RYE BROOK, New York, July 16, 2002 (PRIMEZONE) -- Hoenig Group Inc. (Nasdaq:HOEN) today reported financial results for the three- and six-month periods ended June 30, 2002. As previously announced, the Company sold Axe-Houghton Associates, Inc., its asset management operations, in three separate transactions which were completed on January 31, 2002, March 28, 2002 and April 26, 2002. These transactions and the results of Axe-Houghton Associates are reflected as discontinued operations for the periods indicated in the information below.
In addition, the Company previously announced a pre-tax loss of $7.1 million, plus approximately $0.6 million in related expenses, resulting from unauthorized trading by a former employee of the Company's United Kingdom subsidiary, Hoenig & Company Limited. The Company continues to pursue claims against insurers and others relating to the $7.1 million loss and the unauthorized trading. While the Company believes that it has meritorious claims, there can be no assurance that these claims will result in any recovery.
Three Months Ended June 30, 2002
Operating revenues from continuing operations for the second quarter ended June 30, 2002 increased 8.8% to $25.6 million from $23.5 million during the same period in 2001. The Company's domestic brokerage operating revenues increased 6.7% to $21.8 million for the second quarter 2002, as compared to $20.4 million during the same period in 2001. International brokerage operating revenues increased 22.9% to $3.8 million for the second quarter 2002, as compared to $3.1 million during the same period in 2001.
The Company incurred an operating loss from continuing operations of $7.0 million for the second quarter 2002, as compared to operating income from continuing operations of $1.6 million for the same period in 2001 due to the $7.1 million loss and related expenses. Excluding the $7.1 million loss and related expenses, operating income from continuing operations for the second quarter 2002 decreased 56.2% to $0.7 million, primarily due to a 31.5% decrease in domestic brokerage operating income. The decrease in domestic brokerage operating income reflects an increase in research and services expense as a percentage of commission revenues for the three months ended June 30, 2002.
Net investment and other income from continuing operations was $0.3 million during the second quarter 2002, as compared to $1.3 million during the same period in 2001. Net investment income and other from continuing operations for 2001 includes $0.8 million of investment gains related to the Company's ownership of publicly traded shares of the London and Hong Kong stock exchanges.
The Company recognized a gain of $1.2 million before and after taxes in the second quarter 2002 as a result of the last of the Company's three Axe-Houghton transactions, which was completed on April 26, 2002. This gain is included in net income from discontinued operations.
The Company incurred a net loss of $5.0 million for the second quarter 2002, as compared to net income of $2.1 million for the same period in 2001. The Company's net loss for the second quarter 2002 includes a net loss from continuing operations of $6.2 million, partially offset by the $1.2 million of net income from discontinued operations. Excluding the $7.1 million loss and related expenses ($6.7 million net of tax), the Company had net income from continuing operations of $0.5 million in the second quarter 2002. In the second quarter 2001, net income from continuing operations was $1.8 million and net income from discontinued operations was $0.4 million.
The Company's net loss per share, both basic and diluted, for the three months ended June 30, 2002 was $0.62, as compared to net income per share of $0.27 basic and $0.24 diluted for the same period in 2001.
Six Months Ended June 30, 2002
Operating revenues from continuing operations for the six months ended June 30, 2002 increased 10.1% to $50.5 million from $45.9 million during the same period in 2001. The Company's domestic brokerage operating revenues increased 7.4% to $43.1 million for the six months ended June 30, 2002, as compared to $40.2 million during the same period in 2001. International brokerage operating revenues increased 28.6% to $7.4 million for the six months ended June 30, 2002, as compared to $5.8 million during the same period in 2001.
The Company incurred an operating loss from continuing operations of $5.8 million for the six months ended June 30, 2002, as compared to operating income from continuing operations of $2.8 million for the same period in 2001, due to the $7.1 million loss and $0.6 million in related expenses. Excluding the $7.1 million loss and related expenses, operating income from continuing operations for the six months ended June 30, 2002 decreased 32.4% to $1.9 million, due primarily to a 23.4% decrease in domestic brokerage operating income during the period. The decrease in domestic brokerage operating incomes reflects an increase in research and services expense as a percentage of commission revenues for the six months ended June 30, 2002.
Net investment income and other from continuing operations was $0.5 million during the six months ended June 30, 2002. The Company had a net investment loss and other from continuing operations of $6.4 million during the same period in 2001 due to the first quarter 2001 pre-tax impairment write-off of the Company's $9.2 million investment in InstiPro Group, Inc. Net investment income and other from continuing operations for the six months ended June 30, 2001 before the InstiPro Group write-off was $2.9 million.
The Company recognized a gain of $5.8 million before tax, and $3.9 million net of taxes and expenses, for the six months ended June 30, 2002 from the Axe-Houghton transactions, two of which were completed during the first quarter 2002.
