TradeStation Group's 2001 Fourth Quarter Results Better Than Business Outlook.Business Editors & High-Tech high-tech also hi-techadj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers MIAMI--(BUSINESS WIRE)--March 6, 2002 TradeStation TradeStation is a Windows-based application, designed, sold and distributed by TradeStation Securities. It is technical analysis software that is used for analysing and trading the financial markets. It uses a built-in proprietary programming language named EasyLanguage. Securities Continues To Attract Very Active Traders Traders Individuals who take positions in securities and their derivatives with the objective of making profits. Traders can make markets by trading the flow. When they do this, their objective is to earn the bid/ask spread. ; From Q3 to Q4 2001 Average Daily Revenue Trades Rise 218% and Average Daily Share Volume Rises 197% TradeStation Group, Inc. (Nasdaq:TRAD), the parent company of the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" TradeStation Securities direct-access brokerage, today reported its financial results for the fourth quarter and year ended December December: see month. 31, 2001. Excluding the effect of non-recurring, non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , TradeStation Group's results were 1 cent per share better than what was estimated in its October October: see month. 2001 Fourth Quarter Business Outlook. From third quarter to fourth quarter 2001, with respect to TradeStation 6 equities account customers, average daily revenue trades rose 218% and average daily share volume rose 197%. 2001 Year-End year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. Financial Results Show Successful Growth of New Business Model Excluding TradeStation Group's legacy software operations, revenues increased 7.9% to $28.2 million in 2001 from $26.1 million in 2000. Including legacy software operations, TradeStation Group had total revenues of $41.0 million in 2001, compared to $52.9 million in 2000. The decrease was caused entirely by the company's planned phase-out of its legacy sales and licensing of client software and related activities, the revenues of which decreased to $12.8 million in 2001 from $26.8 million in 2000. Excluding the effect of non-recurring, non-cash charges recorded in the 2001 fourth quarter, the company's 2001 net loss per share was 27 cents, as compared to the company's 2000 net loss per share of 22 cents (after excluding 9 cents attributable to merger-related expenses in 2000). When the non-recurring, non-cash charges are included ($5.3 million of impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill and certain intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc two 1999 acquisitions, and $4.8 million to provide a full valuation allowance against deferred tax assets), the company's 2001 net loss per share was 49 cents. Fourth Quarter Financial Results Demonstrate Strong Brokerage Revenue Growth In the 2001 fourth quarter, revenues from TradeStation's brokerage business increased 39% to $5.5 million, as compared to 2001 third quarter revenues of $3.9 million, and were consistent with 2000 fourth quarter revenues of $5.6 million. Growth in the number of TradeStation 6 platform accounts was the main reason for the increase. For the three months ended December 31, 2001, TradeStation Group had total revenues of $9.1 million, compared to $9.2 million for the 2001 third quarter and $13.5 million for the 2000 fourth quarter. Excluding the effect of the non-recurring, non-cash charges recorded in the 2001 fourth quarter, the company's fourth quarter 2001 net loss per share of 6 cents was 1 cent, or 19%, more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than the company's Fourth Quarter 2001 Business Outlook that was published October 2001, and 4 cents, or 38%, more favorable than the third quarter 2001 net loss per share of 10 cents. The company's 2000 fourth quarter net loss per share, after excluding 8 cents attributable to merger-related expenses, was 4 cents. When the non-recurring, non-cash charges are included, the company's 2001 fourth quarter net loss per share was 29 cents. Company's 2001 Year-End Cash and Cash Equivalents Are $20 Million TradeStation Group had cash and cash equivalents of $20.0 million at December 31, 2001, as compared to $18.4 million at December 31, 2000, approximately $3.6 million of which is currently restricted. At December 31, 2001, the company had no borrowings other than $1.4 million of capital lease obligations. "We expect to have sufficient cash resources to complete the planned phase-out of our legacy software business and become a profitable direct-access online brokerage," said David Fleischman, Chief Financial Officer of TradeStation Group. TradeStation 6 Platform Attracts Significant Number of New Brokerage Clients At the end of the 2001 fourth quarter, the company had 2,127 funded TradeStation 6 equities and futures accounts, a 154% increase over the 836 accounts the company had at the end of the 2001 third quarter, and the company experienced the following 2001 fourth quarter daily trading results with respect to TradeStation 6 platform equities accounts: Trading Statistics Q4 01 Q3 01 % Increase ------------------ ----- ----- ---------- Average daily trade revenue $50,427 $20,486 146% Average daily revenue trades 2,177 684 218% Average daily share volume 2,590,000 873,000 197% "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the continuation of a bear market and perhaps the worst growth statistics ever experienced by the online brokerage industry, we grew our new TradeStation 6 client base significantly in the 2001 fourth quarter," said Bill Cruz, Co-Chairman and Co-CEO of TradeStation Group. "This growth, in these times, shows the immense drawing power and value of TradeStation 6 to the active trader market." TradeStation 6 Platform Customer Account Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. Among the Best in the Industry Brokerage clients using the TradeStation 6 platform generated the following customer account metrics in the 2001 fourth quarter: Customer Account Metrics ------------------------ Annualized average revenue per account $11,031 Annualized trades per account 476 Average assets per account $91,262 "The metrics on customer accounts for equities clients using TradeStation 6 continue to be nothing short of outstanding," said Cruz. "We have maintained for some time that TradeStation brokerage clients would be very active traders. Our average TradeStation 6 brokerage client continued to trade at an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of close to 500 times per year. We believe we are well positioned to become a major presence in the online brokerage industry." Conference Call At 11:00, a.m., eastern time, today, the management of TradeStation Group will conduct an analyst conference call to discuss the company's 2001 fourth quarter and year-end results. The telephone conference will be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.TradeStation.com. A rebroadcast of the call will be accessible for approximately 90 days. About TradeStation