UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 23, 2011
Investors Capital Holdings, Ltd.
(Exact name of registrant as specified in its charter)
Delaware (State or Other Jurisdiction of Incorporation) | 333-43664 | 04-3284631 (IRS Employer Identification No.) |
230 Broadway East
Lynnfield, MA 01940
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (800) 949-1422
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[] (Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[] (Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[] (Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[] (Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 23, 2011 the Registrant issued a news release, a copy of which is set forth in Exhibit 2.02 hereto, announcing financial results for the Registrant for the fiscal year ended March 31, 2011.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Investors Capital Holdings, Ltd.
By/s/Timothy B. Murphy
Timothy B. Murphy, Chief Executive Officer
Date: May 26, 2011
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Exhibit 2.02
FOR IMMEDIATE RELEASE
Contact:
Robert Foney, Chief Marketing Officer
781.477.4814
rfoney@investorscapital.com
www.investorscapital.com
Investors Capital Holdings Annual Revenue Climbs 7.7%
Avg. revenue per advisor increases 17.2% to over $161k; advisory revenue grows 17%
Lynnfield, Mass. (May 23, 2011) – Investors Capital Holdings, Ltd. (NYSE Amex: ICH, “the Company”), a financial services holding company, posted total revenue of $85.25 million for the fiscal year ended March 31, 2011 (“the year”). This represents a 7.7% increase over total revenue of $79.19 million for the fiscal year ended March 31, 2010 (“prior period”). For the year, the Company posted a net loss of $0.91 million, compared to net income of $0.32 million for the prior period. Investors Capital Holdings operates primarily through its wholly-owned subsidiary, Investors Capital Corporation (“ICC”), a dually registered broker-dealer and investment advisory firm.
Total revenue increased due primarily to market growth and increased activity of ICC advisors. Commission revenue, which accounts for 80.0% of total revenue, increased 6.4% to $68.11 million. Advisory fees, which make up 17.6% of total revenue, grew 17.0% to $14.98 million. The rise in advisory fees predominantly reflects increases in the value of underlying advisory program assets as investor sentiment becomes more favorable and the securities market continues to recover from the recent debt crisis.
“This year has been challenging in many regards,” said Investors Capital Holdings, Ltd. President and CEO Timothy B. Murphy. “But I believe we are in a good position for growth. Our revenues are growing; our net capital is strong; our recruiting pipeline is full; and our recruitersare busy with advisors inquiring about joining Investors Capital. I am excited for what the new year will bring.”
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At fiscal-year end, the firm had net capital of $2.84 million (an excess of $2.59 million) compared to net capital of approximately $3.39 million (an excess of $2.91 million) as of the prior period. ICC is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1) which requires our broker-dealer subsidiary to maintain minimum net capital. As of March 31, 2011, ICC computes net capital requirements under the alternative method, which requires firms to maintain minimum net capital, as defined, equal to the greater of $250,000 or 2% of aggregate debit balances.
Investors Capital continues to benefit from improving the overall quality of its representatives, a key component of the Company’s strategy for achieving growth in revenues and net income. The firm seeks to continually improve the quality of its representatives by helping them expand their skills and practices, recruiting established, high-quality representatives, and terminating lower-quality advisors. The firm’s average revenue per representative, based on a rolling 12-month period, rose again at fiscal-year end to $161,642, an increase of 17.2% over $137,961 for the prior rolling 12-month period.
Results of operations were largely impacted by litigation and regulatory actions that have accompanied a more demanding industry regulatory environment. Adjusted EBITDA was negative $0.23 million for the year compared to $1.48 million for the prior period. Adjusted EBITDA, a non-GAAP financial measure described below, is a key metric utilized by the firm in evaluating its financial performance.
About Investors Capital Holdings, Ltd.:
Investors Capital Holdings, Ltd. (NYSE Amex: ICH) of Lynnfield, Massachusetts is a financial services holding company that operates primarily through its broker/dealer and investment advisor subsidiary, Investors Capital Corporation. Our mission is to provide 5-star service and support to our valued registered representatives, including advisory programs, strategic practice management and marketing services, and technology, to help them grow their businesses and exceed their clients’ expectations. Business units include Investors Capital Corporation, ICC Insurance Agency, Inc., and Investors Capital Holdings Securities Corporation. For more information, please call (800) 949-1422 x4814 or visit www.investorscapital.com.
Certain statements contained in this press release that are not historical fact may be deemed to be forward-looking statements under federal securities laws. There are many factors that could cause our future actual results to differ materially from those suggested by or forecast in the forward-looking statements. Such factors include, but are not limited to, general economic conditions, interest rate fluctuations, regulatory changes affecting the financial services industry, competitive factors effecting demand for our services, availability of funding, and other risks including those identified in the Company’s Securities and Exchange Commission filings.
Investors Capital Holdings, Ltd., 230 Broadway, Lynnfield, Massachusetts 01940, Distributor.
