[GREENHILL GRAPHIC OMITTED]
CONTACT: John D. Liu,
Chief Financial Officer
Greenhill & Co., Inc.
(212) 389-1800
FOR IMMEDIATE RELEASE
GREENHILL & CO. REPORTS RECORD THIRD QUARTER RESULTS
WITH EARNINGS PER SHARE OF $0.58
NEW YORK, October 20, 2005 - Greenhill & Co., Inc. (NYSE: GHL) today reported
record revenues of $66.0 million and record net income of $17.8 million for the
quarter ended September 30, 2005. Diluted earnings per share were $0.58 per
share for the quarter ended September 30, 2005.
The Firm's third quarter revenues compare with revenues of $36.5 million for the
third quarter of 2004, which represents an increase of $29.5 million or 81%. On
a year-to-date basis, revenue through September 30, 2005 was $139.4 million,
compared to $100.9 million for the comparable period in 2004, representing an
increase of $38.5 million or 38%.
The Firm's quarterly revenues can fluctuate materially depending on the number
and size of completed transactions on which it advised, the number and size of
merchant banking gains (or losses) and other factors. Accordingly, the revenues
in any particular quarter may not be indicative of future results.
The Firm's third quarter net income in 2005 compares with net income of $8.2
million in the third quarter of 2004, which represents an increase of $9.6
million or 117%. On a year-to-date basis, net income was $34.8 million through
September 30, 2005, compared to pro forma net income of $22.5 million for the
comparable period in 2004, which represents an increase of $12.3 million or 55%.
The Firm had actual net income of $26.5 million for the nine months ended
September 30, 2004.
We believe that pro forma results for the nine months ended September 30, 2004,
more accurately depict our results as a public company and will provide the most
meaningful basis for comparison among present, historical and future periods.
Prior to our initial public offering we operated as a limited liability company
and our earnings did not fully reflect either the compensation expense we pay
our managing directors or the taxes that we pay as a corporation. Additionally,
a portion of our earnings attributable to our European operations was recorded
as minority interest prior to our initial public offering. Our pro forma results
increase compensation expense and tax expense to amounts we would have paid as a
public corporation and eliminate the minority interest attributable to our
European operations.
"We are pleased with our financial advisory results in a M&A market that has
continued to gain momentum. In merchant banking, our robust results demonstrate
the revenue potential of our strategy, begun in early 2004, of investing Firm
capital in merchant banking opportunities. On the cost side, our disciplined
approach ensures that the benefits of this higher advisory and merchant banking
revenue flow to our shareholders," Robert F. Greenhill, Chairman and CEO, said.
REVENUES
REVENUES BY SOURCE
The following provides a breakdown of total revenues by source for the
three-month and nine-month periods ended September 30, 2005 and September 30,
2004, respectively:
Three Months Ended
-------------------------------------------------------
September 30, 2005 September 30, 2004
------------------------ ------------------------
Amount % of Total Amount % of Total
------ ---------- ------ ----------
(in millions, unaudited)
Financial Advisory................................... $ 35.3 53% $ 31.3 86%
Merchant Banking Fund Management & Other............. 30.7 47% 5.2 14%
--------------- ----------- --------------- ----------
Total Revenues....................................... $ 66.0 100% $ 36.5 100%
Nine Months Ended
-------------------------------------------------------
September 30, 2005 September 30, 2004
------ ---------- ------ ----------
Amount % of Total Amount % of Total
------ ---------- ------ ----------
(in millions, unaudited)
Financial Advisory................................... $ 91.1 65% $ 84.6 84%
Merchant Banking Fund Management & Other............. 48.3 35% 16.3 16%
--------------- ---------- --------------- -----------
Total Revenues....................................... $ 139.4 100% $ 100.9 100%
FINANCIAL ADVISORY REVENUES
Financial Advisory Revenues were $35.3 million in the third quarter of 2005
compared to $31.3 million in the third quarter of 2004, which represents an
increase of 13%. This increase was due to a higher number of significant
completed assignments during the third quarter of 2005 compared to the same
period in 2004. For the nine months ended September 30, 2005, Financial Advisory
Revenues were $91.1 million compared to $84.6 million for the comparable period
in 2004, representing an increase of 8%.
Completed assignments in the third quarter of 2005 included: America West
Holdings' merger with the US Airways Group; T&F Informa plc's acquisition of IIR
Holdings Limited; the sale of Scottish Radio Holdings to EMAP plc; the
divestiture of various assets for Texas Genco LLC; and the sale of Telecity plc
to 3i plc and Oak Hill Capital Partners.
"The combination of an improving M&A market, an increased desire by corporate
clients for independent advice and greater recognition of our Firm in corporate
boardrooms across Europe and the U.S. has continued to work in our favor. During
the third quarter, our clients completed some important transactions, and we
also became involved in a number of significant M&A situations that remain
pending," Scott L. Bok and Simon A. Borrows, Co-Presidents, commented.
