Download - GAIN Capital/FXCM Merger Presentation
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Filed by FXCM Inc.
Pursuant to Rule 425 under the
Securities Act of 1933
Subject Company: Gain Capital Holdings, Inc.
Commission File No.: 001-35008
Disclosure Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, which reflect the current views of FXCM (FXCM) with respect to, among other things, its operations and financial performance for
the future. You can identify these forward-looking statements by the use of words such as outlook, believes, expects, potential, continues, may,
will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words or other
comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors thatcould cause actual outcomes or results to differ materially from those indicated in these statements. FXCM believes these factors include but are not limited to
evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary
technology, risks related to its dependence on FX market makers, market conditions , risks related to the proposed transaction involving FXCM and GAIN,
which include, but are not limited to, the risks that the proposed transaction may not be completed; that, if completed, the businesses of FXCM and GAIN
may not be combined successfully or that such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; that
the expected synergies from the proposed transaction may not be fully realized or may take longer to realize than expected and those other risks described under
Risk Factors as such factors may be updated from time to time in FXCM Inc.s most recent annual report on Form 10-K, FXCM Inc.s quarterly reports on
Form 10-Q and other SEC filings, which are accessible on the SECs website at sec.gov.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this
communication and in our other SEC filings. FXCM undertakes no obligation to publicly update or review any forward-looking statement, whether as a resultof new information, future developments or otherwise.
Important Legal Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This
communication is being made in respect of the business combination transaction with GAIN proposed by FXCM, which may become the subject of aregistration statement filed with the SEC. This communication is not a substitute for any prospectus, proxy statement or any other document which FXCM
may file with the SEC in connection with the proposed transaction. INVESTORS ARE URGED TO READ ANY SUCH DOCUMENTS REGARDING
THE PROPOSED TRANSACTION THAT ARE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
Such documents would be available free of charge at the SECs website ( http://www.sec.gov) or at FXCMs website (http://www.fxcm.com ) by following thelink to Investor Relations and then under the tab Financial Information SEC Filings.
FXCMand its directors and executive officers may be deemed to be participants in any solicitation of proxies in respect of the proposed transaction with
GAIN. Neither FXCMnor any of its directors or executive officers beneficially own any shares of common stock of GAIN. Additional information regardingFXCMs directors and executive officers is available in FXCMs proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC
on April 30, 2012. Other information regarding potential participants in any such proxy solicitation and a description of their direct and indirect interest, by
security holdings or otherwise, will be contained in any proxy statement filed in connection with the proposed transaction.
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U n s a v e d D o c u m e n t / 9 / 1 8 / 2 0 1 0 / 1 3 : 4 9 P r o p o s e d A c q u i s i t i o n o f G A I N C a p i t a l H o l d i n g s , I n c . A p r i l 9 , 2 0 1 3
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1 T h i s p r e s e n t a t i o n c o n t a i n s f o r w a r d - l o o k i n g s t a t e m e n t s w i t h i n t h e m e a n i n g o f S e c t i o n 2 7 A o f t h e S e c u r i t i e s A c t o f 1 9 3 3 a n d S e c t i o n 2 1 E o f t h e S e c u r i t i e s E x c h a n g e A c t o f 1 9 3 4 , w h i c h r e f l e c t F X C M I n c . s ( F X C M ) c u r r e n t v i e w s w i t h r e s p e c t t o , a m o n g o t h e r t h i n g s , i t s o p e r a t i o n s a n d f i n a n c i a l p e r f o r m a n c e f o r t h e f u t u r e . Y o u c a n i d e n t i f y t h e s e f o r w a r d - l o o k i n g s t a t e m e n t s b y t h e u s e o f w o r d s s u c h a s o u t l o o k , b e l i e v e s , e x p e c t s , p o t e n t i a l , c o n t i n u e s , m a y , w i l l , s h o u l d , s e e k s , a p p r o x i m a t e l y , p r e d i c t s , i n t e n d s , p l a n s , e s t i m a t e s , a n t i c i p a t e s o r t h e n e g a t i v e v e r s i o n o f t h e s e w o r d s o r o t h e r c o m p a r a b l e w o r d s . S u c h f o r w a r d - l o o k i n g s t a t e m e n t s a r e s u b j e c t t o v a r i o u s r i s k s a n d u n c e r t a i n t i e s . A c c o r d i n g l y , t h e r e a r e o r w i l l b e i m p o r t a n t f a c t o r s t h a t c o u l d c a u s e a c t uo u t c o m e s o r r e s u l t s t o d i f f e r m a t e r i a l l y f r o m t h o s e i n d i c a t e d i n t h e s e s t a t e m e n t s . F X C M b e l i e v e s t h e s e f a c t o r s i n c l u d e b u t a r e n o t l i m i t e d t o e v o l v i n g l e g a l a n d r e g u l a t o r y r e q u i r e m e n t s o f t h e F X i n d u s t r y , t h e l i m i t e d o p e r a t i n g h i s t o r y o f t h e F X i n d u s t r y , r i s k s r e l a t e d t o t h e p r o t e c t i o n o f i t s p r o p r i e t a r y t e c h n o l o g y , r i s k s r e l a t e d t o i t s d e p e n d e n c e o n F X m a r k e t m a k e r s , m a r k e t c o n d i t i o n s , r i s k s r e l a t e d t o t h e p r o p o s e d t r a n s a c t i o n i n v o l v i n g F X C M a n d G A I N C a p i t a l H o l d i n g s , I n c . ( G A I N o r G C A P ) , w h i c h i n c l u d e, b u t a r e n o t l i m i t e d t o , t h e r i s k s t h a t t h e p r o p o s e d t r a n s a c t i o n m a y n o t b e c o m p l e t e d ; t h a t , i f c o m p l e t e d , t h e b u s i n e s s e s o f F X C M a n d G A I N m a y n o t b e c o m b i n e d s u c c e s s f u l l y o r t h a t s u c h c o m b i n a t i o n m a y t a k e l o n g e r , b e m o r e d i f f i c u l t , t i m e - c o n s u m ic o s t l y t o a c c o m p l i s h t h a n e x p e c t e d ; t h a t t h e e x p e c t e d s y n e r g i e s f r o m t h e p r o p o s e d t r a n s a c t i o n m a y n o t b e f u l l y r e a l i z e d o r m a y t a k e l o n g e r t o r e a l i z e t h a n e x p e c t e d a n d t h o s e o t h e r r i s k s d e s c r i b e d u n d e r R i s k F a c t o r s a s s u c h f a c t o r s m a y b e u p d a t e d f r o m t i m e t o t i m e i n F X C M s m o s t r e c e n t a n n u a l r e p o r t o n F o r m 1 0 - K , F X C M s q u a r t e r l y r e p o r t s o n F o r m 1 0 - Q a n d o t h e r S E C f i l i n g s , w h i c h a r e a c c e s s i b l e o n t h e S E C s w e b s i t e a t s e c . g o v . T h e s e f a c t o r s s h o u l d n o t b e c o n s t r u e d a s e x h a u s t i v e a n d s h o u l d b e r e a d i n