The Company incurred a net loss of $1.3 million for the six months ended June 30, 2002 and for the same period in 2001. The Company's net loss for the six months ended June 30, 2002 includes a net loss from continuing operations of $5.3 million, offset by $4.1 million of net income from discontinued operations. Excluding the $7.1 million loss and related expenses ($6.7 million net of tax), net income from continuing operations for the six months ended June 30, 2002 was $1.3 million. For the six months ended June 30, 2001, the Company incurred a net loss from continuing operations of $2.0 million and net income from discontinued operations of $0.7 million. Net income from continuing operations for the six months ended June 30, 2001 excluding the $9.2 million InstiPro impairment write-off ($5.5 million net of tax) was $3.5 million.
The Company's net loss per share, both basic and diluted, for the six months ended June 30, 2002 was $0.16, as compared to a net loss per share, both basic and diluted, of $0.17 for the same period in 2001.
At June 30, 2002, the Company had cash, U.S. government obligations, net accounts receivables and other investments of $55.3 million, as compared to $63.9 million as of December 31, 2001.
For over thirty years, Hoenig Group Inc. has provided high quality trade execution, independent research and premier client service to professional money managers and alternative investment funds throughout the world. Hoenig Group Inc. operates through its brokerage subsidiaries in the United States, United Kingdom and Hong Kong.
Financial Data Three Months Ended June 30,
2002(1) 2001
------------ ------------
Operating Revenues from
Continuing Operations $ 25,551,798 $ 23,488,282
Operating (Loss) Income
from Continuing Operations (6,983,448) 1,616,532
Net Investment Income and Other
from Continuing Operations 295,884 1,306,648
(Loss) Income Before Income Taxes
from Continuing Operations (6,687,564) 2,923,180
Net (Loss) Income from
Continuing Operations (6,187,903) 1,792,385
Net Income from Discontinued
Operations 1,236,757 357,527
Net (Loss) Income (4,951,146) 2,149,912
Net (Loss) Income Per Share
Basic
(Loss) Income from
Continuing Operations (0.78) 0.23
Income from Discontinued
Operations 0.16 0.04
------------ ------------
Net (Loss) Income Per
Share Basic (0.62) 0.27
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Diluted
(Loss) Income from
Continuing Operations (0.78) 0.20
Income from Discontinued
Operations 0.16 0.04
------------ ------------
Net (Loss) Income Per
Share Diluted (0.62) 0.24
============ ============
Weighted Average Shares
- Basic 7,945,603 7,903,829
Weighted Average Shares
- Diluted 7,945,603 8,958,772
(1) Financial data for the three months ended June 30, 2002,
excluding the $7.1 million loss and $0.6 million of related
expenses ($6.7 million net of tax), would be as follows:
operating income from continuing operations of $708,298, income
from continuing operations before income taxes of $1,004,182, net
income from continuing operations of $501,832, basic and diluted
earnings per share from continuing operations of $0.06.
Financial Data Six Months Ended June 30,
2002(1) 2001(2)
------------ ------------
Operating Revenues from
Continuing Operations $50,547,266 $45,927,405
Operating (Loss) Income from
Continuing Operations (5,824,797) 2,763,168
Net Investment Income (Loss) and
Other from Continuing Operations 509,200 (6,350,887)
(Loss) Before Income Taxes from
Continuing Operations (5,315,597) (3,587,719)
Net (Loss) from Continuing
Operations (5,346,332) (1,993,771)
Net Income from Discontinued
Operations 4,081,183 672,454
Net (Loss) (1,265,149) (1,321,317)
Net (Loss) Income Per Share
Basic and Diluted
(Loss) from Continuing Operations (0.67) (0.25)
Income from Discontinued Operations 0.51 0.09
------------ ------------
Net (Loss) Per Share Basic (0.16) (0.17)
============ ============
Weighted Average Shares
- Basic & Diluted 7,925,055 7,905,304
(1) Financial data for the six months ended June 30, 2002, excluding
the $7.1 loss and $0.6 million of related expenses ($6.7 million
net of tax), would be as follows: operating income from
continuing operations of $1,866,949, income from continuing
operations before income taxes of $2,376,149, net income from
continuing operations of $1,343,403, basic earnings per share
from continuing operations of $0.17, and diluted earnings per
share from continuing operations of $0.15.
(2) Financial data for the six months ended June 30, 2001, excluding
the $9.2 million ($5.5 million net of tax) impairment write-off
of the Company's investment in InstiPro Group, Inc., would be as
follows: net investment income and other from continuing
operations of $2,941,520, income from continuing operations
before income taxes of $5,704,688, net income from continuing
operations of $3,486,229, basic earnings per share from
continuing operations of $0.44, and diluted earnings per share
from continuing operations of $0.39.
This press release contains forward-looking statements that relate to future plans, events and performance. These forward-looking statements involve risks and uncertainties. These risks and uncertainties are set forth in the Company's periodic reports and other filings with the Securities and Exchange Commission. Forward-looking statements reflect the Company's current views with respect to future events. Actual events and results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated.