MF Global Reports Fiscal 2008 First Quarter Results



    - Net Revenues of $374.4 Million

    - Net Income of $72.9 Million

    - Adjusted Pre-tax Margin of 18.8%

    NEW YORK, August 1 /CNW/ - MF Global Ltd. (NYSE:   MF), the world's leading
broker of exchange-listed futures and options, today reported fiscal 2008
first quarter revenues, net of interest and transaction-based expenses (net
revenues), of $374.4 million. For the quarter ended June 30, 2007, the company
recorded GAAP net income of $72.9 million, or $0.60 per diluted pro forma
share, and $0.57 per adjusted diluted pro forma share based on 127.0 million
adjusted diluted pro forma shares outstanding.

    Net income on an adjusted basis was $46.1 million, or $0.36 per adjusted
diluted pro forma share, in the first fiscal quarter.(1) Adjusted figures do
not include gains from exchange memberships, the non-recurring expense of
initial public offering costs or the integration expenses related to the
acquisition of Refco assets.

    "This was a solid quarter for MF Global driven by continued strong
performance in Europe and Asia," said Kevin Davis, chief executive officer, MF
Global. "Our unique diversification across products, markets, regions and
clients continues to deliver consistent results."

    "Our business is one which tends to thrive in times of market turmoil and
uncertainty. Accordingly, MF Global has been a beneficiary of the recent
significant volatility, particularly in July, in many of the markets in which
we operate," Mr. Davis continued. "We remain confident in our long-term
financial objectives as well as the overall growth prospects for MF Global."

    Pre-tax margin, or pre-tax income divided by net revenues, was 29.8
percent for the period ended June 30, 2007. Adjusted pre-tax margin was 18.8
percent for the same period.

    For the fiscal first quarter of 2008, execution-only volume was 132.0
million lots and cleared volume was 338.5 million lots.

    For the fiscal first quarter of 2008, execution-only commissions were
$110.3 million, cleared commissions were $358.7 million and principal
transactions were $63.8 million.

    Interest income totaled $860.7 million in the fiscal first quarter of
2008. Interest income is comprised of interest earned on client funds,
interest received on margin accounts, interest received from collateralized
financing arrangements, and interest earned from the investment of excess
capital.

    For the fiscal first quarter of 2008, compensation and employee benefits
expense was $215.4 million, or 57.5 percent of net revenues. Adjusted
non-compensation expense for the fiscal first quarter of 2008 was $80.1
million, or 21.4 percent of net revenues.

    "We maintained strong expense discipline in the quarter demonstrating the
scalability and operating leverage of the financial model," said Amy Butte,
chief financial officer, MF Global. "As we move forward as an independent
public company, we are focused on operating flexibility and maximizing
long-term shareholder value."

    For the fiscal first quarter of 2008, the company's effective tax rate on
ordinary operations was approximately 35.0 percent. Overall, the company's
effective tax rate for the fiscal first quarter of 2008 was approximately 33.0
percent. The lower overall effective tax rate in the first quarter reflects
the impact of one-time items associated with the separation transaction,
including non-deductible initial public offering costs and the reversal of
previously accrued taxes relating to gains on the sale of certain assets to
Man Group plc.

    At June 30, 2007, MF Global had $1.2 billion in cash and cash
equivalents.

    Due to its foreign issuer status at the time of its recently completed
initial public offering, MF Global intends to begin periodic financial
reporting as a domestic issuer with respect to the second fiscal quarter
ending September 30, 2007. Accordingly, the company will not hold an earnings
conference call or file a report on Form 10-Q with the Securities and Exchange
Commission with respect to the quarter ended June 30, 2007. Going forward,
starting with fiscal second quarter results expected at the end of October,
the company will include quarterly year-over-year financial comparisons in the
press release, will host an earnings conference call and file a report on Form
10-Q for that quarter.

    Other First Quarter Highlights

    On July 19 2007, MF Global, formerly Man Financial, successfully
completed its separation from Man Group plc (LSE:EMG) through an initial
public offering of 97.4 million shares of common stock.

    MF Global continued its track record of consolidation in the first fiscal
quarter. The company acquired FXA Securities Ltd., a leading provider of
online foreign exchange products to retail investors in Japan. This
acquisition represents an opportunity for MF Global to roll out a retail
foreign exchange platform to all of Asia Pacific and Europe.

    The company also acquired Dowd Wescott in February 2007. The strategic
acquisition expanded MF Global's professional trader client segment which
generates significant volumes and creates long-term global opportunities for
the company.

