NITE Nightstar Therapeutics Plc ADS

Fourth Quarter 2005 Operating Earnings from Continuing Operations were $0.16 Per Diluted Share JERSEY CITY, N.J., Jan. 19 /PRNewswire-FirstCall/ -- Knight Capital Group, Inc. (NASDAQ:NITE) today reported GAAP earnings of $41.9 million, or $0.41 per diluted share, for the fourth quarter of 2005. For the fourth quarter of 2005, the company's $63.8 million in pre-tax earnings include $27.1 million in pre-tax operating earnings from continuing operations; $40.4 million related to the sale of strategic investments in shares of the International Securities Exchange, Inc. (ISE) and The Nasdaq Stock Market, Inc. (Nasdaq); and pre-tax charges of $3.7 million related to regulatory reserves for a previously disclosed matter relating to our Asset Management business segment. For the fourth quarter of 2004, the company reported GAAP earnings of $108.4 million, or $0.94 per diluted share, and pre-tax operating earnings from continuing operations of $38.1 million. Income from discontinued operations was $86.0 million, net of tax, or $0.74 per diluted share. "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 fourth quarter of 2005 were $201.3 million, compared to $185.6 million for the fourth quarter of 2004. Revenues for the full year 2005 were $634.6 million, compared to $625.8 million in 2004. The following chart provides a reconciliation of the components of GAAP pre-tax earnings from continuing operations and diluted earnings per share from continuing operations for the fourth quarters of 2004 and 2005: Fourth Quarter 2005 Fourth Quarter 2004 GAAP Pre-Tax Diluted GAAP Pre-Tax Diluted Earnings from Earnings Earnings from Earnings Continuing per Share Continuing per Share Operations from Operations from Continuing Continuing Operations Operations ($ in millions) ($ in millions) Operating Earnings Equity Markets $ 23.0 $ 15.6 Asset Management 6.6 22.3 Corporate (2.5) 0.3 Total Operating Earnings 27.1 $ 0.16 38.1 $ 0.19 Gains on Strategic Investments 40.4 0.25 - - Regulatory and Other Charges (3.7) (0.03) (0.5) - Nonrecurring Tax Benefit - 0.03 - - Total $ 63.8 $ 0.41 $ 37.6 $ 0.19 "Knight's Equity Markets business thrived against the backdrop of a mediocre fourth quarter market that lacked volatility, volume and a typical year-end rally," said Thomas M. Joyce, Chairman and Chief Executive Officer of Knight Capital Group. "Of all the factors leading to the favorable results, our decision to dramatically boost automation in our broker-dealer operations mid-2005 had the greatest impact on profitability. Market share itself matters less and less to us in the broker-dealer business. What matters is profitable market share. Our clients' success is increasingly measured by execution quality, and Knight's results are ever more driven by trading efficiencies and our ability to provide top-flight client service. "Among institutional clients, Knight's model continued to compete well as demand for unbundled offerings grew," Mr. Joyce added. "We incrementally increased our institutional market share and revenues through both deeper penetration and new accounts. The performance of our Asset Management segment in the fourth quarter moved into positive territory in December, and Deephaven ended a challenging year for all hedge funds with slightly higher blended returns than in 2004. "Knight introduced more products and enhancements to our offering in 2005 than in any other year of our history. Much of our effort has been to better leverage our natural liquidity in small- and mid-cap stocks, one of our greatest assets. We broadened access to that liquidity through direct market access and ECN execution, complementing our fundamental institutional sales, cash equity and automated broker-dealer trading operations. In addition, Knight believes that we, as a firm, provide great insight and experience to the trading process, and so we added technical research to help clients make better