Florida (State or other jurisdiction of incorporation or organization) |
65-0701248 (I.R.S. Employer Identification Number) |
4400 Biscayne Boulevard,
12th
Floor Miami, Florida (Address of principal executive offices) |
33137 (Zip Code) |
Large accelerated filer o
|
Accelerated filer þ | |
Non-accelerated filer o (Do not check if a smaller reporting company)
|
Smaller reporting company o |
Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
7 | ||||||||
Item 2. | 18 | |||||||
Item 3. | 28 | |||||||
Item 4. | 28 | |||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | 29 | |||||||
Item 1A. | 29 | |||||||
Item 6. | 29 | |||||||
SIGNATURES | 30 | |||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 |
1
Item 1. | Condensed Consolidated Financial Statements (Unaudited) |
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 8,334 | $ | 8,595 | ||||
Securities owned: |
||||||||
Marketable, at fair value |
5,782 | 3,139 | ||||||
NYSE Euronext restricted common stock, at fair value in 2008 and at historical
cost in 2007 |
1,047 | 1,158 | ||||||
Receivables from clearing brokers |
20,422 | 35,881 | ||||||
Receivables from other broker-dealers |
3,067 | 15,511 | ||||||
Accounts receivable, net |
681 | 1,528 | ||||||
Exchange memberships owned, at historical cost |
115 | 120 | ||||||
Investment in fund manager |
335 | 386 | ||||||
Furniture, equipment and leasehold improvements, net |
3,204 | 791 | ||||||
Restricted assets |
702 | 545 | ||||||
Intangible assets, net |
32,762 | 19,927 | ||||||
Goodwill |
30,044 | 23,546 | ||||||
Unamortized debt issue cost |
2,560 | | ||||||
Other assets |
3,228 | 3,005 | ||||||
Total assets |
$ | 112,283 | $ | 114,132 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Securities sold, but not yet purchased, at fair value |
$ | 378 | $ | 946 | ||||
Accrued compensation |
6,050 | 6,693 | ||||||
Commissions and fees payable |
4,917 | 4,641 | ||||||
Accounts payable and accrued liabilities |
6,168 | 5,644 | ||||||
Deferred income taxes |
633 | | ||||||
Deferred rent |
3,689 | 1,566 | ||||||
Accrued interest |
219 | 671 | ||||||
Notes payable |
32,321 | 39,868 | ||||||
Total liabilities |
54,375 | 60,029 | ||||||
Contingencies (see note 9) |
| | ||||||
Shareholders equity: |
||||||||
Preferred stock, $.0001 par value; 2,000,000 shares authorized; none issued |
| | ||||||
Common stock, $.0001 par value; 400,000,000 shares authorized; shares
issued
and outstanding, 171,495,960 in 2008 and 161,698,071 in 2007 |
17 | 16 | ||||||
Additional paid-in capital |
164,484 | 148,723 | ||||||
Accumulated deficit |
(106,593 | ) | (94,636 | ) | ||||
Total shareholders equity |
57,908 | 54,103 | ||||||
Total liabilities and shareholders equity |
$ | 112,283 | $ | 114,132 | ||||
2
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues: |
||||||||||||||||
Investment banking |
$ | 4,178 | $ | 3,547 | $ | 13,385 | $ | 25,012 | ||||||||
Commissions and fees |
25,130 | 5,028 | 64,617 | 14,689 | ||||||||||||
Asset management |
666 | 686 | 2,150 | 2,072 | ||||||||||||
Principal transactions |
(609 | ) | 82 | (452 | ) | 188 | ||||||||||
Interest and dividends |
982 | 627 | 3,003 | 1,943 | ||||||||||||
Realized and unrealized (loss) gain on NYSE
Euronext restricted common stock |
(111 | ) | 20 | (111 | ) | 53 | ||||||||||
Other income |
1,036 | 462 | 2,704 | 942 | ||||||||||||
Total revenue |
31,272 | 10,452 | 85,296 | 44,899 | ||||||||||||
Expenses: |
||||||||||||||||
Compensation and benefits |
11,198 | 7,238 | 31,685 | 28,164 | ||||||||||||
Non-cash compensation |
1,538 | 1,715 | 4,605 | 4,439 | ||||||||||||
Commissions and fees |
15,126 | | 39,237 | | ||||||||||||
Brokerage, communication and clearance fees |
1,638 | 930 | 3,877 | 2,796 | ||||||||||||
Rent and occupancy, net of sublease revenue |
917 | 433 | 1,967 | 1,180 | ||||||||||||
Professional services |
1,563 | 670 | 4,071 | 2,680 | ||||||||||||
Interest |
1,118 | 16 | 3,474 | 287 | ||||||||||||
Depreciation and amortization. |
898 | 333 | 2,241 | 918 | ||||||||||||
Loss on extinguishment of debt |
| | | 1,833 | ||||||||||||
Other |
2,277 | 1,330 | 5,344 | 3,763 | ||||||||||||
Total expenses |
36,273 | 12,665 | 96,501 | 46,060 | ||||||||||||
Loss before income taxes |
(5,001 | ) | (2,213 | ) | (11,205 | ) | (1,161 | ) | ||||||||
Income tax expense (benefit) |
690 | (115 | ) | 752 | 46 | |||||||||||
Net loss |
$ | (5,691 | ) | $ | (2,098 | ) | $ | (11,957 | ) | $ | (1,207 | ) | ||||
Loss per common share: |
||||||||||||||||
Basic |
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.01 | ) | ||||
Diluted |
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.01 | ) | ||||
Weighted average common shares used in computation
of per share data: |
||||||||||||||||
Basic |
167,303,935 | 159,826,786 | 163,850,741 | 156,362,156 | ||||||||||||
Diluted |
167,303,935 | 159,826,786 | 163,850,741 | 156,362,156 | ||||||||||||
3
Additional | ||||||||||||||||||||
Common Stock | Paid-In | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance, December 31, 2007 |
161,698,071 | $ | 16 | $ | 148,723 | $ | (94,636 | ) | $ | 54,103 | ||||||||||
Issuance of shares of common stock
under employee stock purchase
plan |
147,666 | | 252 | | 252 | |||||||||||||||
Exercise of stock options, net of
128,657 shares tendered in payment
of exercise price and 255,183
options used in cashless exercise |
1,935,529 | | 484 | | 484 | |||||||||||||||
Stock options granted to members
of former Advisory Board and
consultants |
| | 237 | | 237 | |||||||||||||||
Stock-based compensation to
employees |
5,800 | | 4,368 | | 4,368 | |||||||||||||||
Stock retired under stock repurchase
plan |
(534,493 | ) | | (1,012 | ) | | (1,012 | ) | ||||||||||||
Common stock issued in Punk
Ziegel acquisition |
250,000 | | 435 | | 435 | |||||||||||||||
Common stock issued in Triad
Advisors acquisition |
7,993,387 | 1 | 10,426 | | 10,427 | |||||||||||||||
Warrants issued for acquisition of
customer accounts |
| | 571 | | 571 | |||||||||||||||
Net loss |
| | | (11,957 | ) | (11,957 | ) | |||||||||||||
Balance, September 30, 2008 |
171,495,960 | $ | 17 | $ | 164,484 | $ | (106,593 | ) | $ | 57,908 | ||||||||||