c o n j u n c t i o n w i t h t h e o t h e r c a u t i o n a r y s t a t e m e n t s t h a t a r e i n c l u d e d i n t h i s p r e s e n t a t i o n a n d i n o u r S E C f i l i n g s . F X C M u n d e r t a k e s n o o b l i g a t i o n t o p u b l i c l y u p d a t e o r r e v i e w a n y f o r w a r d - l o o k i n g s t a t e m e n t , w h e t h e r a s a r e s u l t o f n e w i n f o r m a t i o n , f u t u r ed e v e l o p m e n t s o r o t h e r w i s e . N o n - GA A P F i n a n c i a l M e a s u r e s : T h i s p r e s e n t a t i o n p r e s e n t s c e r t a i n n o n - G A A P f i n a n c i a l m e a s u r e s . T h e s e m e a s u r e s s h o u l d n o t b e c o n s i d e r e d i n i s o l a t i o n f r o m , o r a s a s u b s t i t u t e f o r , m e a s u r e s p r e p a r e d i n a c c o r d a n c e w i t h g e n e r a l l y a c c e p t e d a c c o u n t i n g p r i n c i p l e s . F o r r e c o n c i l i a t i o n s o f t h e s e n o n - G A A P f i n a n c i a l m e a s u r e s t o t h e m o s t c o m p a r a b l e m e a s u r e s c a l c u l a t e d a n d p r e s e n t e d i n a c c o r d a n c e w i t h G A A P , p l e a s e r e f e r t o F X C M s o r GA I N s a n n u a l r e p o r t s o n F o r m 1 0 - K , F X C M s o r G A I N s q u a r t e r l y r e p o r t s o n F o r m 1 0 - Q a n d o t h e r S E C f i l i n g s , w h i c h a r e a c c e s s i b l e o n t h e S E C s w e b s i t e a t s e c . g o v . D i s c l a i m e r
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2 T h i s c o m m u n i c a t i o n d o e s n o t c o n s t i t u t e a n o f f e r t o s e l l o r t h e s o l i c i t a t i o n o f a n o f f e r t o b u y a n y s e c u r i t i e s o r a s o l i c i t a t i o n o f a n y v o t e o r a p p r o v a l . T h i s c o m m u n i c a t i o n i s b e i n g m a d e i n r e s p e c t o f t h e b u s i n e s s c o m b i n a t i o n t r a n s a c t i o n w i t h G A I N p r o p o s e d b y F X C M , w h i c h m a y b e c o m e t h e s u b j e c t o f a r e g i s t r a t i o n s t a t e m e n t f i l e d w i t h t h e S E C . T h i s m a t e r i a l i s n o t a s u b s t i t u t e f o r a n y p r o s p e c t u s , p r o x y s t a t e m e n t o r a n y o t h e r d o c u m e n t w h i c h F X C M m a y f i l e w i t h t h e S E C i n c o n n e c t i o n w i t h t h e p r o p o s e d t r a n s a c t i o n . I N V E S T O R S A R E U R G E D T O R E A D A N Y S U C H D O C U M E N T S R E G A R D I N G T H E P R O P OS E D T R A N S A C T I O N T H A T A R E F I L E D W I T H T H E S E C C A R E F U L L Y A N D I N T H E I R E N T I R E T Y I F A N D WH E N T H E Y B E C O M E A V A I L A B L E B E C A U S E T H E Y W I L L C O N T A I N I M P O R T A N T I N F OR M A T I O N A B O U T T H E P R O P O S ET R A N S A C T I O N . S u c h d o c u m e n t s w o u l d b e a v a i l a b l e f r e e o f c h a r g e a t t h e S E C s w e b s i t e ( h t t p : / / w w w . s e c . g o v ) o r a t F X C M s w e b s i t e ( h t t p : / / w w w . f x c m . c o m ) b y f o l l o w i n g t h e l i n k t o I n v e s t o r R e l a t i o n s a n d t h e n u n d e r t h e t a b F i n a n c i a l I n f o r m a t i o n S E C F i l i n g s . F X C M a n d i t s d i r e c t o r s a n d e x e c u t i v e o f f i c e r s m a y b e d e e m e d t o b e p a r t i c i p a n t s i n a n y s o l i c i t a t i o n o f p r o x i e s i n r e s p e c t o f t h e p r o p o s e d t r a n s a c t i o n w i t h G A I N . N e i t h e r F X C M n o r a n y o f i t s d i r e c t o r s o r e x e c u t i v e o f f i c e r s b e n e f i c i a l l y o w n a n y s h a r e s o f c o m m o n s t o c k o f G A I N . A d d i t i o n a l i n f o r m a t i o n r e g a r d i n g F X C M s d i r e c t o r s a n d e x e c u t i v e o f f i c e r s i s a v a i l a b l e i n F X C M s p r o x y s t a t e m e n t f o r i t s 2 0 1 2 a n n u a l m e e t i n g o f s t o c k h o l d e r s , w h i c h w a s f i l e d w i t h t h e S E C o n A p r i l 3 0 , 2 0 1 2 . O t h e r i n f o r m a t i o n r e g a r d i n g p o t e n t i a l p a r t i c i p a n t s i n a n ys u c h p r o x y s o l i c i t a t i o n a n d a d e s c r i p t i o n o f t h e i r d i r e c t a n d i n d i r e c t i n t e r e s t , b y s e c u r i t y h o l d i n g s o r o t h e r w i s e , w i l l b e c o n t a i n e d i n a n y p r o x y s t a t e m e n t f i l e d i n c o n n e c t i o n w i t h t h e p r o p o s e d t r a n s a c t i o n . I m p o r t a n t L e g a l I n f o r m a t i o n
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T a b l e o f C o n t e n t s 1 . T r a n s a c t i o n O v e r v i e w 2 . B e n e f i t s f o r G A I N S h a r e h o l d e r s 3 . B e n e f i t s f o r F X C M S h a r e h o l d e r s 4 . B e n e f i t s f o r G A I N C l i e n t s 5 . C h a l l e n g e s f o r G A I N a s a S t a n d a l o n e C o m p a n y 6 . N e x t S t e p s A p p e n d i x 3
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4 T r a n s a c t i o n O v e r v i e w
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T r a n s a c t i o n H i g h l i g h t s W e b e l i e v e t h e t r a n s a c t i o n w i l l c r e a t e a n i n d u s t r y l e a d e r w i t h s i g n i f i c a n t b e n e f i t s o f i m p r o v e d s c a l e e c o n o m i c s P r o f o r m a 2 0 1 2 r e v e n u e s o f ~ $ 5 6 9 m i l l i o n , c l i e n t a s s e t s o f ~ $ 1 . 6 b i l l i o n ( 1 ) a n d e s t i m a t e d p o s t - s y n e r g y r u n - r a t e A d j . E B I T D A o f b e t w e e n ~ $ 1 6 3 a n d ~ $ 1 8 3 m i l l i o n ( 2 ) P o t e n t i a l s i g n i f i c a n t o p e r a t i n g s y n e r g i e s c o u l d p o t e n t i a l l y d r i v e b e t w e e n $ 5 0 a n d $ 7 0 m i l l i o n i n i n c r e m e n t a l r u n - r a t e E B I T D A o n c e i n t e g r a t i o n i s c o m p l e t e P o t e n t i a l c a p i t a l s y n e r g i e s c o u l d r e s u l t i n t h e r e l e a s e o f b e t w e e n $ 8 0 a n d $ 1 0 0 m i l l i o n i n c u r r e n t l yr e s t r i c t e d c a s h P o t e n t i a l s i g n i f i c a n t b e n e f i t s f o r a l l s h a r e h o l d e r s : S t o c k t r a n s a c t i o n a l l o w s a l l s h a r e h o l d e r s t o p a r t i c i p a t e P r o j e c t e d t o b e a c c r e t i v e t o E P S i n 2 0 1 4 e x c l u d i n g u p f r o n t o n e - t i m e c o s t s G r e a t e r a b i l i t y t o w i t h s t a n d m a r k e t v o l a t i l i t y a n d p o t e n t i a l r e g u l a t o r y c h a n g e s I m p r o v e s b a l a n c e s h e e t s t r e n g t h , l i q u i d i t y a n d t r a d i n g c h a r a c t e r i s t i c s S u p e r i o r p l a t f o r m f o r f u t u r e g r o w t h a n d d e v e l o p m e n t o p p o r t u n i t i e s 5 S o u r c e : F X C M a n d G A I N S E C f i l i n g s . 1 . B a s e d o n f i g u r e s a s r e p o r t e d b y F X C M a n d G A I N a s o f D e c e m b e r 3 1 , 2 0 1 2 . 2 . P r o F o r m a A d j . E B I T D A i s b a s e d o n 2 0 1 2 F X C M A d j . E B I T D A o f ~ $ 1 1 3 m m a n d p r o j e c t e d i n c r e m e n t a l r u n - r a t e E B I T D A c o n t r i b u t i o n f r o m G A I N ( i n c l . s y n e r g i e s ) o f $ 5 0 t o $ 7 0 m m .