decisions. In the coming year, Knight will continue its pursuit to become a valued, centralized source for access to high-quality trade execution across asset classes." Q4 2005 Q4 2004 Revenues ($) 201,296,633 185,577,605 Net income from continuing operations ($) 41,871,215 22,454,544 Income from discontinued operations, net of tax ($) - 85,954,320 Net income ($) 41,871,215 108,408,864 Diluted EPS from continuing operations ($) 0.41 0.19 Diluted EPS from discontinued operations ($) - 0.74 Diluted EPS ($) 0.41 0.94 U.S. equity dollar value traded (in $ millions) 498,022 476,142 U.S. equity trades executed (in thousands) 52,289 55,681 Average daily U.S. equity trades (in thousands) 830 870 Nasdaq and Listed equity shares traded (in millions) 26,140 32,834 OTC Bulletin Board and Pink Sheet shares traded (in millions) 137,246 358,910 Average revenue capture per U.S. equity dollar value traded (bps) 1.8 2.2 Average month-end balance of assets under management (in $ millions) 3,047.9 3,584.7 Quarterly fund return to investors* 1.9% 4.8% * Quarterly fund return represents the blended quarterly return across all assets under management in the Deephaven funds YTD 2005 YTD 2004 Revenues ($) 634,623,085 625,750,354 Net income (loss) from continuing operations ($) 66,238,898 (9,771,885) Income from discontinued operations, net of tax ($) 122,007 100,903,791 Net income ($) 66,360,905 91,131,906 Diluted EPS from continuing operations ($) 0.62 (0.08) Diluted EPS from discontinued operations ($) - 0.86 Diluted EPS ($) 0.62 0.77 U.S. equity dollar value traded (in $ millions) 1,882,164 1,730,658 U.S. equity trades executed (in thousands) 204,069 205,903 Average daily U.S. equity trades (in thousands) 810 817 Nasdaq and Listed equity shares traded (in millions) 106,311 125,541 OTC Bulletin Board and Pink Sheet shares traded (in millions) 718,785 1,349,557 Average revenue capture per U.S. equity dollar value traded (bps) 1.8 2.5 Average month-end balance of assets under management (in $ millions) 3,291.1 2,963.5 Year-to-date fund return to investors* 7.2% 6.5% * Year-to-date fund return represents the blended return across all assets under management in the Deephaven funds Equity Markets During the fourth quarter of 2005, the Equity Markets business segment generated total revenues of $134.8 million, compared to $126.6 million in the fourth quarter of 2004. In the fourth quarter of 2005, the Equity Markets business segment reported pre-tax operating earnings of $23.0 million, compared to pre-tax operating earnings of $15.6 million in the fourth quarter of 2004. Asset Management During the fourth quarter of 2005, the Asset Management business segment, Deephaven Capital Management, generated $21.3 million in asset management fees, compared to $48.8 million in the same period a year ago. In the fourth quarter of 2005, the Asset Management business segment reported pre-tax operating earnings of $6.6 million, compared to pre-tax operating earnings of $22.3 million in the fourth quarter of 2004. Asset Management had approximately $2.9 billion under management at December 31, 2005, down from the $3.6 billion under management at December 31, 2004. During the fourth quarter of 2005, the company recorded a $3.7 million pre-tax charge relating to the previously disclosed SEC PIPEs matter. Including the $2.0 million pre-tax charge recorded during the second quarter of 2005, total charges relating to this matter are $5.7 million pre-tax. Corporate In the fourth quarter of 2005, the Corporate segment reported a pre-tax operating loss of $2.5 million, compared to pre-tax operating earnings of $258,000 in the fourth quarter of 2004. Additionally, during the fourth quarter of 2005, the company recognized a pre-tax gain of $24.6 million relating to the sale of approximately 57% of its equity investment in the ISE and a pre-tax gain of $15.8 million relating to the sale of its remaining investment in Nasdaq. The company's investment