
Total investment banking			30,303				11,339				71,165				63,305
Brokerage			21,715				27,293				103,170				131,939
Asset management
Management fees			4,504				3,807				15,205				14,691
Private equity realized and unrealized gains and (losses) – net			811				( 9,280	)			(952	)			( 13,414	)
Other securities realized and unrealized gains and (losses) – net			3,047				( 1,532	)			7,211				( 8,397	)
Total asset management			8,362				( 7,005	)			21,464				( 7,120	)
Interest income			170				640				913				7,341
Total revenues			60,550				32,267				196,712				195,465
Interest expense			(433	)			(  724	)			(1,656	)			(  5,938	)
Net revenues		$	60,117			$	31,543			$	195,056			$	189,527

Investment Banking Transactions:
Capital raising			43				6				92				59
Strategic advisory			6				8				23				23
Total transactions			49				14				115				82
Average revenue per transaction		$	618			$	810			$	619			$	772
Other Metrics:
Non-GAAP compensation ratio(1)			76.4	%			66.1	%			68.0	%			69.4	%
Non-compensation ratio(2)			46.0	%			114.6	%			62.8	%			125.5	%
Assets under management		$	1,496,721			$	1,342,066			$	1,496,721			$	1,342,066
Shareholders’ equity		$	131,337			$	171,901			$	131,337			$	171,901
Less: Other intangible assets			(16,401	)			(23,229	)			(16,401	)			(23,229	)
Tangible shareholders’ equity		$	114,936			$	148,672			$	114,936			$	148,672
Common shares outstanding(3)			31,693				30,789				31,693				30,789
Book value per share		$	4.14			$	5.58			$	4.14			$	5.58
Tangible book value per share		$	3.63			$	4.83			$	3.63			$	4.83

 
 

(2) The firm’s non-compensation ratio is the ratio of total expenses (other than compensation and benefits expenses and interest expense) to net revenues.

·	adjusting its GAAP net loss of $13.7 million to exclude the after-tax non-cash expense associated with the amortization of intangible assets acquired as a result of its acquisition of Westwind Partners of $0.8 million;

·	using its non-GAAP net loss of $12.9 million as the numerator of its non-GAAP basic and diluted loss per share calculations; and

·	using as the denominator of its non-GAAP basic and diluted loss per share calculations the basic and diluted weighted average shares used, respectively, as the denominator of its GAAP basic and diluted loss per share calculations.

·

adjusting its GAAP net loss of $62.2 million to exclude (i) the after-tax non-cash expense associated with its initial grant of restricted stock units of $0.1 million and (ii) the after-tax non-cash expense associated with the amortization of intangible assets acquired as a result of its acquisition of Westwind Partners of $5.8 million;

·	using its non-GAAP net loss of $56.3 million as the numerator of its non-GAAP basic and diluted loss per share calculations; and

·	using as the denominator of its non-GAAP basic and diluted loss per share calculations the basic and diluted weighted average shares used, respectively, as the denominator of its GAAP basic and diluted loss per share calculations.

		Three Months Ended				Year Ended
		December 31, 2009				December 31, 2009
		(in millions)
Net loss		$	(13.7	)		$	(62.2	)
Exclusion of the after-tax non-cash expense associated with the initial grant of restricted stock units			–				0.1
Exclusion of the after-tax non-cash expense associated with the amortization of intangible assets acquired as a result of the firm’s acquisition of Westwind Partners			0.8				5.8
Non-GAAP net loss		$	(12.9	)		$	(56.3	)

		Three Months Ended				Year Ended
		December 31, 2009				December 31, 2009
Weighted average shares used in computation of net loss per share:
Basic (in thousands)			32,789				32,515
Diluted (in thousands)			32,789				32,515
Net loss per share:
Basic		$	(0.42	)		$	(1.91	)
Diluted		$	(0.42	)		$	(1.91	)
Non-GAAP net loss per share:
Basic		$	(0.39	)		$	(1.73	)
Diluted		$	(0.39	)		$	(1.73	)

		Three Months Ended				Year Ended
		December 31, 2009				December 31, 2009
		(in millions)
Compensation and benefits expenses		$	45.3			$	133.4
Exclusion of the pre-tax non-cash expense associated with the initial grant of restricted stock units…………………………………….			–				0.2
Non-GAAP compensation and benefits expense		$	45.3			$	133.2
Net revenues		$	60.1			$	195.1
Exclusion of investment (gains) losses in private equity			(0.8	)			0.9
Non-GAAP net revenues		$	59.3			$	196.0

		Three Months Ended				Year Ended
		December 31, 2008				December 31, 2008
		(in millions)
Compensation and benefits expenses		$	28.1			$	147.2
Exclusion of the pre-tax non-cash expense associated with the initial grant of restricted stock units			1.1				6.3
Non-GAAP compensation and benefits expense		$	27.0			$	140.9
Net revenues		$	31.5			$	189.5
Exclusion of investment (gains) losses in private equity			9.3				13.4
Non-GAAP net revenues		$	40.8			$	202.9

 

		Three Months Ended				Year Ended
		December 31, 2009				December 31, 2009
		(in millions)
Total expenses excluding interest		$	72.9			$	255.9
Less compensation and benefits expenses			45.3				133.4
Non-compensation expenses		$	27.6			$	122.5

 

 

		Three Months Ended				Year Ended
		December 31, 2008				December 31, 2008
		(in millions)
Total expenses excluding interest		$	64.3			$	385.1
Less compensation and benefits expenses			28.2				147.2
Non-compensation expenses		$	36.1			$	237.9