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K e y T e r m s 6 S o u r c e : F X C M a n d G A I N S E C f i l i n g s . 1 . B a s e d o n F X C M s c l o s i n g p r i c e a s o f A p r i l 8 , 2 0 1 3 o f $ 1 3 . 3 9 . 2 . B a s e d o n f u l l y d i l u t e d s h a r e c o u n t a t o f f e r p r i c e p e r s h a r e o f $ 5 . 3 5 . A s s u m e s 3 9 . 3 m i l l i o n t o t a l G A I N s h a r e s o u t s t a n d i n g , i n c l u d i n g 3 5 . 5 m i l l i o n b a s i c s h a r e s o u t s t a n d i n g , 2 . 2 m i l l i o n s h a r e s o f r e s t r i c t e d s t o c k a n d 1 . 6 m i l l i o n s h a r e s d u e t o e x e r c i s a b l e o p t i o n s . 3 . B a s e d o n h i s t o r i c a l c l o s i n g p r i c e s . 4 . B a s e d o n 8 1 . 6 m i l l i o n f u l l y d i l u t e d F X C M s h a r e s o u t s t a n d i n g . C o n s i d e r a t i o n 1 0 0 % s t o c k - f o r - s t o c k t r a n s a c t i o n 0 . 3 9 9 6 s h a r e s o f F X C M C l a s s A c o m m o n s t o c k p e r G C A P s h a r e O f f e r i n g t o i n c l u d e u p t o $ 5 0 m i l l i o n i n c a s h c o n s i d e r a t i o n i n l i e u o f F X C M c o m m o n s h a r e s i f G A I N s h a r e h o l d e r s d e s i r e i m m e d i a t e l i q u i d i t y V a l u e $ 5 . 3 5 p e r s h a r e ( 1 ) A g g r e g a t e v a l u e m i l l i o n ( 2 ) P r e m i u m R e p r e s e n t s a 2 5 % p r e m i u m t o G A I N s h a r e p r i c e a s o f A p r i l 8 , 2 0 1 3 E x c e e d s G A I N s 5 2 - w e e k h i g h o f $ 5 . 3 1 ( 3 ) O w n e r s h i p W i l l p r o v i d e G A I N s h a r e h o l d e r s w i t h 1 6 . 2 % p r o f o r m a o w n e r s h i p ( 4 ) i n t h e c o m b i n e d c o m p a n y ( a s s u m i n g 1 0 0 % s t o c k - f o r - s t o c k t r a n s a c t i o n ) 1 2 . 8 % p r o f o r m a o w n e r s h i p ( 4 ) a s s u m i n g f u l l c a s h e l e c t i o n F i n a n c i n g N o f i n a n c i n g c o n t i n g e n c i e s
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7 B e n e f i t s f o r G A I N S h a r e h o l d e r s
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8 B e n e f i t s f o r G A I N S h a r e h o l d e r s I m p r o v e d T r a d i n g C h a r a c t e r i s t i c s T h e p r o p o s e d t r a n s a c t i o n m a y p r o v i d e G A I N s h a r e h o l d e r s w i t h i m m e d i a t e b e n e f i t s a s s o c i a t e d w i t h t h e t r a d i n g c h a r a c t e r i s t i c s o f F X C M , s u c h a s : G r e a t e r l i q u i d i t y , w i t h a v e r a g e d a i l y t r a d i n g v o l u m e s 8 . 6 x G A I N s a v e r a g e v o l u m e ( 2 ) A d d i t i o n a l r e s e a r c h a n a l y s t c o v e r a g e ( F X C M i s c o v e r e d b y 5 a d d i t i o n a l a n a l y s t s ) A b r o a d e r i n s t i t u t i o n a l i n v e s t o r b a s e , g i v e n f e w e r i n s t i t u t i o n a l i n v e s t o r l i m i t a t i o n s B e t t e r c o r r e l a t i o n w i t h t h e p o s i t i v e p e r f o r m a n c e o f t h e b u s i n e s s S o u r c e : C a p i t a l I Q a n d F X C M a n d G A I N S E C F i l i n g s . N o t e : A v e r a g e d a i l y t r a d i n g v o l u m e s r e p r e s e n t t h e d o l l a r v a l u e o f s h a r e s t r a d e d . 1 . B a s e d o n F XC M a n d G A I N f i g u r e s a s o f D e c e m b e r 3 1 , 2 0 1 2 . 2 . A v e r ag e o f M o n t h l y F XC M t o G A I N A v e r a g e D o l l a r V o l u meM u l t i p l e b e t w e e n J a n u a r y 2 0 1 1 a n d M a r c h 2 0 1 3 . W e e x p e c t p o t e n t i a l r e g u l a t o r y c h a n g e s m a y h a v e a g r e a t e r a d v e r s e a f f e c t o n G A I N a s a s t a n d a l o n e e n t i t y : P r o p o s e d b a n o n c r e d i t c a r d f i n a n c i n g R e q u i r e m e n t s o f D o d d - F r a n k a n d M i F I D I I r e g a r d i n g o v e r - t h e - c o u n t e r t r a d i n g W e b e l i e v e o u r c u r r e n t m o d e l i s b e t t e r p o s i t i o n e d t o a b s o r b t h e i m p a c t o f p r o p o s e d r e g u l a t o r y c h a n g e s G r e a t e r A b i l i t y t o A b s o r b R e g u l a t o r y C h a n g e s I n c r e a s e d s c a l e m a y i m p r o v e g r o w t h p o t e n t i a l , l i q u i d i t y p o s i t i o n a n d o v e r a l l f i n a n c i a l p e r f o r m a n c e G A I N c u r r e n t l y f a c e s o p e r a t i o n a l a n d f i n a n c i a l d i f f i c u l t i e s d u e t o i t s s c a l e C o m b i n e d e n t i t y i s e x p e c t e d t o h a v e ~ 3 x G A I N s t r a d a b l e a c c o u n t s a n d ~ 4 x c l i e n t a s s e t s ( 1 ) S y n e r g i e s f r o m t h e c o m b i n e d e n t i t y c o u l d r e s u l t i n i n c r e a s e d E P S a n d
pot ent ial sh are pr ice app rec iat ion Inc rea se d E ffi cie nci es of Sca le Pre miu m t o E xis tin g P ric e GAI N s har eho lde rs wil l r eal ize a 2 5% pr emi um to GAI Ns clo sin g s toc k p ric e o n A pri l 8 , 2 013 R epr ese nts 80 tim es 20 12 net inc ome G AIN has con sis ten tly clo se d b elo w $ 5.3 5 p er sh are , o ur cur ren t o ff er, si nce Apr il 2, 201 2
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9 B e n e f i t s f o r F X C M S h a r e h o l d e r s
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1 0 S o u r c e : F X C M a n d G A I N S EC f i l i n g s . 1 . B a s e d o n F XC M a n d G A I N f i g u r e s a s o f D ec e m b e r 3 1 , 2 0 1 2 . 2 . B a s e d o n FX C M a n d G A I N f i g u r e s a s o f De c e m b e r 3 1 , 2 0 1 2 . E x c l u d e s G A I N n o n - F X c u s t o m e r e q u i t y r e l a t e d t o t h e O p e n E C r y a c q u i s i t i o n o f $ 1 0 9 . 7 m i l l i o n . B e n e f i t s o f C o m b i n a t i o n P o t e n t i a l s i g n i f i c a n t b e n e f i t s o f i m p r o v e d s c a l e e c o n o m i c s 3 6 % i n c r e a s e i n r e v e n u e s a n d 4 5 % i n c r e a s e i n t r a d a b l e a c c o u n t s ( 1 ) t o b e l e v e r a g e d g o i n g f o r w a r d 2 8 % i n c r e a s e i n F X c l i e n t e q u i t y ( 2 ) G r e a t e r a b i l i t y t o w i t h s t a n d m a r k e t v o l a t i l i t y a n d p o t e n t i a l r e g u l a t o r y c h a n g e s P o t e n t i a l s u b s t a n t i a l o p e r a t i n g s y n e r g i e s r e l a t e d t o p r o d u c t a n d m a r k e t o v e r l a p s , r e d u n d a n t f i x e d c o s t s a n d c a p i t a lr e q u i r e m e n t s a c r o s s v a r y i n g j u r i s d i c t i o n s P r o j e c t e d t o b e a c c r e t i v e i n 2 0 1 4 e x c l u d i n g u p f r o n t o n e -t i m e c o s t s T h e c o m b i n a ti o n o f F X C M a n d G A I N b r a n d n a m es / m a r k e t i n g c a m p a i g ns c o u l d p o t e n t i a l ly e n h a n c e o v e r a l l m a r k e t i n g p r e s e n c e a n d r e d u c e c l i e n t t u r n o v e r P o t e n t i a l i m p r o v e m e n t o f o v e r a l l p l a t f o r m f o r f u t u r e g r o w t h a n d d e v e l o p m e n t o p p o r t u n i t i e s B e n e f i t s f o r F X C M S h a r e h o l d e r s