4
Nine months ended September 30, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (11,957 | ) | $ | (1,207 | ) | ||
Adjustments to reconcile net loss to |
||||||||
net cash provided by operating activities: |
||||||||
Depreciation and amortization |
357 | 225 | ||||||
Amortization of deferred rent credit |
(69 | ) | 25 | |||||
Amortization of debt discount |
603 | | ||||||
Amortization of intangible assets |
1,833 | 621 | ||||||
Amortization of debt issue cost |
509 | | ||||||
Amortization of investment in fund manager |
51 | 73 | ||||||
Accrued interest |
219 | 228 | ||||||
Deferred income taxes |
633 | | ||||||
Non-cash compensation expense |
4,605 | 4,439 | ||||||
Loss on extinguishment of debt |
| 1,833 | ||||||
Loss on disposal of fixed assets |
| 115 | ||||||
(Increase) decrease in operating assets, net of effects of acquisitions: |
||||||||
Securities owned |
(2,033 | ) | (1,557 | ) | ||||
Receivables from clearing brokers |
18,698 | (931 | ) | |||||
Receivables from other broker-dealers |
12,444 | 668 | ||||||
Accounts receivable, net |
1,757 | (47 | ) | |||||
Other assets |
1,367 | (797 | ) | |||||
Increase (decrease) in operating liabilities, net of effects of acquisitions: |
||||||||
Securities sold, but not yet purchased |
(577 | ) | (512 | ) | ||||
Accrued compensation |
(1,487 | ) | 138 | |||||
Commission and fees payable |
(931 | ) | | |||||
Accounts payable and accrued liabilities |
(1,283 | ) | (2,607 | ) | ||||
Net cash provided by operating activities |
24,739 | 707 | ||||||
Cash flows from investing activities: |
||||||||
Punk Ziegel acquisition, net of cash received |
(2,433 | ) | | |||||
Triad Advisors acquisition, net of cash received |
(6,478 | ) | | |||||
Adjustment to cash paid for Investacorp acquisition |
(148 | ) | | |||||
Acquisition of relationships and customer accounts |
| (92 | ) | |||||
Purchases of furniture, equipment and leasehold improvements |
(385 | ) | (306 | ) | ||||
Decrease in restricted assets |
323 | 1,086 | ||||||
Net cash (used in) provided by investing activities |
(9,121 | ) | 688 | |||||
Cash flows from financing activities: |
||||||||
Issuance of common stock under stock plans |
736 | 1,216 | ||||||
Shares tendered for withholding taxes on exercise of stock options |
| (1,122 | ) | |||||
Repurchases of common stock |
(1,012 | ) | (483 | ) | ||||
Principal payments on notes payable |
(15,603 | ) | | |||||
Net cash used in financing activities |
(15,879 | ) | (389 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
(261 | ) | 1,006 | |||||
Cash and cash equivalents, beginning of period |
8,595 | 6,983 | ||||||
Cash and cash equivalents, end of period |
$ | 8,334 | $ | 7,989 | ||||
5
Nine months ended September 30, | ||||||||
2008 | 2007 | |||||||
Supplemental cash flow information: |
||||||||
Interest paid |
$ | 2,786 | $ | 1,732 | ||||
Taxes paid |
57 | 31 | ||||||
Non-cash financing transactions: |
||||||||
Leasehold improvements financed by landlord in connection with relocation
of premises and included in deferred rent |
2,016 | | ||||||
Warrants issued for acquisition of customer accounts |
571 | | ||||||
Lease commitment capitalized as part of Captialink acquisition |
| 463 | ||||||
Issuance of shares of common stock in exchange for promissory notes
payable to former parent |
| 6,833 | ||||||
Punk Ziegel acquisiton: |
||||||||
Assets acquired |
$ | 4,433 | | |||||
Liabilities assumed |
(1,326 | ) | | |||||
Net assets acquired |
3,107 | | ||||||
Stock issued in acquisition |
(435 | ) | | |||||
Cash acquired in acquisition |
(239 | ) | | |||||
Cash paid in acquisition |
$ | 2,433 | | |||||
Triad Advisors acquisition: |
||||||||
Assets acquired |
$ | 24,574 | | |||||
Liabilities assumed |
(2,172 | ) | | |||||
Net assets acquired |
22,402 | | ||||||
Note issued in acquisition. |
(4,384 | ) | ||||||
Stock issued in acquisition |
(10,427 | ) | | |||||
Cash paid in acquisition |
7,591 | | ||||||
Cash acquired in acquisition |
(1,113 | ) | | |||||
Net cash paid in acquisition |
$ | 6,478 | | |||||
6
1. | Description of Business and Basis of Presentation | |
Description of Business | ||
The unaudited condensed consolidated financial statements include the accounts of Ladenburg Thalmann Financial Services Inc. (LTS or the Company), a holding company, and its subsidiaries. The principal operating subsidiaries of LTS are Ladenburg Thalmann & Co. Inc. (Ladenburg), since the October 19, 2007 date of acquisition, Investacorp, Inc. (collectively with related companies, Investacorp) and, since the August 13, 2008 date of acquisition, Triad Advisors, Inc. and subsidiaries (collectively, Triad). | ||
Ladenburg is a full service broker-dealer that has been a member of the New York Stock Exchange (NYSE) since 1879. Broker-dealer activities include principal and agency trading, investment banking and asset management. Ladenburg provides its services principally for middle market and emerging growth companies and high net worth individuals through a coordinated effort among corporate finance, capital markets, asset management, brokerage and trading professionals. | ||
Investacorp and Triad are registered broker-dealers and investment advisors that have been serving the independent registered representative community since 1978 and 1998, respectively. Each of Investacorps and Triads independent registered representatives primarily serves retail clients. Ladenburg, Investacorp and Triad clear their customers transactions through correspondent clearing brokers on a fully-disclosed basis. They derive revenue from advisory fees and commissions, primarily from the sale of mutual funds, variable annuity products and other financial products and services. Each of Ladenburg, Investacorp and Triad is subject to regulation by, among others, the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB). Ladenburg is also subject to regulation by the Commodities Futures Trading Commission (CFTC) and National Futures Association (NFA). (See Note 5.) | ||
Basis of Presentation | ||
The condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Because of the nature of the Companys business, interim period results may not be indicative of full year or future results. | ||
The unaudited condensed consolidated financial statements do not include all information and notes required in annual financial statements in conformity with generally accepted accounting principles. The statement of financial condition at December 31, 2007 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principles for complete financial statement presentation. Please refer to the notes to the consolidated financial statements included in the Companys annual report on Form 10-K for the year ended December 31, 2007, filed with the SEC, for additional disclosures and a description of accounting policies. | ||
Certain prior year items have been reclassified to conform to the current periods presentation. All significant intercompany balances and transactions have been eliminated. | ||
2. | Recently Issued Accounting Principles | |
In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141(R), Business Combinations. This statement expands the definition of transactions and events that qualify as business combinations; requires that the acquired assets and liabilities, including contingencies, be recorded at the fair value determined on the acquisition date and changes thereafter reflected in revenue, not goodwill; changes the recognition timing for restructuring costs; and requires acquisition costs to be expensed as incurred. Adoption of SFAS No. 141(R) is required for combinations in fiscal years beginning after December 15, 2008. Early adoption and retroactive application of SFAS No. 141(R) to fiscal years preceding the effective date are not permitted. |
7
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. This statement requires noncontrolling interests to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. This statement is applicable to the accounting for noncontrolling interests and transactions with noncontrolling interest holders in consolidated financial statements and is effective for fiscal years beginning on or after December 15, 2008. | ||
In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No.142, Goodwill and Other Intangible Assets. FSP FAS 142-3 is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No.141(R) and other U.S. generally accepted accounting principles. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier application is not permitted. The Company does not believe the adoption of FSP FAS 142-3 will have a material effect on its condensed consolidated financial statements. | ||
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. SFAS No.162 is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not expect the adoption of SFAS No. 162 to have a material effect on its condensed consolidated financial statements. | ||
3. | Acquisitions | |
Triad | ||
On August 13, 2008, Triad, a leading independent broker-dealer and investment advisor with headquarters in Norcross, Georgia, became a wholly-owned subsidiary of LTS. The acquisition was made to significantly expand the companys presence in the independent broker-dealer area. Under the Agreement and Plan of Merger, dated as of July 9, 2008, by and among LTS, Triad, Triple Acquisition Inc. (Triple), a wholly-owned subsidiary of LTS, and the shareholders of Triad, Triple merged with and into Triad, with Triad remaining as the surviving corporation and a wholly-owned subsidiary of LTS. All outstanding shares of Triads common stock were converted into an aggregate of $6,826 in cash (net of a post-closing adjustment of $674), 7,993,387 shares of LTS common stock subject to certain transfer restrictions valued at $10,427 and a $5,000 promissory note valued at $4,384 (see Note 8). In the event that Triad meets certain profit targets during the three-year period following completion of the merger, the Company also will pay to Triads former shareholders up to $7,500 in cash and up to 4,134,511 shares of LTS common stock. | ||
Preliminary Purchase Price Allocation | ||
The preliminary allocation of the purchase price to Triads tangible and intangible assets acquired and liabilities assumed was based on their estimated fair values. The valuation of these tangible and identifiable intangible assets and liabilities is preliminary and is subject to further management review and may change materially. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. In accordance with SFAS No. 142, Goodwill and Other Intangible Asset, goodwill is not amortized but will be tested for impairment at least annually. |
8
The purchase price for the acquisition, including acquisition costs, consisted of the following: |
As of | ||||
August 13, 2008 | ||||
Cash |
$ | 7,591 | ||
Common stock (7,993,387 shares x $1.30 per share)(1) |
10,427 | |||
$5,000 note payable valued based on 11% imputed interest rate |
4,384 | |||
Total purchase price |
$ | 22,402 | ||
(1) | Based on market prices at time of announcement adjusted for transfer restrictions. |
The total purchase price has been allocated as follows: |
As of | ||||
August 13, 2008 | ||||
Net working capital and tangible assets |
$ | 3,585 | ||
Identifiable intangible assets |
13,022 | |||
Goodwill |
5,795 | |||
Total purchase price |
$ | 22,402 | ||
Punk Ziegel | ||
On May 2, 2008, Punk, Ziegel & Company, L.P. (Punk Ziegel), a specialty investment bank based in New York City, was merged into Ladenburg. The Company paid the sellers $3,107, representing Punk Ziegels retained earnings plus paid-in-capital. | ||
Investacorp | ||
On October 19, 2007, the Company acquired all of the outstanding shares of Investacorp for approximately $30,000 in cash and a promissory note in the aggregate principal amount of $15,000. The Company paid the sellers approximately $5,200 representing Investacorps retained earnings plus paid-in-capital, which is included in the cash payment above. In connection with the financing of the acquisition, the Company entered into a $30,000 revolving credit agreement with Frost Gamma Investments Trust (Frost Gamma), an entity affiliated with Dr. Phillip Frost, the chairman of the board and principal shareholder of the Company. See Note 8. | ||