Group, Inc. TradeStation Group, Inc. (Nasdaq:TRAD), through its operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , TradeStation Securities, Inc., offers TradeStation 6 to institutional, professional and serious, active individual traders -- an electronic trading  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. platform that enables clients to design, test and monitor their own custom trading strategies In finance, a trading strategy (see also trading system) is a predefined set of rules to apply. Usually, this refers to a means used to replicate an option in order to give it an arbitrage free value in the sense that the cost of buying some financial assets to give the same and then automate To turn a set of manual steps into an operation that goes by itself. See automation. them with direct-access order execution. The trading platform currently offers streaming real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. equities, options, futures and futures options Futures option An option on a futures contract. Related: Options on physicals. futures option A put or call option on a futures contract. market data. Equities and options transactions are cleared through Bear, Stearns Securities Corp. (NYSE NYSE See: New York Stock Exchange :BSC (Binary Synchronous Communications) See bisync. ) and futures and futures options transactions are cleared through Refco, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . The company's other operating subsidiary, TradeStation Technologies, Inc., develops and offers strategy trading software tools and subscription services. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release and the conference call being broadcast today contains and/or will contain statements that are forward-looking and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. When used in this press release or the conference call the words "believes," "plans," "estimates," "expects," "intends," "designed," "anticipates," "may," "will," "should," "could," "become," "upcoming," "potential," "pending" and similar expressions, if and to the extent used, are intended to identify forward-looking statements. All forward-looking statements are based largely on current expectations and beliefs concerning future events that are subject to substantial risks and uncertainties. Actual results may differ materially from the results suggested herein or on the conference call. Factors that may cause or contribute to the various potential differences include, but are not limited to, the company's ability to continue to effectuate ef·fec·tu·ate tr.v. ef·fec·tu·at·ed, ef·fec·tu·at·ing, ef·fec·tu·ates To bring about; effect. [Medieval Latin effectu its Internet brokerage strategy and to successfully market in a timely fashion the company's principal product and service offering (TradeStation 6, f/k/a the TradeStation Platform) and the costs associated therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. ; the acceptance of the company's new products and services in the marketplace; the company's customer and active prospect base containing a substantially lower number of interested brokerage clients than the company anticipates; the date on which the company's planned additions and enhancements to its direct-access trading platform are launched being materially later than the expected date(s) due to changes in marketing decisions, results of ongoing quality assurance testing, insufficient product development resources, other decisions to modify certain features, regulatory pronouncements, or other reasons; technical difficulties or errors in the products and/or services; market pressure to lower substantially or eliminate pricing on brokerage and subscription services as a result of such services being provided at lower or no additional costs by brokerages, financial institutions and other financial companies to their customers, or for other market reasons; the appeal of the company's products and services to the institutional market (given the company's limited experience selling to that market); the company's brokerage client base trading with an average frequency and/or volume lower than the company anticipates; potential NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). or other broker-dealer Broker-Dealer A person or firm in the business of buying and selling securities operating as both a broker and dealer depending on the transaction. Notes: Technically, a broker is only an agent who executes orders on behalf of clients, whereas a dealer acts as a principal regulatory issues arising from the conduct of a brokerage business focused on active traders; the success (and cost) of new marketing strategies; the success (or failure to succeed) of the company's 2002 and 2003 marketing efforts, and/or delays in launching or implementing those efforts; variations in patterns of customer revenues due to holidays or major news events; the company's future participation in any merger or strategic alliance; unfavorable critical reviews regarding the company's products and services; increased competition (including product and price competition); the level of market demand for real-time decision support tools, real-time data Real-time data denotes information that is delivered immediately after collection. There is no delay in the timeliness of the information provided. Some uses of this term confuse it with the term dynamic data. and/or online brokerage services and/or website services generally; the scalability, possible performance failures and reliability of the company's server farm/data network; the entrance of new competitors into the market; the timing and significance of additional new product and service introductions by the company and its competitors; general economic and market factors, including changes in securities and financial markets; the possibility of "cyberterrorism See cyberwar and information warfare. " and the effect that would have on people's willingness to use Internet-based services, particularly for significant financial transactions; variations from the company's budgeted expectations with respect to hiring and maintenance of personnel, sales and marketing expenditures, expected transaction fee revenue growth and subscription fee and client software licensing fee revenue decline; the ability to collect on a large insurance claim and to collect ongoing royalty fee receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed expected from MoneyLine Network, Inc.; the amount of unexpected legal, consultation and professional fees, and other items, events and unpredictable costs or revenue impact that may occur; the adequacy of working capital, cash flows and available financing to fund the new business model and sustain expected operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. ; and other risks and uncertainties indicated from time to time in the company's filings with the Securities and Exchange Commission including, but not limited to, the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2000, as well as 2001 quarterly reports on Form 10-Q Form 10-Q See 10-Q. and other SEC filings and company press releases.