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O p e r a t i n g S y n e r g i e s O v e r v i e w 1 1 W e b e l i e v e o u r c o m b i n e d o v e r l a p i n p r o d u c t s , t a r g e t m a r k e t s a n d r e g u l a t o r y r e q u i r e m e n t s p r o v i d e s a u n i q u e o p p o r t u n i t y t o p o t e n t i a l l y r e a l i z e s u b s t a n t i a l o p e r a t i n g s y n e r g i e s A d d i t i o n a l l y , r e g u l a t o r y r e q u i r e m e n t s r e q u i r e n u m e r o u s f i x e d c o s t s , m a n y o f w h i c h c o u l d b e e l i m i n a t e d o r r e d u c e d g i v e n a l a r g e r , c o m b in e d o r g a n i z a ti o n W e b e l i e v e o p e r a ti n g s y n e r g i e s c a n p o t en t i a l l y d r i v e b e tw e e n $ 5 0 a n d $ 7 0 m i l l i o n i n i n c re m e n t a l r u n - r a t e E B I T DA , u p o n f u l l r e a l i z a t i o n W e p r o j e c t t h a t t h e d e a l w i l l b e a c c r e t i v e i n 2 0 1 4 e x c l u d i n g u p f r o n t o n e - t i m e c o s t s W e e x p e c t G A I N E B I T D A c o n t r i bu t i o n ( i n c l u d i n g s y n e r g i es ) t o b e b e t w e e n $ 3 5 a n d $ 5 5 m i l l i o n i n 2 0 1 4 , a n dbetw een $50 and $70 mill ion in 2 015 We plan to a chie veo p e r a t i n g s y n e r g i e s t h r o u g h : R e d u c e d e m p l o y e e c o m p e n s a t i o n a n d b e n e f i t s e x p e n s e s f r o m l o w e r h e a d c o u n t o n a c o m b i n e d b a s i s S e l l i n g a n d m a r k e t i n g e x p e n s e r e d u c t i o n s t h r o u g h t h e e l i m i n a t i o n o f d u p l i c a t i v e c a m p a i g n s R e d u c e d o c c u p a n c y a n d e q u i p m e n t , p r o f e s s i o n a l s e r v i c e s , p r o d u c t d e v e l o p m e n t a n d o t h e r o p e r a t i n g c o s t s r e s u l t i n g f r o m c o n s o l i d a t i o n O u r i n t e g r a t i o n p h i l o s o p h y a n d p l a n w i l l b e d r i v e n b y : M i n i m i z i n g c u s t o m e r a t t r it i o n b y p r o v i d i n g c o n t i n u i t y i n t r a d i n g e x p e r i e n c e S t r e a m l i n i n g c o m b i n e d o p e r a t io n s r e t a i n b e s t o f b r e e d P l a n t o c o m p l e t e i n t e g r a t i o n o v e r t h e c o u r s e o f 2 0 1 4 W e b e l i e v e F X C M i s u n i q u e l y p o s i t i o n e d t o a c h i e v e o p e r a t i n g s y n e r g i e s g i v e n o u r d i r e c t o v e r l a p i n g e o g r a p h i c a lf o o t p r i n t a n d p r o d u c t m i x G A I N c u r r e n t l y o f f e r s m a n y o f t h e s a m e p r o d u c t s a s F X C M , i n c l u d i n g r e t a i l F X , C F D s a n d i n s t i t u t i o n a l F X A d d i t i o n a l l y , b o t h c o m p a n i e s o p e r a t e i n m a n y o v e r l a p p i n g j u r i s d i c t i o n s , m o s t n o t a b l y , t h e U . S . , U . K . , H o n g K o n g , J a p a n a n d A u s t r a l i a O p e r a t i n g S y n e r g i e s O v e r v i e w
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C a p i t a l S y n er g i e s O v e r v i ew 1 2 I n a d d i t i o n t o p o t e n t ia l o p e r a t i n g s y n e r gi e s , F X C M b e l i ev e s t h e c o m b i n e d e n t i t y w i ll h a v e t h e a b i l i t y t o r e l e a s e b e t w e en $ 8 0 a n d $ 1 0 0 m i l l i o n i n c a s h c u r r e n t l y r e s t r i c t e d d u e t o : C o l l a t e r a l r e q u i r e m e n t s w i t h t r a d i n g p a r t n e r s R e d u n d a n t r e g u l a t o r y c a p i t a l a c r o s s v a r y i n g j u r i s d i c t i o n s R e g u l a t o r y c a p i t a l c o u l d p o t e n t i a l l y b e r e l e a s e d p r o g r e s s i v e l y a s o p e r a t i o n s a r e c o m b i n e d i n d i f f e r e n t j u r i s d i c t i o n s , b e g i n n i n g w i t h b a s e c a p i t a l r e q u i r e m e n t s ( i . e . i n t h e U . S . , t h e b a s e c a p i t a l r e q u i r e m e n t i s $ 2 0 m i l l i o n f o r e a c h s t a n d a l o n e f i r m ) R i s k c a p i t a l r e q u i r e m e n t s c o u l d a l s o b e r e d u c e d d u e t o t h e i n c r e a s e i n t h e c o m b i n e d c o m p a n y s o v e r a l l s i z e a n dr e d u c e d a g g r e g a t e r i s k l e v e l T r a n s i t i o n i n g p o r t i o n s o f G A I N s p o r t f o l i o t o a n a g e n c y -f o c u s e d m o d e l c o u l d p o t e n t i a l l y a l l o w f u r t h e r r e d u c t i o n s i n c a p i t a l r e q u i r e m e n t s r e l a t ed t o o p e n p o s i t i o n s F X C M b e l i e v e s c a p i t a l r e l e a s es c o u l d o c c u r o v e r t i m e w i t h a m a j o r i t y o f c a p i t a l e x p e c t e d t o b e r e l e a s e d b y t h e e n d o f 2 0 1 4 A n y n e w l y r e l e a s e d c a p i t a l c o u l d b e u s e d t o f u n d s t r a t e g i c i n i t i a t i v e s , i n c l u d i n g b u t n o t l i m i t e d t o : a c q u i s i t i o n s , d i v i d e n d s , s h a r e r e p u r c h a s e s a n d c a p i t a l e x p e n d i t u r e s r e l a t e d t o o r g a n i c g r o w t h o f t h e o v e r a l l b u s i n e s s C a p i t a l S y n e r g i e s O v e r v i e w S o u r c e : F X C M a n d G A IN S E C f i l in g s . D a ta a s o f D e c em b e r 3 1 , 2 01 2 .
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S o u r c e : F X C M a n d G A I N S E C f i l i n g s . N o t e : F X C M a n d G A I N f i g u r e s b a s e d o n t h e y e a r e n d e d D e c e m b e r 3 1 , 2 0 1 2 . B a s e d o n f i g u r e s a s r e p o r t e d b y F X C M a n d G A I N . 1 . P r o f o r m a f i g u r e s e x c l u d e t r a n s a c t i o n f e e s a n d o t h e r e x p e n s e s a s s o c i a t e d w i t h t h e p r o p o s e d c o m b i n a t i o n . 2 . F X C M A d j . E B I T D A e x c l u d e s c e r t a i n i t e m s r e l a t i n g t o t h e I P O o f F X C M a n d o t h e r o n e - t i m e c h a r g e s a n d n o n - r e c u r r i n g i t e m s . 3 . G A I N A d j . E B I T D A a d j u s t e d f o r r e s t r u c t u r i n g e x p e n s e s i n c u r r e d i n 2 0 1 2 Q 2 . 4 . P r o F o r m a A d j . E B I T D A i s b a s e d o n 2 0 1 2 F X C M A d j . E B I T D A o f $ 1 1 2 . 9 m m a n d p r o j e c t e d i n c r e m e n t a l r u n - r a t e E B I T D A c o n t r i b u t i o n f r o m G A I N ( i n c l . s y n e r g i e s ) o f $ 5 0 t o $ 7 0 m m . 5 . B a s e d o n r e p o r t e d R e t a i l F u n d e d A c c o u n t s . T h e C o m b i n a t i o n i s E x p e c t e d t o C r e a t e a L a r g e r B u s i n e s s W i t h a S t r o n g G r o w t h P r o f i l e 1 3 P rF o r m a F i n a n c i a l a n d O p e r a t i n g M e t r i c s T h e c o m b i n a t i o n i s e x p e c t e d t o r e s u l t i n a l a r g e r , m o r e e f f i c i e n t b u s i n e s s w i t h s u b s t a n t i a l b e n e f i t s o f s c a l e ( $ i n m i l l i o n s ) F X C M G A I N P r o F o r m a ( 1 ) T o t a l R e v e n u e $ 4 1 7 . 3 $ 1 5 1 . 8 $ 5 6 9 . 1 A d j . E B I T D A $ 1 1 2 . 9 ( 2 ) $ 1 1 . 1 ( 3 ) $ 1 6 2 . 9 - $ 1 8 2 . 9 ( 4 ) C l i e n t A s s e t s $ 1 , 1 9 0 . 8 $ 4 4 6 . 3 $ 1 , 6 3 7 . 1 T r a d a b l e A c c o u n t s 1 9 0 , 2 1 7 8 5 , 0 9 9 ( 5 ) 2 7 5 , 3 1 6
