TradeStation Group Announces Quarterly Results.Business Editors MIAMI--(BUSINESS WIRE)--July 25, 2001 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. Group, Inc. (Nasdaq:TRAD) today reported results for the second quarter ended June June: see month. 30, 2001. The quarter ended with the launch by the company of the new TradeStation(R) Platform, a trading platform that for the first time combines strategy testing, automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. trading and intelligent direct-access order execution. Even though just launched, TradeStation has already been ranked the no. 1 Direct-Access Broker Direct-Access Broker A stockbroker that concentrates on speed and order execution - unlike a full-service broker that focuses on research and advice. Direct-access brokers usually use complicated computer software that allows clients to trade directly with an exchange or with other by Barron's, ahead of competitors including Instinet's ProTrader (Nasdaq:INET INET Internet INET Intranet INET International Networking (conference) INET Institutional Network (Hawaii Department of Education) INET Instinet LLC iNET Integrated Network Enhanced Telemetry ), Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by Schwab's StreetSmart Pro (NYSE NYSE See: New York Stock Exchange :SCH SCH School SCH Schedule SCH Search SCH Semester Credit Hours SCH Santander Central Hispano (bank in Spain) SCH Socket Head SCH Synchronization Channel SCH Succinylcholine SCH Space Center Houston ), E*Trade's WebStreet Direct (NYSE:ET), Ameritrade's TradeCast Elite (Nasdaq:AMTD AMTD Arithmetic Mean Temperature Difference AMTD Automatic Magnetic Tape Distribution AMTD Affordability and Manufacturing Technology Demonstration ), and seven other direct-access brokers. Financial Results Compare Favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to Business Outlook for Second Quarter and First Half of 2001 Year The company announced that its results from operations for the 2001 second quarter was a loss of $1.9 million, or 4 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , as compared to a loss of $1.0 million, or 2 cents per share, for the 2000 second quarter. For the first six months of 2001, results from operations was a loss of $2.3 million, or 5 cents per share, as compared to a loss of $3.7 million, or 8 cents per share, for the same six-month period a year ago. Results from operations excludes amortization of goodwill and 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. , which consists mainly of amortization from the company's 1999 acquisition of Window On WallStreet. Amortization of goodwill and intangible assets was $1.5 million for the 2001 second quarter and $3.1 million for the first six months of 2001. Net loss for the 2001 second quarter was $3.3 million, or 7 cents per share, as compared to net loss of $2.5 million, or 6 cents per share, for the second quarter a year ago. This compares favorably to the company's second quarter 2001 projected net loss of $3.4 million, or 8 cents per share. For the first six months of 2001, net loss was $4.9 million, or 11 cents per share, compared to net loss of $6.6 million, or 15 cents per share, for the same six-month period a year ago. This compares favorably to the company's six-month projected net loss of $5.2 million, or 12 cents per share. For the 2001 second quarter, revenues were $10.6 million, compared to $13.9 million for the second quarter one year ago. For the first six months of 2001, revenues were $22.7 million, compared to $26.8 million for the same period one year ago. "This past quarter marks the completion of our transformation from a software developer to a brokerage firm that targets institutional and 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. ," said Bill Cruz Cruz , Juana Inés de la 1648?-1695. Mexican nun and poet noted for her love lyrics, courtly tributes, satires, and plays as well as theological writings on the role of women in the Roman Catholic church. , Co-Chairman of the Board and Co-CEO. "It has been the most significant quarter in the 19-year history of our company. We believe our selection by Barron's as the top-ranked direct-access brokerage firm only days after our launch is an early indication of the great success this company will achieve in 2002 and beyond." Business Outlook For Third and Fourth Quarter 2001 The company reported that early experience with customers who have begun to use the new TradeStation Platform have produced results of trading frequency that are exceeding the company's previous expectations. David Fleischman, the company's Chief Financial Officer, said, "Given that we launched the controlled release of the TradeStation Platform only three days prior to the end of the second quarter, it is too early to begin publishing any account or trading statistics. We plan to begin to do this with our release of third quarter results." The company currently intends to commence its direct marketing campaign to its existing customer base in August, and a media marketing campaign through CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. and financial periodicals after Labor Day Labor Day, holiday celebrated in the United States and Canada on the first Monday in September to honor the laborer. It was inaugurated by the Knights of Labor in 1882 and made a national holiday by the U.S. Congress in 1894. . Taking these and various other factors into account, the company has prepared a Business Outlook for the third and fourth quarters of 2001. The company's third quarter Business Outlook reflects the anticipated continuing decline of the company's legacy software and subscription business, which is expected to be partially offset by growth in brokerage fee revenues. In addition, the company expects to begin to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. increased marketing costs in the third quarter, most of the benefits of which are not expected to be recognized until the fourth quarter. The following statements regarding the third and fourth quarters of the 2001 fiscal year are based on current expectations and beliefs with respect to the remainder of the 2001 fiscal year. These statements with respect to 2001 are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially, as suggested by the risk factors for 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. set forth below.