    In conjunction with the separation from Man Group and MF Global's initial
public offering, the company received strong credit ratings of A3 from
Moody's, BBB+ from Standard & Poor's Ratings Services, BBB+ from Fitch
Ratings.

    About MF Global Ltd.

    MF Global Ltd., formerly Man Financial, is the leading broker of
exchange-listed futures and options in the world. It provides execution and
clearing services for exchange-traded and over-the-counter derivative products
as well as for non-derivative foreign exchange products and securities in the
cash market.

    MF Global is uniquely diversified across products, trading markets,
customers and regions. Its worldwide client base of more than 130,000 active
accounts ranges from financial institutions, industrial groups, hedge funds
and other asset managers to professional traders and private/retail clients.

    MF Global operates in 12 countries on more than 70 exchanges, providing
access to the largest and fastest growing financial markets in the world. It
is the leader by volume on many of these markets and on a single day averages
six million lots, more than most of the world's largest derivatives exchanges.
For more information, please visit www.mfglobal.com.

    Forward-Looking Statement

    SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: Forward-looking statements in this press release, including
statements relating to the Company's future revenues and earnings, plans,
strategies, objectives, expectations and intentions, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that such forward-looking statements are
inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy, and some of which might not be anticipated. We
caution you not to place undue reliance on these forward-looking statements.
We refer you to the Company's filings with the Securities and Exchange
Commission (SEC) for a description of the risks and uncertainties the Company
faces. This press release includes certain non-GAAP financial measures, as
defined under SEC rules. A reconciliation of these measures is included in the
financial information later in this release, as well as in the Company's
Current Report on Form 8-K furnished to the SEC in connection with this
earnings release, which is available on the Company's website at
www.mfglobal.com and on the SEC's website at www.sec.gov.

    (1) Adjusted items are non-GAAP measures. For a reconciliation of
non-GAAP measures used in this release with the comparable GAAP measures,
please reference the information at the end of this release.

    
                                  MF Global
                       Combined Statement of Operations
                            (Dollars in thousands)


                                                            For the three
                                                             months ended
                                                            June 30, 2007
                                                            --------------

    Revenues
           Execution only commissions                        $    110,296
           Cleared commissions                                    358,673
           Principal transactions                                  63,767
           Interest income                                        860,670
           Other                                                    9,440
                                                            --------------
    Total revenues                                              1,402,846

    Interest and transaction-based expenses:
           Interest expense                                       735,246
           Execution and clearing fees                            221,401
           Sales commissions                                       71,796
                                                            --------------
    Total interest and transaction-based expenses               1,028,443

    Revenues, net of interest expense and transaction-based
     expenses                                                     374,403
                                                            --------------

    Expenses
    Employee compensation and benefits                            215,378
    Communications and technology                                  26,647
    Occupancy and equipment costs                                   8,563
    Depreciation and amortization                                  12,383
    Professional fees                                              14,472
    General and other                                              18,019
    IPO-related costs                                              20,752
    Refco integration costs                                         1,327
                                                            --------------
    Total other expenses                                          317,541

               Gains on exchange seats and shares                  63,301
               Interest on borrowings                               8,692
                                                            --------------

    Income before provision for income taxes                      111,471
    Provision for income taxes                                     36,859
    Minority interests in income of combined companies (net
     of tax)                                                          943
    Equity in earnings of uncombined entities (net of tax)           (772)
                                                            --------------
    Net income                                               $     72,897
                                                            --------------
    

    
                                  MF Global
                           Combined Balance Sheets
                            (Dollars in thousands)


                                                    June 30,   March 31,
                                                       2007        2007
                                                   ----------- -----------

    Assets
    Cash and cash equivalents                      $ 1,210,516 $ 1,733,098
    Cash segregated under Federal and other
     regulations                                     5,446,262   4,373,496
    Securities purchased under agreements to resell 28,431,481  19,056,287
    Securities borrowed                              8,954,648   4,843,281
    Securities received as collateral                  409,095     555,229
    Securities owned, at fair value                 17,153,716  13,598,979
    Receivables:
       Brokers, dealers and clearing organizations   8,295,133   6,185,144
       Customers (net of allowances)                   906,131     801,643
       Affiliates                                        3,751      12,004
       Other                                            37,887      41,741
    Memberships in exchanges, at cost                   16,897      17,514
    Furniture, equipment and leasehold
     improvements, net                                  50,831      45,756
    Intangible assets, net and goodwill                254,266     238,058
    Other assets                                       190,841     168,042