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1 4 B e n e f i t s f o r G A I N C l i e n t s
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P o t e n t i a l B e n e f i t s f o r G A I N C l i e n t s M a i n t a i n q u a l i t y o f t r a d i n g e x p e r i e n c e t h r o u g h a c q u i s i t i o n W e e x p e c t c l i e n t s u s i n g t h e M T 4 p l a t f o r m w i l l c o n t i n u e t o h a v e t h e s a m e t r a d i n g e x p e r i e n c e W e e x p e c t G A I N c l i e n t s t r a d i n g o n m o b i l e , w e b o r d o w n l o a d e d t r a d i n g p l a t f o r m s w i l l h a v e a c c e s s t o F X C M s a w a r d - w i n n i n g s u i t e o f a p p l i c a t i o n s o n t h o s e p l a t f o r m s C h o i c e o f A g e n c y o r P r i n c i p a l E x e c u t i o n W e e x p e c t G A I N c l i e n t s w i l l h a v e t h e a b i l i t y t o c h o o s e b e t w e e n t h e p r i n c i p a l e x e c u t i o n m o d e l o r a g e n c y , n o - d e a l i n g d e s k m o d e l W e e x p e c t G A I N c l i e n t s w i l l a l s o b e n e f i t f r o m a d d i t i o n a l v a l u e - a d d e d s e r v i c e s , s u c h a s : D a i l y F x , a p r o p r i e t a r y s e c u r e p o r t a l t h a t p r o v i d e s t r a d i n g s i g n a l s a n d h i g h t o u c h e d u c a t i o n T r a d i n g s o f t w a r e o f f e r e d i n 1 7 l a n g u a g e s , F X r e s e a r c h a n dc o n t e n t o f f e r e d i n 1 6 l a n g u a g e s a n d c u s t o m e r s u p p o r t o f f e r e d i n 1 8 l a n g u a g e s I m p r o v e d c u s t o m e r s u p p o r t o n t h e F X C M p l a t f o r m W e e x p e c t G A IN c l i e nt s w i l l a l s o b e n e f i t f r o m t h e p o t e n t i a l l y i m p r o v ed f i n a n c i a l s t r e n g t h a n d s t a b i l i t y o f t h e c o m b i n e d o r g a n i z a t i o n 1 5 I m p r o v e d C l i e n t E x p e r i e n c e
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1 6 C h a l l e n g e s f o r G A I N a s a S t a n d a l o n e C o m p a n y
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C h a l l e n g e s a s a S t a n d a l o n e C o m p a n y 1 7 A s a s t a n d a l o n e e n t i t y , G A I N p o t e n t i a l l y f a c e s c o n s i d e r a b l e c h a l l e n g e s i n c l u d i n g : I n s u f f i c i e n t s c a l e i n a n y o f i t s t h r e e p r i n c i p a l m a r k e t s t o d e l i v e r c o n s i s t e n t r e s u l t s P e n d i n g a n d p o t e n t i a l a d v e r s e r e g u l a t o r y c h a n g e s e s p e c i a l l y i n a r e a s o f c o n c e n t r a t i o n, s u c h a s t h e U . S . I n c r e a s e d i m p a c t o f h i g h f i x e d c o s t s a n d c a p i t a l r e q u i r e m e n t s f o r p u b l i c l y t r a d e d r e t a i l F X b r o k e r s L a c k o f l i q u i d i t y h i n d e r s i n v e s t o r s a b i l i t y t o e f f i c i e n t l y e x e c u t e o w n e r s hi p t r a n s f e r s M u t e d s t o c k p r i c e m o v e m e n t l e a d i n g u p t o o r c o m i n g o u t o f e a r n i n g s a n n o u n c e m e n ts L i m i t e d f r e e c a s h a v a i l a b l e t o e x e c u t e n e a r - t e r m g r o w t h s t r a t e g i e s
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1 8 N e x t S t e p s
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Nex t S tep s 19 W e a re hig hly mot iva ted and pre par ed to mov e q uic kly tow ard s a su cce ss ful tra ns act ion S eni or Man age men t a nd FXC Ms Boa rd of Dir ect ors are kee nly foc us ed on thi s o ppo rtu nit y We are com mun ica tin g t his pr opo sal dir ect ly to sha reh old ers to inf orm the m o f t he att rac tiv e v alu e o ppo rtu nit y FXC M b eli eve s a n ego tia ted tra ns act ion wit h G AIN s Boa rd of Dir ect ors rep res ent s t he bes t p ath for war d f ors h a r e h o l d e r s H o w e v e r , F X C M w i l l c o n s i d e r a l l r e a s o n a b l e o p t i o n s a v a i l a b l e t o i t t o e n s u r e f u l l c o n s i d e r a t i o n o f i t s p r o p o s a l G i v e n o u r i n d u s t r y k n o w l e d g e a n d t r a n s a c t i o n a l e x p e r i e n c e , w e b e l i e v e w e c a n p e r f o r m d u e d i l i g e n c e v e r y q u i c k l y ,r e q u i r i n g m i n i m a l a d d i t i o n a l i n f o r m a t io n W e h a v e a d e d i c a t e d t r a n s a c t i o n t e a m r e a d y t o p r o c e e d q u i c k l y w i t hd u e d i l i g e n c e a n d d o c u m e n t a t i o n W i t h t h e s u p p o r t o f G A I N s M a n a g e m e n t a n d B o a r d o f D i r e c t o r s , w e b e l i e v e t h i s t r a n s a c t i o n c a n b ec o m p l e t e d b y l a t e 2 0 1 3
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K e y T a k e a w a y s 2 0 T h i s t r a n s a c t i o n p o t e n t i a ll y p r o v i d e s s i g n i f i c a n t b e n e f i t s f o r G A I N a n d F X C M s h a r e h o l d e r s E n h a n c e d s c a l e o f c o m b i n e d e n t i t y P r o j e c t i o n o f s u b s t a n t i a l o p e r a t i n g s y n e r g i e s l e a d i n g t o m e a n i n g f u l E P S a c c r e t i o n i n 2 0 1 4 A b i l i t y t o u n l o c k c u r r e n t l y r e s t r i c t e d c a p i t a l O u r pr op os al of fer s G AIN sh are ho lde rs A pre miu m t o t he cur ren t s har e p ric e An att rac tiv e l ong - t erm val ue pro po sit ion whe re the pot ent ial ben efi ts fro m r eal ize d s yn erg ies cou ld pot ent ial ly imp ro ve per fo rma nce and the sha re pri ce of com bin ed ent ity P ote nti al imm edi ate ben efi ts rel ati ng to tra din g d yna mic s, liq uid ity and op era tin g m ode l c ons ist enc y As a s tan dal on e e nti ty, we bel iev e G AIN fac es con sid era ble cha lle nge s inc lud ing I nsu ffi cie nt sca le in any of its thr eepri nci pal mar ket s t o d eli ver con si ste nt res ult s Pen din g a nd po ten tia l a dv ers e r egu lat or y c han ges esp eci all y i n a rea s o f c onc ent rat ion P oo r t rad ing dyn ami cs , l imi ted liq uid ity and mut ed sh are pri ce rea cti on to per fo rma nce W e a re exc ite d t o b egi n d is cus sio ns wit h t he GAI Ns Boa rd of Dir ect or s a nd Man age men t T eam reg ard ing th em e r i t s o f t h i s t r a n s a c t i o n