in the Deephaven funds earned $4.8 million pre-tax during the fourth quarter of 2005, compared to pre-tax earnings of $9.0 million, during the fourth quarter of 2004. At the end of the fourth quarter of 2005, the company had $281.7 million invested in the Deephaven funds. The company had $823.4 million in stockholders' equity as of December 31, 2005, equivalent to a book value of approximately $8.02 per diluted share. As of December 31, 2005, the company had $230.6 million in cash and cash equivalents and a $281.7 million investment in funds managed by Deephaven, its Asset Management business segment. During the fourth quarter of 2005, the company did not repurchase any additional shares under its $345 million stock repurchase program. To date, the company has repurchased 37.6 million shares for $295.9 million. The company cautions that there are no assurances that any further repurchases may actually occur. Copies of this earnings release and other information on the company can be obtained at the company's website, http://www.knight.com/. The company will conduct its fourth quarter 2005 earnings conference call for analysts, investors and the media at 9:00 a.m. Eastern Standard Time (EST) today, January 19, 2006. The conference call will be webcast live at 9:00 a.m. EST for all investors and interested parties on Knight's website. In addition, the company will release its monthly volume statistics for December 2005 on its website 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 multi-strategy 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 pre-tax income (loss) amounts for certain reporting periods before gains on certain sales of strategic investments, charges, writedowns and discontinued operations to assist the reader in understanding the impact of these sales, 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 years ended December 31, December 31, 2005 2004 2005 2004 REVENUES Commissions and fees $ 83,223,402 $ 72,206,052 $296,221,767 $276,010,852 Net trading revenue 48,792,436 53,123,497 165,614,332 250,992,997 Asset management fees 21,325,765 48,814,379 89,226,578 77,658,193 Interest and dividends, net 2,699,913 1,818,167 9,019,081 4,647,059 Investment income and other 45,255,117 9,615,510 74,541,327 16,441,253 Total revenues 201,296,633 185,577,605 634,623,085 625,750,354 EXPENSES Employee compensation and benefits 56,140,363 76,086,322 229,459,520 244,549,546 Execution and clearance fees 27,947,307 23,300,603 99,426,667 111,787,940 Soft dollar and commission recapture expense 17,634,091 15,795,557 63,670,978 60,117,556 Communications and data processing 8,578,291 7,312,818 32,512,930 28,896,451 Payments for order flow and ECN rebates 6,377,074 9,215,539 21,220,284 36,632,317 Professional fees 5,166,504 3,353,340 19,554,523 14,914,772 Depreciation and amortization 4,108,887 3,377,360 16,354,746 14,247,699 Occupancy and equipment rentals 3,367,565 3,960,666 13,553,631 16,852,358 Business development 1,801,385 2,347,014 6,418,984 8,268,973 Writedown of assets and lease loss accrual - 312,192 10,055,252 3,810,453 Regulatory charges and related matters 3,703,428 141,732 5,703,428 79,341,732 Other 2,676,514 2,725,923 11,540,764 6,844,285 Total expenses 137,501,409 147,929,066 529,471,707 626,264,082 Income (loss) from continuing operations before income taxes 63,795,224 37,648,539 105,151,378 (513,728) Income tax expense 21,924,009 15,193,995 38,912,480 9,258,157 Net income (loss) from continuing operations 41,871,215 22,454,544 66,238,898 (9,771,885) Income from discontinued operations, net of tax - 85,954,320 122,007 100,903,791 Net income $ 41,871,215 $108,408,864 $ 66,360,905 $ 91,131,906 Basic earnings per share from continuing operations $ 0.42 $ 0.20 $ 0.64 $ (0.09) Diluted earnings per share from continuing operations $ 0.41 $ 0.19 $ 0.62 $ (0.08) Basic earnings per share from discontinued operations $ - $ 0.77 $ - $ 0.90 Diluted earnings per share from discontinued