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
December 31, December 31,
------------------------- ------------------------
2001 2000 2001 2000
------------ ------------ ------------ -----------
(Unaudited)
REVENUES:
Brokerage
revenues $ 5,471,898 $ 5,579,407 $ 18,601,627 $ 17,933,750
Subscription
fees 1,814,481 2,697,122 9,566,566 8,170,083
Licensing fees 595,991 3,394,819 5,028,830 18,343,279
Other 1,228,939 1,823,650 7,790,120 8,478,621
------------ ------------ ------------ ------------
Total
revenues 9,111,309 13,494,998 40,987,143 52,925,733
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Clearing and
other transaction
costs 1,759,741 1,559,410 5,771,610 4,787,328
Data delivery
and related
costs 1,215,633 1,234,524 5,301,917 4,001,542
Technology
development 3,168,623 1,983,328 12,015,812 8,128,376
Sales and
marketing 2,284,076 4,984,470 11,174,225 26,435,076
Inventory and
handling costs 18,770 91,836 150,824 1,244,837
General and
administrative 1,956,815 3,503,254 12,924,434 11,915,028
Amortization of
goodwill and
other
intangibles 1,596,128 1,495,554 6,198,264 5,978,478
Merger related
costs - 3,800,000 - 3,800,000
Impairment of
goodwill and
certain
intangibles 5,285,497 - 5,285,497 -
------------ ------------ ------------ ------------
Total
operating
expenses 17,285,283 18,652,376 58,822,583 66,290,665
------------ ------------ ------------ ------------
Loss from
operations (8,173,974) (5,157,378) (17,835,440) (13,364,932)
OTHER INCOME, net 114,462 318,785 598,708 1,292,632
------------ ------------ ------------ ------------
Loss before
income
taxes (8,059,512) (4,838,593) (17,236,732) (12,072,300)
INCOME TAX
PROVISION 4,660,723 508,074 4,668,132 1,402,710
------------ ------------ ------------ ------------
Net loss $(12,720,235) $(5,346,667) $(21,904,864)$(13,475,010)
============ ============ ============ ============
LOSS PER SHARE:
Basic and
diluted $ (0.29) $ (0.12) $ (0.49)$ (0.31)
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Basic and
diluted 44,521,893 44,098,519 44,458,689 43,955,819
============ ============ ============ ============
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
----------------------------
2001 2000
------------ -----------
ASSETS:
Cash and cash equivalents $ 19,981,591 $ 18,394,996
Securities owned, at market value 415,928 249,423
Accounts receivable 330,300 644,200
Other receivables 315,669 1,028,920
Income tax receivable - 8,542,413
Property and equipment, net 3,224,518 2,651,057
Goodwill, net - 1,156,709
Other intangible assets, net 1,748,096 11,850,148
Deferred income taxes, net - 4,805,651
Other assets 804,901 1,030,631
------------ ------------
Total assets $ 26,821,003 $ 50,354,148
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Accounts payable $ 1,596,244 $ 3,579,962
Accrued expenses 6,013,038 5,709,542
Income tax payable - 1,003,912
Deferred revenue 347,336 821,593
Capital lease obligations 1,406,872 214,069
------------ ------------
Total liabilities 9,363,490 11,329,078
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 17,457,513 39,025,070
------------ ------------
Total liabilities and
shareholders' equity $ 26,821,003 $ 50,354,148
============ ============
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