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2 1 A p p e n d i x
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P r o F o r m a O p e r a t i n g P e r f o r m a n c e O v e r v i e w 2 2 S o u r c e : F X C M a n d G A IN S E C f i l i n g s a n d e a r n i n g s r e p o r t s . 1 . F X C M r e v e n u e s i n c l u d e s n e t i n t e r e s t . G A I N r e v e n u e s e x c l u d e i n t e r e s t o n n o t e p a y a b l e . 2 . S e e s l i d e 3 0 ( F o o t n o t e s 7 a n d 8 ) f o r d e f i n i t i o n o f A d j . E B I T D A . 3 . S e e s l i d e 3 0 ( F o o t n o t e s 1 0 a n d 1 1 ) f o r d e f i n i t i o n o f A d j . N e t I n c o m e . A d j . N e t I n c o m e ( 3 ) A d j . E B I T D A ( 2 ) R e v e n u e ( 1 ) R e t a i l T r a d i n g V o l u m e ( $ i n m m ) ( $ i n m m ) G A I N ( 4% ) 1 % 4 % ( 2 3 % ) ( 1 8 % ) ( 1 8 % ) ( 2 6 % ) 2 % FX C M 2 3 %7%20% 10% 8% ( 11%) 5% 3% P r o F o r m a 13% 5% 15% ( 0%) 1% ( 14%) ( 5%) 2% ( $ i n m m ) ( $ i n bn ) ( Y oY % G r ow t h ) ( Y oY % G r ow t h ) ( Y oY % G r ow t h ) ( Y oY % G r ow t h ) G A I N ( 56%) ( 12%) ( 15%) ( 142%) ( 75%) ( 54%) ( 6 1%) nmF X CM 2% ( 19%) 13% ( 18%) ( 2%) ( 26%) 18% 13% P r o F o r m a ( 16 %) ( 16% ) 1% ( 41%) ( 14%) ( 37%) ( 8%) 6% G A I N 38% 0% 44% 0% ( 4%) ( 5%) ( 38%) ( 18%) F X CM 10% 14% 34% 16% 20% ( 7%) ( 17%) ( 9%)P r o F o r m a 1 8 % 1 0 % 37%1 1 % 1 2 % ( 7 % ) ( 2 3 % ) ( 1 1 % ) G A I N ( 6 2 % ) ( 1 3 % ) ( 1 2 % ) ( 1 3 4 % ) ( 9 6 % ) ( 5 5 % ) ( 6 1 % ) n m F X C M ( 1 7 % ) ( 3 2 % ) ( 5 % ) ( 0 % ) ( 9 % ) ( 5 6 % ) ( 3 1 % ) ( 5 6 % ) P r o F o r m a ( 3 1 % ) ( 2 5 % ) ( 8 % ) ( 2 4 % ) ( 2 4 % ) ( 5 6 % ) ( 4 2 % ) ( 7 2 % ) $ 2 6 $ 2 9 $ 3 1 $ 2 6 $ 2 5 $ 2 1 $ 3 7 $ 3 0 $ 5 $ 1 9 $ 1 6 ( $ 3 ) $ 1 $ 9 $ 6 ( $ 5 ) $ 3 1 $ 4 8 $ 4 7 $ 2 3 $ 2 6 $ 3 0 $ 4 3 $ 2 5 $ 0 $ 1 5 $ 3 0 $ 4 5 $ 6 0 Q 1 ' 1 1 Q 2 ' 1 1 Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 F X C M G A I N $ 9 5 $ 1 0 3 $ 1 0 9 $ 1 0 5 $ 1 0 3 $ 9 2 $ 1 1 5 $ 1 0 8 $ 4 1 $ 5 6 $ 5 4 $ 3 2 $ 3 3 $ 4 6 $ 4 0 $ 3 2 $ 1 3 5 $ 1 5 9 $ 1 6 3 $ 1 3 7 $ 1 3 6 $ 1 3 7 $ 1 5 5 $ 1 4 1 $ 0 $ 5 0 $ 1 0 0 $ 1 5 0 $ 2 0 0 Q 1 ' 1 1 Q 2 ' 1 1 Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 F X C M G A I N $ 1 4 $ 1 6 $ 1 7 $ 2 1 $ 1 3 $ 8 $ 1 3 $ 1 0 $ 2 $ 1 1 $ 9 ( $ 1 ) $ 0 $ 5 $ 4 ( $ 3 ) $ 1 6 $ 2 7 $ 2 6 $ 1 9 $ 1 3 $ 1 3 $ 1 6 $ 6 $ 0 $ 1 0 $ 2 0 $ 3 0 $ 4 0 Q 1 ' 1 1 Q 2 ' 1 1 Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 F X C M G A I N $ 8 2 2 $ 9 3 8 $ 1 , 0 4 2 $ 9 7 2 $ 9 8 5 $ 8 6 9 $ 8 6 2 $ 8 8 6 $ 4 0 3 $ 3 5 7 $ 4 4 8 $ 3 6 6 $ 3 8 5 $ 3 4 1 $ 2 7 9 $ 2 9 9 $ 1 , 2 2 5 $ 1 , 2 9 5 $ 1 , 4 9 0 $ 1 , 3 3 8 $ 1 , 3 7 0 $ 1 , 2 1 0 $ 1 , 1 4 1 $ 1 , 1 8 5 $ 0 $ 4 0 0 $ 8 0 0 $ 1 , 2 0 0 $ 1 , 6 0 0 Q 1 ' 1 1 Q 2 ' 1 1Q 3 ' 1 1 Q 4 ' 1 1 Q 1 ' 1 2 Q 2 ' 1 2 Q 3 ' 1 2 Q 4 ' 1 2 F X C M G A I N
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C h a l l e n g es o f B e i n g a G l o b a l , P u b l i c l y T r a d e d R e t a i l F X B r o k e r 2 3 M i n i m u m R e g u l a t o r y C a p i t a l U n i t e d S t a t e s H i g h M i n i m u m F i x e d C a p i t a l a n d C o s t s f o r C o m p l i a n c e f o r E v e r y R e g u l a t e d E n t i t y C o m p l i a n c e S t a f f U n i t e d K i n g d o m I m p a c t s o n F i n a n c e , O p e r a t i o n s , L e g a l , A c c o u n t i n g , M a r k e t i n g , I T J a p a n H o n g K o n g S p e c i a l i z e d I T s o l e l y f o r c o m p l i a n c e A u s t r a l i a , E U + o t h e r s ; I n c r e a s e d c o s t s f o r i n t e r n a l s t a f f i n : A c c o u n t i n g ; F i n a n c e ; a d d i t i o n a l r e p o r t i n g ; S a r b a n e s - O x l e y c o m p l i a n c ee x p e n s e s ; I n c r e a s e d c o s t s f o r o u t s i d e s e r v i c e s : A c c o u n t i n g ; T a x ; L e g a l ; S a r b a n e s - O x l e y ; G l o b a l p r e s e n c e r e q u i r e s g l o b a l m a r k e t i n g e x p e n d i t u r e s i n t e n s o f m i l l i o n s d o l l a r s a n n u a l l y C o m p r e s s e d R e v e n u e s + H i g h F i x e d C o s t s + B r a n d E x p e n s e = I m p o r t a n c e o f S c a l e X = F i x e d C o so f I n d u s t r y R e g u l a t o r s i n M u l t i p l e J u r i s d i c t i o n s H i g h P r i c e o f M a i n t a i n i n g G l o b a l B r a n d a n d D r i v i n g N e w A c c o u n t G r o w t h F i x e d C o s t s o f M a i n t a i n i n g P u b l i c C o m p a n y C o n t r o l s a n d I n f r a s t r u c t u r e
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R e g u l a t o r y H e a d w in d s H a v e P o t e n t i a l t o N e g a t iv e l y I m p a c t G A I N N e w E u r o p e a n m i n i m u m c a p i t a l r e q u i r e m e n t s m a y f o r c e G A I N t o h o l d a d d i ti o n a l c a p i t a l O T C r u l e c h a ng e s b y D o d d - F r a n k a n d E M I R m a n d a t e m u l t i pl e p r i c e p r o v i d e r s , n o l o n g er a l l o w i n g s i n g l e d e a le r i n t e r a c t i o n w i t h c u s t o me r s E x t e n d i n g t h e s e m a n d a t e s t o r e t a i l c u s t o m e r s m a y b e d e t r i m en t a l t o G A I N s b u s i n e s s G e n e r a l c o m p l i a n c e c o s t s o f r u n n i n g a g l o b a l f i r m i n A s i a , N o r t h A m e r i c a , E u r o p e a n d e m e r g i n g m a r k e t s w i l l l i k e l y l e a d t o r a p i d l y e x p a n d i n g e x p e n s e s e v e r y y e a r , w e i g h i n g h e av i l y o n s m a l l b u s i n e s s e s N e w f u t u r e s r e g u l a t i o n s c o u l d h a v e a n e g a t i v e i m p a c t o n v o l u m e s C o m p l i a n c e c o s t s i n t h e f u t u r e s b u s i n e s s a r e a n t i c i p a t e d t o r i s e d r a m a t i c a l l y i f p r o p o s e d r e f o r m s bC F T C a r e p a s s e d 2 4