operations $ - $ 0.74 $ - $ 0.86 Basic earnings per share $ 0.42 $ 0.97 $ 0.64 $ 0.81 Diluted earnings per share $ 0.41 $ 0.94 $ 0.62 $ 0.77 Shares used in computation of basic earnings per share 99,491,802 111,252,398 103,455,791 112,423,158 Shares used in computation of diluted earnings per share 102,663,564 115,578,444 106,881,855 117,636,085 * Certain prior period amounts have been reclassified to conform to the current period presentation. KNIGHT CAPITAL GROUP, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) December 31, 2005 December 31, 2004 ASSETS Cash and cash equivalents $ 230,591,067 $ 445,539,282 Securities owned, held at clearing brokers, at market value 380,366,778 254,473,209 Receivable from brokers and dealers 229,828,734 244,881,065 Investment in Deephaven sponsored funds 281,656,753 215,329,959 Fixed assets and leasehold improvements at cost, less accumulated depreciation and amortization 67,656,533 54,382,503 Strategic investments 31,896,425 29,266,796 Goodwill 47,682,880 19,182,248 Intangible assets, less accumulated amortization 29,773,442 11,546,528 Other assets 116,563,732 119,418,725 Total assets $1,416,016,344 $1,394,020,315 LIABILITIES & STOCKHOLDERS' EQUITY Liabilities Securities sold, not yet purchased, at market value $ 345,457,499 $ 221,420,569 Payable to brokers and dealers 35,102,415 88,480,788 Accrued compensation expense 117,763,834 123,664,383 Accrued expenses and other liabilities 94,244,447 109,252,681 Total liabilities 592,568,195 542,818,421 Stockholders' equity Class A common stock 1,397,457 1,339,655 Additional paid-in-capital 473,945,690 427,451,712 Retained earnings 653,513,691 587,152,786 Treasury stock, at cost (294,652,742) (147,636,413) Accumulated other comprehensive income, net of tax 10,350,387 - Unamortized stock-based compensation (21,106,334) (17,105,846) Total stockholders' equity 823,448,149 851,201,894 Total liabilities and stockholders' equity $1,416,016,344 $1,394,020,315 KNIGHT CAPITAL GROUP, INC. RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES* Amounts in millions (Unaudited) For the three months ended December 31, 2005 Equity Asset Markets Management Corporate Total GAAP PRE-TAX INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 23.0 $ 2.9 $ 37.9 $ 63.8 Adjustments: Sales of strategic investments - - (40.4) (40.4) Regulatory charges and related matters - 3.7 - 3.7 Net impact of adjustments - 3.7 (40.4) (36.7) PRE-TAX OPERATING INCOME (LOSS) $ 23.0 $ 6.6 $ (2.5) $ 27.1 For the three months ended December 31, 2004 Equity Asset Markets Management Corporate Total GAAP PRE-TAX INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 15.1 $ 22.3 $ 0.3 $ 37.6 Adjustments: Writedown of assets and lease loss accrual 0.3 - - 0.3 Regulatory charges and related matters 0.1 - - 0.1 Net impact of adjustments 0.5 - - 0.5 PRE-TAX OPERATING INCOME $ 15.6 $ 22.3 $ 0.3 $ 38.1 For the year ended December 31, 2005 Equity Asset Markets Management Corporate Total GAAP PRE-TAX INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 35.1 $ 20.8 $ 49.3 $ 105.2 Adjustments, net of tax: Sales of strategic investments - - (55.9) (55.9) Regulatory charges and related matters - 5.7 - 5.7 Writedown of assets and lease loss accrual 10.0 - - 10.0 Net impact of adjustments 10.0 5.7 (55.9) (40.2) PRE-TAX OPERATING INCOME (LOSS) $ 45.1 $ 26.5 $ (6.6) $ 65.0 For the year ended December 31, 2004 Equity Asset Markets Management Corporate Total GAAP PRE-TAX INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ (13.2) $ 29.6 $ (16.9) $ (0.5) Adjustments, net of tax: Writedown of assets and lease loss accrual 3.8 - - 3.8 Regulatory charges and related matters 79.3 - - 79.3 Net impact of adjustments 83.2 - - 83.2 PRE-TAX OPERATING INCOME (LOSS) $ 70.0 $ 29.6 $ (16.9) $ 82.7 * Totals may not add due to rounding. FCMN Contact: KFitzsimmons@knighttrading.com 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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