Pro Forma Information | ||
The unaudited condensed consolidated financial statements include the results of operations of Investacorp, Triad and Punk Ziegel from their respective dates of acquisition. The following unaudited pro forma information represents the Companys consolidated results of operations for 2007 periods as if the acquisition of Investacorp and Triad had occurred at the beginning of 2007 and the 2008 periods as if the acquisition of Traid had occurred at the beginning of 2008. Pro forma data does not include the Punk Ziegel acquisition based on materiality. The pro forma net results reflect amortization of the amounts ascribed to intangibles acquired in the acquisitions, amortization of employee stock-based compensation, income tax expense and interest expense on debt used to finance the acquisitions. |
9
Three months ended | Nine months ended | Three months ended | Nine months ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2008 | 2008 | 2007 | 2007 | |||||||||||||
Total revenue |
$ | 41,976 | $ | 126,644 | $ | 42,692 | $ | 140,341 | ||||||||
Net loss |
$ | (6,057 | ) | $ | (11,680 | ) | $ | (2,400 | )(1) | $ | (2,265 | )(1) | ||||
Basic loss per share |
$ | (0.04 | ) | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
Diluted loss per share |
$ | (0.04 | ) | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
Weighted average common
shares outstanding
basic and diluted |
171,039,975 | 170,414,654 | 167,820,173 | 164,355,543 |
(1) | Includes a non-recurring charge of $9,200 for special bonuses paid to Investacorp employees prior to the closing of the acquisition. |
The unaudited pro forma financial information is not representative or indicative of the Companys consolidated results of operations that would have been reported had the acquisitions been completed as of the beginning of the periods presented, nor should it be taken as indicative of the Companys future consolidated results of operations | ||
4. | Securities Owned and Securities Sold, But Not Yet Purchased | |
The components of securities owned and securities sold, but not yet purchased, at fair value, were as follows: |
Securities sold, | ||||||||
Securities | but not | |||||||
owned | yet purchased | |||||||
September 30, 2008 |
||||||||
Certificates of deposit |
$ | 1,200 | $ | | ||||
Common stock and warrants |
4,582 | 378 | ||||||
NYSE Euronext restricted common stock |
1,047 | | ||||||
$ | 6,829 | $ | 378 | |||||
December 31, 2007 |
||||||||
Common stock and warrants |
$ | 3,139 | $ | 946 | ||||
NYSE Euronext restricted common stock |
1,158 | | ||||||
$ | 4,297 | $ | 946 | |||||
As of September 30, 2008 and December 31, 2007, approximately $5,062 and $3,112, respectively, of securities owned were deposited with the Companys subsidiaries clearing brokers. Under the clearing agreements with such clearing brokers, the securities may be sold or hypothecated by such clearing brokers. | ||
Securities sold, but not yet purchased, at fair value represents obligations of the Companys subsidiaries to purchase the specified financial instrument at the then current market price. Accordingly, these transactions result in off-balance-sheet risk as the Companys subsidiaries ultimate obligation to repurchase such securities may exceed the amount recognized in the condensed consolidated statements of financial condition. | ||
Restricted NYSE Euronext Common Stock | ||
The Company owns NYSE Euronext common stock resulting from the conversion of Ladenburgs membership interest in the NYSE. Certain of these shares were previously subject to transfer restrictions during the periods presented. | ||
On March 7, 2007, 1,552 of the 28,277 NYSE Euronext shares owned by the Company began the last year of transfer restrictions and were classified as trading securities and included in marketable securities at September 30, 2007. Accordingly, such shares were valued at fair value as opposed to cost, resulting in an unrealized gain of $20 and $53 for the three and nine months ended September 30, 2007, respectively. In June 2007, the issuer removed the transfer restrictions on the 1,552 shares. The shares were sold in the third quarter of 2008. |
10
Effective October 1, 2008, the issuer removed the transfer restriction on the last tranche of 26,725 NYSE Euronext restricted shares held by the Company. Such restrictions were originally scheduled to lapse on March 9, 2009. These shares are classified as trading securities at September 30, 2008 and valued at fair value, resulting in an unrealized loss of ($111) and ($111) for the three and nine months ended September 30, 2008, respectively. | ||
On October 1, 2008, the Company received 8,178 NYSE Euronext shares in exchange for its American Stock Exchange (AMEX) membership due to NYSE Euronexts acquisition of AMEX. The Company may receive additional amounts from the exchange of its AMEX membership if AMEX sells its headquarters building. The Company will recognize a gain from the exchange of its AMEX membership in the fourth quarter of 2008. | ||
Fair Value Measurements | ||
The Company adopted SFAS No. 157, Fair Value Measurements, in the first quarter of 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. As defined in SFAS No. 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: | ||
Level 1 valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include listed equity securities. | ||
Level 2 valued using the Black-Scholes option pricing model, discounted for restrictions on marketability. This model considers various assumptions, including time value, volatility factors and current market and contractual prices for the underlying financial instruments. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted. | ||
Level 3 valuations derived from valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments and certain commitments and guarantees. | ||
As of September 30, 2008: |
Securities owned, at fair
value |
Level
1 |
Level
2 |
Level
3 |
Total |
||||||||||||||||||
Certificates of deposit |
$ | 1,200 | $ | 1,200 | ||||||||||||||||||
Common stock and warrants |
4,936 | $ | 693 | | 5,629 | |||||||||||||||||
Total |
$ | 6,136 | $ | 693 | $ | | $ | 6,829 | ||||||||||||||
Securities sold, but not yet purchased, at fair value |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||||
Common stock and warrants |
$ | 378 | | | $ | 378 | ||||||||||||||||
Total |
$ | 378 | $ | | $ | | $ | 378 | ||||||||||||||
11
The adoption of SFAS No. 157 did not have a material effect on the Companys condensed consolidated financial statements. | ||
Fair Value Option | ||
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value, with changes in fair value recognized in earnings as they occur. SFAS No. 159 permits the fair value option election on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The difference between carrying value and fair value at the election date is recorded as a transition adjustment to opening retained earnings. SFAS No. 159 became effective January 1, 2008; however, the Company did not elect to apply the fair value option to any assets or liabilities that are not currently required to be measured at fair value. | ||
5. | Net Capital Requirements | |
Ladenburg is a registered broker-dealer and futures commission merchant and, accordingly, is subject to Rule 15c3-1 (the Net Capital Rule) under the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 1.17 under the CFTC. The Net Capital Rule specifies minimum net capital requirements for all registered broker-dealers and is designed to measure financial integrity and liquidity. Ladenburg has elected to compute its net capital under the alternative method allowed by these rules. At September 30, 2008, Ladenburg had net capital, as defined in the Net Capital Rule, of $11,597, which exceeded its minimum capital requirement of $500, by $11,097. | ||
Investacorp and Triad are also subject to the Net Capital Rule, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined in the Net Capital Rule, shall not exceed 15 to 1. At September 30, 2008, Investacorp had net capital of $3,373, which was $3,065 in excess of its required net capital of $308. Investacorps net capital ratio was 1.4 to 1. At September 30, 2008, Triad had net capital of $1,647, which was $1,397 in excess of its required net capital of $250. Triads net capital ratio was .95 to 1. | ||
Ladenburg, Investacorp and Triad claim exemption from the provisions of the SECs Rule 15c3-3 pursuant to paragraph (k)(2)(ii) as they clear their customer transactions through correspondent brokers on a fully-disclosed basis. | ||
6. | Intangible Assets | |
At September 30, 2008 and December 31, 2007, intangible assets subject to amortization consisted of the following: |
September 30, 2008 | December 31, 2007 | |||||||||||||||||||
Estimated | Gross | Gross | ||||||||||||||||||
useful life | carrying | Accumulated | carrying | Accumulated | ||||||||||||||||
(years) | amount | amortization | amount | amortization | ||||||||||||||||
Technology |
1 | $ | 426 | $ | 292 | $ | 285 | $ | 59 | |||||||||||
Relationships with
registered
representatives |
20 | 24,707 | 776 | 14,921 | 155 | |||||||||||||||
Vendor relationships |
7 | 3,613 | 288 | 1,881 | 56 | |||||||||||||||
Covenants not to compete |
5 | 1,717 | 102 | 354 | 15 | |||||||||||||||
Customer accounts |
10 | 1,311 | 152 | 740 | 96 | |||||||||||||||
Relationships with
investment banking
clients |
4 | 2,783 | 1,362 | 2,783 | 841 | |||||||||||||||
Trade name |
10 | 211 | 41 | 211 | 26 | |||||||||||||||
Lease |
6 | 1,004 | 64 | | | |||||||||||||||
Customer relationships |
6 | 72 | 5 | | | |||||||||||||||
$ | 35,844 | $ | 3,082 | $ | 21,175 | $ | 1,248 | |||||||||||||
12
Aggregate amortization expense amounted to $725 and $198 for the three months ended September 30, 2008 and 2007, respectively, and $1,833 and $620 for the nine months ended September 30, 2008 and 2007, respectively. The weighted-average amortization period for total amortizable intangibles is 15.64 years. Estimated amortization expense for each of the five succeeding years and thereafter is as follows: |
2008 (remaining) |
$ | 832 | ||
2009 |
$ | 3,214 | ||
2010 |
$ | 2,979 | ||
2011 |
$ | 2,418 | ||
2012 |
$ | 2,347 | ||
2013 2027 |
$ | 20,972 |
7. | Income Taxes | |
Income tax expense for the three and nine months ended September 30, 2008 primarily represents deferred income taxes relating to amortization of goodwill for tax purposes. (See Note 3). After consideration of all the evidence, both positive and negative, management has determined that a valuation allowance at September 30, 2008 was necessary to offset fully the deferred tax assets based on the likelihood of future realization. As a result of such valuation allowance, no tax benefit was provided during the three and nine months ended September 20, 2008 due to the pre-tax loss in such periods. Realization of deferred tax assets is dependent on the existence of sufficient taxable income within the carryforward period, including future reversals of taxable temporary differences. The taxable temporary difference related to tax deductible goodwill will reverse only upon a disposition or impairment of goodwill which period is not determinable. Accordingly, the related deferred tax liability was not utilized to reduce the required valuation allowance. | ||
A provision for income taxes which amounted to approximately $46 for the nine months ended September 30, 2007 was a result of certain state and local taxes not measured by income, certain state taxes measured by income and the federal alternative minimum tax. As a result of anticipating the utilization of a portion of its net operating loss carryforwards, no provision for federal income taxes, other than an alternative minimum tax, is reflected in the accompanying statements of operations for such period. | ||
8. | Notes Payable | |
Notes payable consisted of the following: |
September | December | |||||||
30, | 31, | |||||||
2008 | 2007 | |||||||
Note payable to former Investacorp
shareholder, net of $720 and $1,277 of
unamortized discount at September 30,
2008 and December 31, 2007, respectively |