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C l i e n t A s s e t s $ 4 4 6 . 3 $ 1 , 1 9 0 . 8 $ 1 , 2 3 9 . 9 $ 0 $ 4 0 0 $ 8 0 0 $ 1 , 2 0 0 $ 1 , 6 0 0 G A I N F X C M I G G r o u p ( $ i n m m ) S u b - s c a l e ( 4 ) ( 5 ) ( 6 ) L T M A d j . E B I T D A M a r g i n 7 . 3 % 2 7 . 1 % 4 6 . 7 % 0 % 2 0 % 4 0 % 6 0 % 8 0 % G A I N F X C M I G G r o u p ( 7 ) ( 8 ) S u b - s c a l e ( 9 ) L T M R e t u r n o n A v e r a g e E q u i t y ( 1 0 ) ( 1 1 ) S u b - s c a l e ( 1 2 ) 3 . 4 % 1 2 . 0 % 2 8 . 3 % 0 % 1 0 % 2 0 % 3 0 % 4 0 % G A I N F X C M I G G r o u p $ 1 5 1 . 8 $ 4 1 7 . 3 $ 5 8 9 . 9 $ 0 $ 1 5 0 $ 3 0 0 $ 4 5 0 $ 6 0 0 G A I N F X C M I G G r o u p L T M R e v e n u e( 1 ) ( $ i n m m ) ( 3 ) S u b - s c a l e ( 2 ) E c o n o m i c C h a l l e ng e s f o r C o m p a n i e s N o t O p e r a t i n g A t S c a l e R e l a t i v e S c a l e F i n an c i a l R e s u l t s F X C M a n d I G G r o u p a r e a p p r o x i m a t el y 2 - 4 x t h e s i z e o f G A I N w h e n m e a s u r ed o n b o t h r e v e n u e g e n e r a te d a n d c l i e n t a s s e t s C o m p a n i e s w i t h s c a l e a r e a b l e t o b e t t e r l e v e r a g e t h e i r f i x e d c o s t s t r u c t u r e r e s u l t i n g i n h i g h e r p r o f i t a b i l i t y m a r g i n s S e e s l i d e 3 0 f o r s o u r c e s a n df o o t n o t e s . 2 5 A s d e m o n s t r a t e d b e l o w , c o m p a n i e s t h a t o p e r a t e a t i n c r e a s e d s c a l e e x p e r i e n c e f i n a n ci a l b e n e f i t s n o t a v a i l a b l e t o t h o s e o f s m a l l e r s i z e C o m p a n i e s w i th s c a l e a r e a b l e t o o p e r a t e m o r e e f f i c i e n t l y a n d g e n e r a t e m o r e f a v o r a b l e r e t u r n s o n e q u i t y
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G A I N F a c e s D i f f i c u l t i e s D u e t o C u r r e n t T r a d i n g D y n a m i c s G i v e n l i m i t e d l i q u i d i t y , G A I N s h a r e h o l d e r s h a v e b e e n u n a b l e t o e x i t p o s i t i o n s e f f e c t i v e l y F X C M h a s g r e a t e r l i q u i d i t y a n d h a s h i s t o r i c a l l y s h o w n a s t r o n g a b i l i t y t o e x e c u t e b l o c k t r a d e s G A I N s s h a r e p r i c e n o l o n g e r s h o w s s u b s t a n t i a l r e a c t i o n t o e a r n i n g s a n n o u n c e m e n t s A d d i t i o n a l r e s e a r c h c o v e r a g e a n d a b r o a d e r i n v e s t o r b a s e m a y p r o v i d e b e t t e r c o r r e l a t i o n w i t h p e r f o r m a n c e I n s t i t u t i o n a l s h a r e h o l d e r s h a v e r e d u c e d o v e r a l l h o l d i n g s i n G A I N w i t h i n v e s t o r a c t i v i s m i n c r e a s i n g s i n c e I P O I n c r e a s e d s c a l e a n d c o v e r a g e m a y i m p r o v e t r a d i n g d y n a m i c s f o r h o l d e r s o f s h a r e s i n t h e c o m b i n e d e n t i t y 2 6
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F X C M C o n s i s t e n t l y D e m o n s t r a t e s A M o r e R o b u s t L i q u i d i t y P r o f i l e 2 7 F X C M a n d G A I N L i q u i d i t y P r o f i l e F X C M t o G A I N V o l u m e M u l t i p l e 2 . 3 x 5 . 3 x 1 0 . 9 x 4 . 4 x 8 . 7 x 5 . 6 x 7 . 8 x 1 2 . 4 x 4 . 2 x 2 . 5 x 4 . 5 x 4 . 1 x 1 0 . 0 x 7 . 5 x 2 0 . 9 x 1 6 . 1 x 6 . 5 x 8 . 2 x 9 . 2 x 1 1 . 6 x 1 2 . 2 x 1 5 . 3 x 1 4 . 2 x 3 . 7 x 9 . 2 x 1 2 . 0 x 4 . 3 x G A I N s h a r e h o l d e r s c o u l d b e n e f i t s i g n i f i c a n t l y f r o m t h e a d d i t i o n a l l i q u i d i t y i n F X C M s t o c k , a s s h o w n b e l o w ( A v e r a g e D a i l y $ V o l u m e , i n m m ) S o u r c e : C a p i t a l I Q a n d F XC M a n d G AI N S E C f i l i n g s . N o t e : A v e r a g e d a i l y d o l l a r v o l u m e f i g u r e s r e p r e s e n t t h e a v e r a g e o f t h e p r o d u c t o f d a i l y s h a r e s t r a d e d a n d t h e V o l u m e W e i g h t e d A v e r a g e Pr i c e f o r a l l d a y s i n a g i v e n m o n t h . $2 . 7 $ 5 . 0 $ 5 . 8 $ 3 . 6 $ 6 . 6 $ 3 . 0 $ 2 . 6 $ 4 . 5 $ 2 . 9 $ 2 . 8 $ 1 . 8 $ 2 . 0 $ 1 . 8 $ 3 . 5 $ 5 . 8 $ 3 . 0 $ 2 . 5 $ 3 . 4 $ 1 . 6 $ 2 . 2 $ 3 . 0 $ 2 . 1 $ 2 . 6 $ 1 . 4 $ 2 . 1 $ 3 . 1 $ 2 . 9 $ 1 . 2 $ 0 . 9 $ 0 . 5 $ 0$ 0 . 8 $ 0 . 5 $ 0 . 3 $ 0 . 4 $ 0 . 7 $ 1 . 1 $ 0 . 4 $ 0 . 5 $ 0 . 2 $ 0 . 5 $ 0 . 3 $ 0 . 2 $ 0 . 4 $ 0 . 4 $ 0 . 2 $ 0 . 2 $ 0 . 2 $ 0 . 1 $ 0 . 2 $ 0 . 4 $ 0 . 2 $ 0 . 3 $ 0 . 7 $ 0 . 0 $ 1 . 0 $ 2 . 0 $ 3 . 0 $ 4 . 0 $ 5 . 0 $ 6 . 0 $ 7 . 0 F X C M $ V o l u m e G A I N $ V o l u m e
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S o u r c e : F X C M . D a t a r e f l e c t s a l l t r a d i n g d a y s b e t w e e n 1 2 / 2 / 2 0 1 0 a n d 2 / 2 8 / 2 0 1 3 . N o t e : T h e t e r m b l o c k t r a d e r e p r e s e n t s a s a l e o f a t l e a s t 1 0 , 0 0 0 s h a r e s i n a s i n g l e o r d e r . 1 . A v e r a g e p r i c e c h a n g e r e f l e c t s t h e c h an g e b e t w e e n t h e c l o s i n g p r i c e o n t h e d a y p r i o r a n d t h e c l o s i n g p r i c e o n t h e d a y o f a g i v e n b l o c k t r a d e . 2 . R e p r e s e n t s a v e r a g e o f b l o c k t r a d e v o l u m e / b l o c k t r a d e s g r e a t e r t h a n 1 0 , 0 0 0 s h a r e s f o r d a y s i n w h i c h b l o c k v o l u m e i s b e t w e e n a g i v e n r a n g e . 3 . R e p r e s e n t s a v e r a g e o f b l o c k t r a d e v o l u m e / t o t a l d a i l y v o l u m e f o r d a y s i n w h i c h b l o c k v o l u m e i s b e t w e e n a g i v e n r a n g e . H i s t o r i c a l F X C M B l o c k T r a d e s F X C M s L i q u i d i t y P r o f i l e P r o v i d e s t h e A b i l i t y t o S u c c e s s f u l l y E x e c u t e S i z e a b l e B l o c k T r a d e s F X C M s s h a r e h o l d e r s h a v e e x e c u t e d 7 5 7 b l o c k t r a d e s ( s a l e o f 1 0 , 0 0 0 + s h a r e s i n a s i n g l e o r d e r ) s i n c e I P Oo n e b l o c k t r a d e w a s e x e c u t e d o n 2 9 1 d a y s ( 5 2 % o f d a y s b e t w e e n I P O a n d 2 / 2 8 / 2 0 1 3 ) B l o c k t r a d e s r e p r e s e n t a n a g g r e g a t e v o l u m e o f 2 6 . 4 m m s h a r e s , w i t h a n a v e r a g e b l o c k t r a d e o f ~ 3 5 , 0 0 0 s h a r e s A s s e e n b e l o w , F X C M h a s s e e n l i t t l e d o w n w a r d p r i c e m o v e m e n t o n d a y s w h e n l a r g e b l o c k t r a d e s o c c u r C o m b i n e d w i t h F X C M s l i q u i d i t y p r o f i l e , G A I N s h a r e h o l d e r s c o u l d b e n e f i t s i g n i f i c a n t l y f r o m h o l d i n g s h a r e s o f t h e c o m b i n e d c o m p a n y 2 8 T o t a l B l o c k V o l u m e o f ( S h a r e s ) : ( 2 ) A v e r a g e P r i c eC h a n g e 0 . 5 7 % 0 . 5 2 % ( 0 . 2 6 % ) ( 1 . 2 2 % ) ( 0 . 3 6 % ) 0 . 5 4 % ( 0 . 5 0 % ) ( 2 . 7 3 % ) 4 . 7 4 % A v g . V o l u m eper Trad e 13 ,497 20,7 09 2 0,89 8 23 ,661 34,8 17 4 2,75 6 13 3,41 5 63 ,726 138, 853 Avg. % of Daily Volu me 7. 25% 12.1 3% 1 4.85 % 16 .86% 23.9 7% 3 3.97 % 54 .92% 44.7 4% 4 2.91 % 91 43 2 3 18 49 4 5 16 4 2 0 20 40 6 0 80 100 10,0 00 - 20,0 00 2 0,00 0 - 30,0 00 3 0,00 0 - 40,0 00 4 0,00 0 - 50,0 00 5 0,00 0 -1 0 0 , 0 0 0 1 0 0 , 0 0 0 - 2 5 0 , 0 0 0 2 5 0 , 0 0 0 - 5 0 0 , 0 0 0 5 0 0 , 0 0 0 - 1 , 0 0 0 , 0 0 0 1 , 0 0 0 , 0 0 0 + N u m b e r o f D a y s ( 1 ) ( 3 )