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INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES | |||
March 31, 2011 | March 31, 2010 | ||
Assets | |||
Current Assets | |||
Cash and cash equivalents | $ 4,587,195 | $ 5,812,865 | |
Deposit with clearing organization, restricted | 175,000 | 175,000 | |
Accounts receivable | 6,798,638 | 6,042,188 | |
Note receivable (current) | 108,169 | 140,598 | |
Loans receivable from registered representatives (current), net of allowance | 721,664 | 769,263 | |
Prepaid income taxes | 157,880 | 559,007 | |
Securities owned at fair value | 17,384 | 57,933 | |
Investment | 50,000 | 50,000 | |
Prepaid expenses | 1,073,969 | 957,674 | |
13,689,899 | 14,564,528 | ||
Property and equipment, net | 597,735 | 774,182 | |
Long Term Investments | |||
Loans receivable from registered representatives | 616,583 | 292,884 | |
Note receivable | 495,000 | 595,000 | |
Investments | 214,555 | 184,319 | |
Non-qualified deferred compensation investment | 1,089,572 | 929,897 | |
Cash surrender value life insurance policies | 680,429 | 551,398 | |
3,096,139 | 2,553,498 | ||
Other Assets | |||
Deferred tax asset, net | 1,218,773 | 838,773 | |
Capitalized software, net | 132,131 | 149,838 | |
Other assets | 15,808 | 13,728 | |
1,366,712 | 1,002,339 | ||
TOTAL ASSETS | $ 18,750,485 | $ 18,894,547 | |
Liabilities and Stockholders' Equity | |||
Current Liabilities | |||
Accounts payable | $ 1,109,400 | $ 817,761 | |
Accrued expenses | 2,078,705 | 2,358,656 | |
Commissions payable | 3,246,898 | 3,488,415 | |
Notes payable | 1,527,969 | 1,130,922 | |
Unearned revenues | 113,486 | 101,931 | |
Securities sold, not yet purchased, at fair value | - | 5,693 | |
8,076,458 | 7,903,378 | ||
Long-Term Liabilities | |||
Non-qualified deferred compensation plan | 1,176,096 | 793,735 | |
1,176,096 | 793,735 | ||
Total liabilities | 9,252,554 | 8,697,113 | |
Commitments and contingencies (Note 15) | |||
Stockholders' Equity: | |||
Common stock, $.01 par value, 10,000,000 shares authorized; | |||
6,618,259 issued and 6,614,374 outstanding at March 31, 2011 | |||
6,595,804 issued and 6,591,919 outstanding at March 31, 2010 | 66,183 | 65,958 | |
Additional paid-in capital | 12,279,380 | 12,095,862 | |
Accumulated deficit | (2,874,214) | (1,964,084) | |
Less: Treasury stock, 3,885 shares at cost | (30,135) | (30,135) | |
Accumulated other comprehensive income | 56,717 | 29,833 | |
Total stockholders' equity | 9,497,931 | 10,197,434 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 18,750,485 | $ 18,894,547 | |
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INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS | |||
| |||
YEARS ENDED | |||
March 31, | |||
2011 | 2010 | ||
Revenue: | |||
Commissions | $ 68,111,786 | $ 63,999,464 | |
Advisory fees | 14,977,601 | 12,796,618 | |
Other fee income | 802,752 | 1,013,718 | |
Other revenue | 1,361,826 | 1,378,137 | |
Total revenue | 85,253,965 | 79,187,937 | |
Expenses: | |||
Commissions and advisory fees | 67,125,324 | 61,080,743 | |
Compensation and benefits | 8,471,493 | 8,007,675 | |
Regulatory, legal and professional services | 3,983,401 | 2,338,062 | |
Brokerage, clearing and exchange fees | 2,046,543 | 2,573,689 | |
Technology and communications | 1,219,738 | 1,121,918 | |
Marketing and promotion | 1,382,025 | 877,969 | |
Occupancy and equipment | 922,312 | 853,548 | |
Other administrative | 1,101,691 | 1,451,447 | |
Interest | 23,698 | 26,213 | |
Total operating expenses | 86,276,225 | 78,331,264 | |
Operating income (loss) | (1,022,260) | 856,673 | |
(Benefit) provision for income taxes | (112,130) | 535,135 | |
Net income (loss) | $ ( 910,130 ) | $ 321,538 | |
Basic and diluted net income (loss) per share | $ (0.14) | $ 0.05 | |
Basic and dilute dividends per common share | $ - | $ - | |
Shares used in basic and diluted per share calculations | 6,527,315 | 6,503,476 |
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Adjusted EBITDA
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted by eliminating items that we believe are not part of our core operations, are non-recurring items of revenue or expense, or do not involve a cash outlay, such as stock-related compensation. We consider adjusted EBITDA important in monitoring and evaluating our financial performance on a consistent basis across various periods. We also use adjusted EBITDA as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions.
Adjusted EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, important GAAP financial measures including pre-tax income, net income and cash flows from operating activities. Items excluded from adjusted EBITDA are significant and necessary components to the operations of our business; therefore, adjusted EBITDA should only be used as a supplemental measure of our operating performance.
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Adjusted EBITDA may be reconciled with net income as follows:
|
| ||
Years Ended March 31, | |||
2011 | 2010 | ||
Adjusted EBITDA: | $ (234,858) | $ 1,475,538 | |
Adjustments to conform adjusted EBITDA to | |||
GAAP Net income (loss): | |||
Income tax benefit | 112,130 | (535,135) | |
Interest expense | (23,698) | (26,213) | |
Depreciation and amortization | (427,769) | (349,001) | |
Non-cash compensation | (183,743) | (243,651) | |
Non-recurring professional fees | (152,192) | - | |
| |||
Net income (loss) | $ (910,130) | $ 321,538 | |
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