$ | 9,891 | $ | 12,937 | ||||
Note payable to affiliate of principal
shareholder of LTS, net of $3,069 of
unamortized discount at December 31, 2007 |
18,000 | 26,931 | ||||||
Note payable to former Triad
shareholders, net of $570 of unamortized
discount at September 30, 2008 |
4,430 | | ||||||
Total |
$ | 32,321 | $ | 39,868 | ||||
Investacorp Note | ||
On October 19, 2007, as part of the purchase price for the Investacorp acquisition, the Company issued a three-year, non-negotiable promissory note in the aggregate principal amount of $15,000 to Investacorps then principal shareholder. The note bears interest at 4.11% per annum and is payable in 36 equal monthly installments. The note was recorded at $13,550 based on an imputed interest rate of 11%. The Company has pledged the stock of Investacorp as security for the payment of the note. The note contains customary events of default, which, if uncured, entitle the holder to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the note. |
13
Frost Gamma Credit Agreement | ||
On October 19, 2007, in connection with the Investacorp acquisition, the Company entered into a $30,000 revolving credit agreement with Frost Gamma. Borrowings under the credit agreement have a five-year term and bear interest at a rate of 11% per annum, payable quarterly. Frost Gamma received a one-time funding fee of $150. The note issued under the credit agreement contains customary events of default, which, if uncured, entitle the holder to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, such note. Pursuant to the credit agreement, the Company granted to Frost Gamma a warrant to purchase 2,000,000 shares of LTS common stock. The warrant is exercisable at any time during a ten-year period and the exercise price is $1.91 per share, the closing price of the Companys common stock on the acquisition date. The warrant was valued at $3,200 based on the Black-Scholes option pricing model, and effective January 1, 2008, the unamortized portion has been reclassified from debt discount to debt issue cost, which is being amortized by the straight-line method over the fiveyear term of the revolving credit agreement. | ||
In February 2008 and September 2008, the Company repaid $8,000 and $4,000, respectively, of the $30,000 of outstanding borrowings under the Frost Gamma credit agreement. The Company may repay outstanding amounts at any time prior to the maturity date of October 19, 2012, without penalty, and may re-borrow up to the full amount of the agreement. | ||
Triad Note | ||
On August 13, 2008, as part of the purchase price for the Triad acquisition, the Company issued a three-year, non-negotiable promissory note in the aggregate principal amount of $5,000 to Triads then shareholders. The note bears interest at 2.51% per annum and is payable in 12 equal quarterly installments. The note was recorded at $4,384, based on an imputed interest rate of 11%. | ||
9. | Contingencies | |
Litigation and Regulatory Matters | ||
In May 2003, a suit was filed in the U.S. District Court for the Southern District of New York by Sedona Corporation against Ladenburg, former employees of Ladenburg and a number of other firms and individuals. The plaintiff alleges, among other things, that certain defendants (not Ladenburg) purchased convertible securities from plaintiff and then allegedly manipulated the market to obtain an increased number of shares from the conversion of those securities. Ladenburg acted as placement agent and not as principal in those transactions. Plaintiff has alleged that Ladenburg and the other defendants violated federal securities laws and various state laws. The plaintiff seeks compensatory damages from the defendants of at least $660,000 and punitive damages of $2,000,000. In August 2005, Ladenburgs motion to dismiss was granted in part and denied in part; in July 2006, Ladenburgs motion to reconsider portions of that decision was denied. A motion to dismiss certain of the claims as re-pleaded by plaintiff is currently pending. The Company believes the plaintiffs claims are without merit and intends to vigorously defend against them. | ||
In July 2004, a suit was filed in the U.S. District Court for the Eastern District of Arkansas by Pet Quarters, Inc. against Ladenburg, a former employee of Ladenburg and a number of other firms and individuals. The plaintiff alleges, among other things, that certain defendants (not Ladenburg) purchased convertible securities from plaintiff and then allegedly manipulated the market to obtain an increased number of shares from the conversion of those securities. Ladenburg acted as placement agent and not as principal in those transactions. Plaintiff has alleged that Ladenburg and the other defendants violated federal securities laws and various state laws. The plaintiff seeks compensatory damages from the defendants of at least $400,000. On April 9, 2007, the court issued an order staying this action pending the final outcome of an arbitration involving parties other than Ladenburg. The Company believes that the plaintiffs claims are without merit and intends to vigorously defend against them. |
14
In December 2005, a suit was filed in New York State Supreme Court, New York County, by Digital Broadcast Corp. against Ladenburg, a Ladenburg employee and another individual. The plaintiff alleges, among other things, that in connection with plaintiffs retention of Ladenburg to assist it in its efforts to obtain financing through a private placement of its securities, Ladenburg committed fraud and breach of fiduciary duty and breach of contract. The plaintiff seeks compensatory damages in excess of $100,000. In November 2006, Ladenburgs motion to dismiss was granted in part and denied in part. In July 2008, Ladenburg filed a motion for summary judgment, which is currently pending. The Company believes that the plaintiffs claims are without merit and intends to vigorously defend against them. | ||