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G A I N H i s t o r i c a l E a r n i n g s P e r f o r m a n c e S h a r e p r i c e n o l o n g e r m o v e s i n s y n c w i t h e a r n i n g s 2 9 S o u r c e : F X C M a n d G A I N S E C f i l i n g s , C a p i t a l I Q a n d R e u t e r s ( D a i l y E P S e s t i m a t e s b a s e d o n m e a n v a l u e s ) N o t e : E P S p r e s e n t e d a s A d j . E P S a s d e f i n e d b y G A I N . A d j . E P S r e p r e s e n t s G A A P E P S p l u s c h a n g e i n f a i r v a l u e o f c o n v e r t i b l e , r e d e e m a b l e p r e f e r r e d s t o c k e m b e d d e d d e r i v a t i v e a n d p u r c h a s e i n t a n g i b l e a m o r t i z a t i o n . G A I N s s t o c k h a s s h o w n m i n i m a l r e a c t i o n t o G A I N s r e p o r t e d e a r n i n g s s i n c e i t s i n i t i a l m a j o r m i s s ( Q 4 2 0 1 1 ) , e v e n w h e n b e a t i n g e a r n i n g s o n t h e u p s i d e s i g n i f i c a n t l y ( Q 2 2 0 1 2 ) $ 2 . 0 0 $ 4 . 0 0 $ 6 . 0 0 $ 8 . 0 0 $ 1 0 . 0 0 1 0 / 2 7 / 1 1 : $ 6 . 8 8 G AI N b e a t s Q 3 2 0 1 1E P S e s t i m a t e s b y $ 0 . 0 3 / 1 4 % 0 7 / 3 1 /1 2 : $ 4 . 8 0 GA I N b e a t s Q2 2 0 1 2 E P S b e a t s b y $ 0 . 1 1 / 5 5 0 % 1 1 / 0 1 / 1 2: $ 4 . 5 5 G A I N b e at s Q 3 2 0 1 2 E P S e s t i m a t e s b y $ 0 . 0 5 / 1 2 5 % 1 2 / 1 5 / 10 :$ 8 . 8 5 G A I N I P O o f 9 m m s h a r e s a t $ 9 . 0 0 a s h a r e 0 4 / 0 8 / 1 3 : $ 4 . 2 7 E v e n w h i l e s i g n i f i c a n t l y o u t p a c i n g m a r k e t e x p e c t a t i o n s o n e a r n i n g s i n t h e c o n s e c u t i v e q u a r t e r s , G A I N s h a r e s s a w l i t t l e m o v e m e n t e i t h e r l e a d i n g u p t o o r c o m i n g o u t o f G A I N s a n n o u n c e m e n t 0 5 / 1 3 / 1 1 : $ 6 . 7 1 G A I N m i s s e s Q 1 2 0 1 1E P S e s t i m a t e s b y $ 0 . 0 6 / ( 5 0 % ) 0 7 / 2 8 / 1 1 : $ 6 . 2 8 GA I N m i s s e s Q 2 2 0 11 E P S e s t i m a t e s b y $ 0 . 0 3 / ( 1 2 % ) 0 2 / 2 8/ 1 2 : $ 6 . 4 9 G A I N m i s s e s Q 4 2 0 1 1 E P S e s t i m a t e s b y $ 0 . 1 9 / ( 1 3 6 % ) 0 5 / 0 9 / 1 2 : $ 5 . 0 0 G A I N mi s s e s Q 1 2 0 1 2 E P S e s t i m a t e s b y $ 0 . 0 8 / ( 1 0 0 % ) 0 3 / 1 2 / 1 3 : $ 4 . 3 2 G A I N mi s s e s Q 4 2 0 1 2 E P S e s t i m a t e s b y $ 0 . 1 5 / ( 2 8 0 % )
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E c o n o m i c C h a l l e n g e s f o r C o m p a n i e s N o t O p e r a t i n g A t S c a l e ( F o o t n o t e s ) S o u r c e : F X C M a n d G A I N S E C f i l i n g s a n d e a r n i n g s r e p o r t s . I G G r o u p H o l d i n g s p l c ( I G G r o u p ) F i n a n c i a l S e r v i c e s A u t h o r i t y ( F S A ) f i l i n g s a n d c o m p a n y r e p o r t s . N o t e : U K t o U . S . e x c h a n g e r a t e o f 1 . 5 8 0 1 f o r t h e P e ri o d 1 1 / 3 0 / 1 1 t o 1 1 / 3 0 / 1 2 O AN D A . B as e d on a s r e p o r t e d f i g u r e s . 1 . G A I N a n d F X C M a s o f 1 2 / 3 1 / 1 2 . I G G r o u p a s o f 1 1 / 3 0 / 1 2 . 2 . E x c l u d e s i n t e r e s t e x p e n s e o n n o t e p a y a b l e o f ~ $ 0 . 4 m m . 3 . C o n s i s t s o f N e t T r a d i n g R e v e n u e w i t h a d d b a c k o f I n t r o d u c i n g B r o k e r C o m m i s s i o n s . 4 . C l i e n t A s s e t s R e p r e s e n t s a m o u n t s d u e t o c l i e n t s , i n c l u d i n g c u s t o m e r d e p o s i t s a n d u n r e a l i z e d g a i n s o r l o s s e s a r i s i n g f r o m o p e n p o s i t i o n s a s o f 1 2 / 3 1 / 2 0 1 2 . 5 . C u s t o m e r E q u i t y a s o f 1 2 / 3 1 / 2 0 1 2 . 6 . S e g r e g a t e d C l i e n t F u n d s c o m p r i s ec l i e n t f u n d s h e l d i n s e g r e g a t e d c l i e n t m o n e y a c c o u n t s o r m o n e y m a r k e t f a c i l i t i e s e s t a b l i s h e d u n d e r t h e U K s F i n a n c i a l S e r v i c e s A u t h o r i t y ( F S A ) C A S S r u l e s a n d s i m i l a r r u l e s o f o t h e r r e g u l a t o r s i n w h o s e j u r i s d i c t i o n t h e G r o u p o p e r a t e s . S u c h m o n i e s a r e n o t i n c l u d e d i n t h e G r o u p s S t a t e m e n t o f F i n a n c i a l P o s i t i o n a s o f 1 1 / 3 1 / 2 0 1 2 . 7 . G A I N A d j . E B I T D A r e p r e s e n t s G A A P N e t I n c o m e p l u s D & A , p u r c h a s e i n t a n g i b l e a m o r t i z a t io n , i n t e r e s t e x p e n s e , r e s t r u c t u r i n g f e e s , i n c o m e t a x e x p e n s e . 8 . F X C M A d j . P r o F o r m a E B I T D A r e p r e s e n t s A d j . P r o F o r m a N e t I n c o m e a t t r i b u ta b l e t o F X C M p l u s N e t I n c o m e a t t r i b u t a b l e t o n o n - c o n t r o l l i n gi n t e r e s t , p r o v i s i o n s f o r i n c o m e t a x , D & A , i n t e r e s t e x p e n s e a n d l e s s s t o c k - b a s e d c o m p e n s a t i o n n e t o f t a x . A d j . P r o F o r m a N e t I n c o mi n c l u d e s t h e f o l l o w i n g a d j u s t m e n t s : - T h e e l i m i n a t i o n o f e q u i t y - b a s e d c o m p e n s a t i o n a s s o c i a t e d w i t h t h e I P O , s e v e r a n c e a n d e q u i t y b a s e d c o m p e n s a t i o n i n c o n n e c t i o n w i t h t h e r e n e g o t i a ti o n o f c e r t a i n e m p l o y m e n t c o n t r a c t s i n t h e C o m p a n y ' s i n s t i t u t i o n a l a n d r e t a i l b u s i n e s s e s . - T h e e l i m i n a t i o n o f a c q u i s i t i o n - r e l a t e d c o s t s a n d a n a d j u s t m e n t t o r e f l e c t a r e s e r v e e s t a b l i s h e d t o s e t t l e c e r t a i n t r a d i n g s y s t e m m a t t e r s w i t h t h e F i n a n c i al S e r v i c e s A g e n c y o f J a p a n . 9 . I G G r o u p E B I T D A r e p r e s e n t s o p e r a t i n g p r o f i t b e f o r e d e p r e c i a t i o n , a m o r t i s a t i o n a n d i m p a i r m e n t o f i n t a n g i b l e a s s e t s a n d a m o u n t s w r i t t e n o f f p r o p e r t y , p l a n t a n d e q u i p m e n t a n d i n t a n g i b l e a s s e t s . E B I T D A M a r gi n c a l c u l a t e d b a s e d o f f o f n e t r e v e n u e a s d e f i n e d i n f o o t n o t e n u m b e r 3 . 1 0 . G A I N A d j . N e t Ir e p r e s e n t s G A A P N e t I n c o m e p l u s p u r c h a s e i n t a n g i b l e a m o r t i z a t i o n ( n e t o f t a x ) . 1 1 . F X C M A d j . N e t I n c o m e r e p r e s e n t s G A A P N e t I n c o m e p l u s c h a n g e i n f a i r v a l u e o f c o n v e r t i b l e , r e d e e m a b l e p r e f e r r e d s t o c k e m b e d d e d d e r i v a t i v e a n d p u r c h a s e i n t a n g i b l e a m o r t i z a t i o n . F X C M s h a r e h o l d e r s e q u i t y f o r 4 Q 2 0 1 2 r e p r es e n t s t o t a l s h a r e h o l d e r s e q u i t y l e s s a m o u n t o f $ 1 6 0 . 2 a t t r i b u t a b le t o L U C I D n o n - c o n t r o l l i ng i n t e r e s t a s o f 1 2 / 3 1 / 2 01 2 . 1 2 . I G G r o u p N e t I n c o me a s o f 1 1 / 3 0 / 2 0 1 2 . 3 0