Q3 2001 Q4 2001
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TOTAL REVENUES (000's) $ 9,700 $ 16,400
Key Components:
Brokerage fees $ 4,500 $ 11,700
Subscription fees $ 2,200 $ 2,000
Net licensing fees $ 400 $ 200
Other revenues $ 2,600 $ 2,500
TOTAL OPERATING EXPENSES $ 14,600 $ 17,900
NET LOSS $ (4,800) $ (1,400)
NET LOSS PER SHARE $ (0.11) $ (0.03)
EBITDA (1) $ (2,600) $ 700
(1) Earnings before interest expense, taxes, depreciation and
amortization
Changes to Management Team and Board of Directors Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. zum Tobel, Vice President of Brokerage Operations and Director, Farshid Tafazzoli, Vice President of Brokerage Technology and Director, and Lothar Mayer, Director, have resigned to pursue other interests. Joe Nikolson, who was promoted to Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of TradeStation Securities in January 2001, will continue as head of the operating team operating team Surgery The participants–surgeons, nurses, etc–in a sterile surgical procedure performed under general–less commonly, local anesthesia at TradeStation Securities. 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 second quarter 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 www.TradeStation.com and at www.StreetFusion.com. A rebroadcast of the call will be accessible from both Web sites for approximately 90 days. Forward-looking Statements This press release contains statements, including a Business Outlook, 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 the words "estimates," "expect," "expected," "believe," "plan," "will," "intends," 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. Without limiting the breadth of that statement, the company emphasizes that actual financial results of the company may differ materially from those set forth in the Business Outlook. 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 (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 date on which the company's fully-integrated direct-access trading platform is fully launched being materially later than the expected date due to changes in marketing decisions, results of ongoing quality assurance testing, decisions to add 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 company's customer and active prospect base containing a substantially lower number of interested brokerage clients than the company anticipates; the appeal of the company's products and services to the institutional 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). , CFTC CFTC See: Commodity Futures Trading Commission CFTC See Commodity Futures Trading Commission (CFTC). or other regulatory issues arising from the conduct of a brokerage business focused on active traders; the success (and cost) of new marketing strategies; the company's future participation in any merger or strategic alliance; unfavorable critical reviews regarding the company's new products and services; increased competition (including product and price competition); the level of market demand for 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. 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, performance failures and reliability of the company's server farm/data network; the entrance of new competitors into the market; 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; variations in patterns of customer revenues due to holidays or major news events; 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 revenue growth and decline and client software licensing fee revenue decline; the ability to collect 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 , including a large insurance claim receivable; failure to receive from Telerate, Inc. royalty payments as a result of its pending federal reorganization proceedings; 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 other company press releases.
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
---- ---- ---- ----
REVENUES:
Brokerage fees $3,792,804 $3,848,376 $8,545,355 $8,013,646
Subscription fees 2,644,750 2,007,791 5,398,557 2,910,625
Net licensing fees 1,563,700 5,001,534 3,516,881 10,848,530
Other 2,592,225 2,999,542 5,239,838 4,992,801
---------- ---------- ---------- ----------
Total revenues 10,593,479 13,857,243 22,700,631 26,765,602
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Clearing and other
transaction costs 1,346,384 1,084,773 2,936,195 2,308,059
Data delivery and
related costs 1,311,068 1,031,703 2,675,681 1,571,079
Inventory and
handling costs 33,735 333,657 115,921 1,053,905
Technology
development 3,386,789 2,096,362 5,828,683 4,131,317
Sales and
marketing 3,268,821 7,321,874 6,224,701 15,879,527
General and
administrative 3,154,302 2,972,214 7,189,867 5,543,118
Amortization of
goodwill and
intangibles 1,541,963 1,491,808 3,060,175 2,983,616
---------- ---------- ---------- ----------
Total operating
expenses 14,043,062 16,332,391 28,031,223 33,470,621
---------- ---------- ---------- ----------
Loss from
operations (3,449,583) (2,475,148) (5,330,592) (6,705,019)
OTHER INCOME, net 179,607 318,270 401,241 692,716
---------- ---------- ---------- ----------
Loss before
income taxes (3,269,976) (2,156,878) (4,929,351) (6,012,303)
INCOME TAX PROVISION 4,896 302,931 16,642 578,748
---------- ---------- ---------- ----------
Net loss $(3,274,872) $(2,459,809) $(4,945,993) $(6,591,051)
========== ========== ========== ==========
LOSS PER SHARE:
Basic and diluted $(0.07) $(0.06) $(0.11) $(0.15)
========== ========== ========== ==========
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
---- ----
(Unaudited)
ASSETS:
Cash and cash equivalents $19,357,519 $18,394,996
Securities owned, at market value 1,593,146 249,423
Accounts receivable, net 856,767 644,200
Other receivables 3,085,254 1,028,920
Income tax receivable - 8,542,413
Deferred income taxes 4,805,651 4,805,651
Property and equipment, net 3,602,187 2,651,057
Goodwill, net 952,584 1,156,709
Intangible assets, net 9,119,098 11,850,148
Other assets 2,008,763 1,030,631
----------- -----------
Total assets $45,380,969 $50,354,148
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Accounts payable $1,755,953 $3,579,962
Accrued expenses 6,913,361 5,686,792
Income taxes payable 134,205 1,003,912
Deferred revenue 887,275 821,593
Securities sold, but not yet
purchased - 22,750
Capital lease obligations 1,466,824 214,069
----------- -----------
Total liabilities 11,157,618 11,329,078
----------- -----------
SHAREHOLDERS' EQUITY 34,223,351 39,025,070
----------- -----------
Total liabilities and
shareholders' equity $45,380,969 $50,354,148
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