In July 2008, a suit was filed in the Circuit Court for the 17th Judicial Circuit, Broward County, Florida, by BankAtlantic and BankAtlantic Bancorp, Inc. against Ladenburg and a Ladenburg research analyst. The plaintiffs allege, among other things, that research reports issued by defendants were false and defamatory, and that defendants are liable for defamation per se and negligence; the amount of the alleged damages is unspecified. The defendants motion to dismiss the case was denied in September 2008. The Company believes that the allegations are without merit and intends to vigorously defend against them. | ||
In the ordinary course of business, the Companys subsidiaries are defendants in litigation and arbitration proceedings and may be subject to unasserted claims or arbitrations primarily in connection with their activities as securities broker-dealers or as a result of participation in public underwritings. Such litigation and claims may involve substantial or indeterminate amounts and are in varying stages of legal proceedings. Where the Company believes that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated, the Company has included an estimation of such amount in accounts payable and accrued liabilities. Upon final resolution, amounts payable may differ materially from amounts reserved. The Company has accrued liabilities in the amount of approximately $757 at September 30, 2008 and $768 at December 31, 2007 in respect to these matters. With respect to other pending matters, the Company is unable to estimate a range of possible loss; however, in the opinion of management, after consultation with counsel, the ultimate resolution of these matters should not have a material adverse effect on the Companys consolidated financial position, results of operations or liquidity. | ||
Deferred Underwriting Compensation | ||
Ladenburg is entitled to receive deferred investment banking and underwriting fees from certain clients whose initial public offerings Ladenburg managed or participated in. These clients are Specified Purpose Acquisition Companies (SPACs), and the payment of deferred fees is contingent upon the SPACs consummating business combinations. Such fees and their related expenses are not reflected in the Companys results of operations until the underlying business combinations have been completed and the fees have been irrevocably earned. Generally, these fees may be received within 24 months from the respective date of the offering, or not received at all if no business combination transactions are consummated during such time period. During the third quarter of 2008, Ladenburg received a deferred fee of $2,878 (included in investment banking revenues) and incurred commissions and related expenses of $1,295. During the nine months ended September 30, 2008, Ladenburg received deferred fees of $5,289 (included in investment banking revenues) and incurred commissions and related expenses of $2,145. As of September 30, 2008, Ladenburg had unrecorded potential deferred fees for SPAC-related transactions of $38,800, which, net of commissions and related expenses, amounted to approximately $22,955. | ||
10. | Off-Balance-Sheet Risk and Concentration of Credit Risk | |
Our three principal broker-dealer subsidiaries, Ladenburg, Investacorp and Triad, do not carry accounts for customers or perform custodial functions related to customers securities. They introduce all of their customer transactions, which are not reflected in these financial statements, to their clearing brokers, which maintain the customers accounts and clear such transactions. Additionally, the clearing brokers provide the clearing and depository operations for proprietary securities transactions. These activities may expose us to off-balance-sheet risk in the event that customers do not fulfill their obligations with the clearing brokers, as each of Ladenburg, Investacorp and Triad has agreed to indemnify their clearing brokers for any resulting losses. Each of Ladenburg, Investacorp and Triad continually assess risk associated with each customer who is on margin credit and records an estimated loss when management believes collection from the customer is unlikely. |
15
11. | Shareholders Equity | |
Repurchase Program | ||
In March 2007, the Companys board of directors authorized the repurchase of up to 2,500,000 shares of the Companys common stock from time to time on the open market or in privately negotiated transactions, depending on market conditions. The repurchase program is funded using approximately 15% of the Companys EBITDA, as adjusted. During the nine months ended September 30, 2008, 534,493 shares were repurchased for $1,012 under the program. | ||
Stock Compensation Plans | ||
The Company granted 1,458,500 stock options to employees and consultants in the nine month period ended September 30, 2008, of which none were granted in the three months then ended. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of options granted in the nine month period ended September 30, 2008 was $2,232. As of September 30, 2008, there was $11,269 of unrecognized compensation cost for stock-based compensation, of which $1,058 related to the 2008 grants. This cost is expected to be recognized over the vesting periods of the options, which on a weighted-average basis is approximately 1.31 years for all grants and approximately 3.59 years for the 2008 grants. | ||
The total intrinsic value of options exercised during the three months ended September 30, 2008 and 2007 was $824 and $3,841, respectively, and during the nine months ended September 30, 2008 and 2007 amounted to $3,383 and $5,577, respectively. | ||
On October 31, 2008, the Company granted ten-year stock options to purchase 600,000, 600,000, 600,000 and 300,000 shares of Company common stock at an exercise price of $1.58 per share to Dr. Phillip Frost, Richard Lampen, Mark Zeitchick and Howard Lorber, respectively. Dr. Frost and Mr. Lorber serve as directors of the Company and Messrs. Lampen and Zeitchick serve as executive officers and directors of the Company. The exercise price was 25% in excess of the fair value ($1.26) of the Companys common stock on the grant date. The options vest in four equal annual installments beginning on the first anniversary of the grant date, subject to earlier vesting upon the recipients death or disability or a change of control of the Company. | ||