                                                   ----------- -----------
    TOTAL ASSETS                                    71,361,455  51,670,272
                                                   ----------- -----------

    Liabilities and Equity
    Short-term borrowings, including current
     portion of long-term borrowings                    93,752      82,005
    Securities sold under agreements to repurchase  24,614,474  16,874,222
    Securities loaned                               16,031,688  10,107,681
    Obligation to return securities borrowed           409,095     555,229
    Securities sold, not yet purchased, at fair
     value                                           6,086,721   3,378,462
    Payables:
       Brokers, dealers and clearing organizations   3,972,265   2,561,509
       Customers                                    17,661,880  15,756,035
       Affiliates                                      910,871     869,897
    Accrued expenses and other liabilities             243,681     345,868
    Long-term borrowings                               604,270     594,622

                                                   ----------- -----------
    TOTAL LIABILITIES                               70,628,697  51,125,530
                                                   ----------- -----------

    Minority interests in combined subsidiaries          8,317       6,973
                                                   ----------- -----------

    EQUITY                                             724,441     537,769

                                                   ----------- -----------
    TOTAL LIABILITIES AND EQUITY                   $71,361,455 $51,670,272
                                                   ----------- -----------
    

    Non-GAAP Financial Measures

    In addition to our combined financial statements presented in accordance
with GAAP, we use certain non-GAAP financial measures of our financial
performance for the reasons described further below. The presentation of these
measures is not intended to be considered in isolation from, as a substitute
for or as superior to, the financial information prepared and presented in
accordance with GAAP, and our presentation of these measures may be different
from non-GAAP financial measures used by other companies. In addition, these
non-GAAP measures have limitations in that they do not reflect all of the
amounts associated with our results of operations as determined in accordance
with GAAP. The non-GAAP financial measures we use are (1) non-GAAP adjusted
net income, which we refer to as "adjusted net income", and (2) non-GAAP
adjusted net income per adjusted diluted pro forma common shares. These
non-GAAP financial measures currently exclude the following items from our
statement of operations:

    --  Refco integration costs

    --  Gains on exchange memberships

    --  IPO-related costs

    We do not believe that any of these items are representative of our
future operating performance. Other than exchange membership gains and losses,
these items reflect costs that were incurred for specific reasons outside of
normal operations.

    In addition, we may consider whether other significant non-operating or
unusual items that arise in the future should also be excluded in calculating
the non-GAAP financial measures we use. The non-GAAP financial measures also
take into account income tax adjustments with respect to the excluded items.

    GAAP Reconciliation

    The table below reconciles net income to adjusted net income (applying an
assumed tax rate of 35% to the adjustments), for the periods presented:

    

                                                          For the Three
                                                           Months Ended
                                                          June 30, 2007
                                                        ------------------
                                                           (dollars in
                                                             millions)
    Net income (unadjusted)                                          72.9
    Add: Refco integration costs                                      0.9
    Add: IPO-related costs                                           13.5
    Less: Exchange memberships gains                                (41.2)
                                                         -----------------

    Adjusted net income                                              46.1

    Adjusted diluted pro forma shares outstanding (in
     millions) (1)                                                  127.0
    

    

    (1) We believe it is meaningful to investors to present adjusted net
    income per adjusted diluted pro forma common share. Adjusted diluted
    pro forma shares outstanding are adjusted to add back shares
    underlying an additional 4,753,933 restricted share units granted as
    part of the IPO Awards that are not considered dilutive under U.S.
    GAAP and therefore not included in pro forma diluted common shares
    outstanding. For fiscal 2007, our adjusted diluted pro forma shares
    outstanding would be 127.0 million, subject to increase to reflect our
    grant of additional awards after the pricing of the initial public
    offering. Since we expect to add back the expenses associated with
    these awards in determining our adjusted net income in future periods,
    we believe it is more meaningful to investors to calculate pro forma
    adjusted net income per common share based on adjusted diluted shares
    outstanding. We believe that this presentation is meaningful because
    it demonstrates the dilution that investors will experience at the end
    of the three-year vesting period of these awards.
    




For further information:

For further information: Investor: MF Global Ltd. Jeremy Skule,
212-319-1253 jskule@mfglobal.com or Jayne Cavuoto, 212-589-6592
jcavuoto@mfglobal.com or Media: Diana DeSocio, 212-589-6282
ddesocio@mfglobal.com

Organization Profile

MF GLOBAL LTD.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890