12. | Per Share Data | |
Basic earnings per share (EPS) is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted EPS includes the determinants of basic EPS and also gives effect to dilutive potential common shares. |
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net loss |
$ | (5,691 | ) | $ | (2,098 | ) | $ | (11,957 | ) | $ | (1,207 | ) | ||||
Total basic and diluted
weighted average common shares
outstanding |
167,303,935 | 159,826,786 | 163,850,741 | 156,362,156 | ||||||||||||
Basic and diluted loss per share |
$ | (0.03 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.01 | ) | ||||
During 2008 and 2007, options and warrants to purchase 26,596,065 and 24,774,276 common shares, respectively, were not included in the computation of diluted loss per share as the effect would have been anti-dilutive. |
16
13. | Segment Information | |
As a result of the Investacorp acquisition on October 19, 2007, the Company has two operating segments. For periods prior to October 19, 2007, the Company had only one segment. The Ladenburg segment includes the retail and institutional securities brokerage, investment banking services, asset management services and investment activities conducted by Ladenburg. The independent brokerage and advisory services segment includes the broker-dealer and investment advisory services provided by Investacorp and Triad (beginning as of the August 13, 2008 acquisition date) to their independent registered representatives. | ||
Segment information for the three months ended September 30, 2008 was as follows: |
Independent | ||||||||||||||||
brokerage and | ||||||||||||||||
Ladenburg | advisory services | Corporate | Total | |||||||||||||
Revenues |
$ | 11,496 | $ | 19,858 | $ | (82 | ) | $ | 31,272 | |||||||
Pre-tax loss |
(2,133 | ) | (159 | ) | (2,709 | ) | (5,001 | ) | ||||||||
Identifiable assets |
32,358 | 73,172 | 6,753 | 112,283 | ||||||||||||
Depreciation and
amortization |
375 | 506 | 17 | 898 | ||||||||||||
Capital expenditures |
55 | 37 | | 92 |
Segment information for the nine months ended September 30, 2008 was as follows: |
Independent | ||||||||||||||||
brokerage and | ||||||||||||||||
Ladenburg | advisory services | Corporate | Total | |||||||||||||
Revenues |
$ | 34,099 | $ | 51,228 | ($31 | ) | $ | 85,296 | ||||||||
Pre-tax (loss) income |
(3,645 | ) | 553 | (8,113 | ) | (11,205 | ) | |||||||||
Identifiable assets |
32,358 | 73,172 | 6,753 | 112,283 | ||||||||||||
Depreciation and
amortization |
982 | 1,208 | 51 | 2,241 | ||||||||||||
Capital expenditures |
325 | 60 | | 385 |
17
Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except share and per share data) |
18
19
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Total revenue |
$ | 31,272 | $ | 10,452 | $ | 85,296 | $ | 44,899 | ||||||||
Total expenses |
36,273 | 12,665 | 96,501 | 46,060 | (1) | |||||||||||
Pre-tax loss |
(5,001 | ) | (2,213 | ) | (11,205 | ) | (1,161 | ) | ||||||||
Net loss |
(5,691 | ) | (2,098 | ) | (11,957 | ) | (1,207 | )(1) | ||||||||
EBITDA as adjusted |
(1,802 | ) | (194 | ) | (1,384 | ) | 6,188 | |||||||||
Add: |
||||||||||||||||
Interest income |
45 | 45 | 189 | 128 | ||||||||||||
Income tax benefit |
| 115 | | | ||||||||||||
Sale of exchange memberships |
310 | | 310 | | ||||||||||||
Less: |
||||||||||||||||
Interest expense |
(1,118 | ) | (16 | ) | (3,474 | ) | (287 | ) | ||||||||
Income tax expense |
(690 | ) | | (752 | ) | (46 | ) | |||||||||
Depreciation and amortization |
(898 | ) | (333 | ) | (2,241 | ) | (918 | ) | ||||||||
Non-cash compensation |
(1,538 | ) | (1,715 | ) | (4,605 | ) | (4,439 | ) | ||||||||
Loss on extinguishment of debt |
| | | (1,833 | ) | |||||||||||
Net loss |
(5,691 | ) | (2,098 | ) | (11,957 | ) | (1,207 | ) |
(1) | Includes $1,833 loss on extinguishment of debt. |
20
Three months | Nine months | |||||||
ended | ended | |||||||
September 30, | September 30, | |||||||
2008 | 2008 | |||||||
Revenues: |
||||||||
Ladenburg |
$ | 11,496 | $ | 34,099 | ||||
Independent brokerage
and advisory services |
19,858 | 51,228 | ||||||
Corporate |
(82 | ) | (31 | ) | ||||
Total revenues |
$ | 31,272 | $ | 85,296 | ||||
Pre-tax income (loss): |
||||||||
Ladenburg |
$ | (2,133 | ) | $ | (3,645 | ) | ||
Independent brokerage and
advisory services |
(159 | ) | 553 | |||||
Corporate |
(2,709 | ) | (8,113 | ) | ||||
Total pre-tax loss |
$ | (5,001 | ) | $ | (11,205 | ) | ||
21
22
23
24
25
26
27
28
2.1
|
Agreement and Plan of Merger, dated as of July 9, 2008, by and among Ladenburg Thalmann Financial Services Inc., Triple Acquisition Inc., Triad Advisors, Inc. and the shareholders of Triad Advisors, Inc. (incorporated by reference to Exhibit 2.1 to the Companys current report on Form 8-K, dated July 9, 2008 and filed with the SEC on July 10, 2008) | |
4.1
|
Non-Negotiable Promissory Note, dated as of August 13, 2008, made by Ladenburg Thalmann Financial Services Inc. in favor of Mark C. Mettelman and Robert W. Bruderman, as representatives of the shareholders of Triad Advisors, Inc. (incorporated by reference to Exhibit 4.1 to the Companys current report on Form 8-K, dated August 13, 2008 and filed with the SEC on August 14, 2008) | |
4.2
|
Pledge Agreement, dated as of August 13, 2008, by and between Ladenburg Thalmann Financial Services Inc. and Mark C. Mettelman and Robert W. Bruderman as representatives of the shareholders of Triad Advisors, Inc. (incorporated by reference to Exhibit 4.2 to the Companys current report on Form 8-K dated August 13, 2008 and filed with the SEC on August 14, 2008) | |
31.1
|
Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2
|
Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
29
LADENBURG THALMANN FINANCIAL SERVICES INC. (Registrant) |
||||
Date: November 10, 2008 | By: | /s/ Brett H. Kaufman | ||
Brett H. Kaufman | ||||
Vice President and Chief Financial Officer (Duly Authorized Officer and Chief Accounting Officer) |
30