MERCHANT BANKING & INTEREST INCOME
The Firm earned $30.7 million in Merchant Banking & Interest Income in the third
quarter of 2005 compared to $5.2 million in the third quarter of 2004,
representing an increase of 490%. In the first nine months of 2005, the Firm
earned $48.3 million in Merchant Banking & Interest Income compared to $16.3
million in the first nine months of 2004, an increase of 196%. These increases
are primarily due to higher asset management fees resulting from greater assets
under management, higher dividend income and distributions of earnings from
portfolio companies, higher realized and unrealized principal investment gains
in the Greenhill Capital Partners (GCP) portfolio, an increase in the recognized
amounts of profit overrides associated with gains in the GCP portfolio and an
increase in interest income. Included in Merchant Banking & Interest Income for
the three and nine months ended September 30, 2005 is $0.7 million and $0.9
million, respectively, related to the interests in GCP Managing Partner I, L.P.
and GCP Managing Partner II, L.P., general partners of GCP, held directly by
various managing directors of the Firm, which is also deducted as minority
interest.
During the third quarter, two GCP companies completed their initial public
offering: Heartland Payment Systems (NYSE: HPY) and Republic Companies Group,
Inc. (NASDAQ: RUTX). In both cases GCP monetized a portion of its investment in
the offering. One private portfolio company, Exco Holdings, Inc., announced its
agreement to be sold in a transaction in which GCP would monetize a portion of
its investment.
With respect to third quarter revenue, GCP benefited from a significant increase
in the value of its holdings in Hercules Offshore Inc., a private energy
services company which expects to complete its initial public offering during
the fourth quarter, Global Signal Inc. (NYSE: GSL) and Heartland Payments
Systems, Inc. In total, GCP earned revenue relating to 7 portfolio companies in
the third quarter, partially offset by losses relating to 2 portfolio companies.
GCP gains and losses relating to investments made in 2004 or later have a larger
impact on Firm revenue because of the Firm's increased investment in, and
increased participation in profit overrides relating to, GCP starting in early
2004.
In terms of new investment activity during the third quarter, GCP invested $18.2
million (12% of which was Firm capital) in 2 portfolio companies, compared to
$13.3 million (12% of which was Firm capital) invested in 4 portfolio companies
in the same period of 2004. In the first nine months of 2005, GCP invested
$102.9 million (11% of which was Firm capital) in 8 portfolio companies,
compared to $30.0 million (7% of which was Firm capital) in 4 companies for the
same period of 2004. For the nine
months ended September 30, 2005, the Firm made one other merchant banking
investment of $0.3 million.
"Greenhill Capital Partners has continued to produce outstanding results for its
limited partners, and the Firm's participation since 2004 as a significant
limited partner has made this activity an important contributor to Firm revenue
and profit. Our third quarter results particularly benefited from what has been
a very favorable environment for monetizing the value of our investments in each
of our three focus areas of energy, financial services and telecommunications,"
Robert H. Niehaus, Chairman of Greenhill Capital Partners, commented.
The following table sets forth additional information relating to our merchant
banking and interest income:
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- ------------------------
2005 2004 2005 2004
---- ---- ---- ----
(in million, unaudited)
Management fees............................. $ 3.4 $ 1.1 $ 7.9 $ 3.4
Net realized and unrealized gains on
investments in GCP....................... 14.2 2.6 20.8 9.1
Merchant banking overrides.................. 12.1 1.2 16.9 3.2
Other unrealized investment income.......... 0.2 0.1 0.5 0.2
Interest income............................. 0.8 0.2 2.2 0.4
----------- ----------- ----------- -----------
Merchant banking revenue ................... $ 30.7 $ 5.2 $ 48.3 $ 16.3
=========== =========== =========== ===========
EXPENSES
OPERATING EXPENSES
Our Total Operating Expenses for the third quarter were $37.5 million, which
compares to $23.2 million of Total Operating Expenses for the third quarter of
2004. This represents an increase in Total Operating Expenses of $14.3 million
or 62%. The pre-tax income margin was 42% in the third quarter of 2005 compared
to 36% for the third quarter of 2004.
For the nine months ended September 30, 2005, Total Operating Expenses were
$83.7 million, which compares to pro forma Total Operating Expenses of $63.0
million for the comparable period in 2004. The increase of $20.7 million or 33%
is described in more detail below. The pre-tax income margin for the nine months
ended September 30, 2005 was 39% compared to 38% for the comparable period in
2004 on a pro forma basis.
The following table sets forth information relating to our actual and pro forma
operating expenses, which are reported net of reimbursements:
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------- --------------------------
2005 2004 2005 2004
---- ---- ---- ----
(in millions, unaudited)
Actual Compensation & Benefits Expense.......... $ 30.7 $ 16.3 $ 62.4 $ 39.0
% of Revenues.............................. 47% 45% 45% 39%
Pro Forma Compensation & Benefits Expense(a).... 30.7 16.3 62.4 45.3
% of Revenues.............................. 47% 45% 45% 45%
Non-Compensation Expense:
Other Operating Expenses................... 6.2 6.0 19.4 15.2
Depreciation & Amortization................ 0.6 0.9 1.9 2.5
--- --- --- ---
Total Non-Compensation Expense.................. 6.8 6.9 21.3 17.7
% of Revenues.............................. 10% 19% 15% 18%
Total Actual Operating Expense.................. 37.5 23.2 83.7 56.7
% of Revenues.............................. 57% 64% 60% 56%
Total Pro Forma Operating Expense (a)........... 37.5 23.2 83.7 63.0
% of Revenues.............................. 57% 64% 60% 62%
Minority Interest in Net Income of Subsidiary... 0.7 - 0.9 6.5
Total Actual Income Before Tax.................. 27.8 13.3 54.8 37.7
Actual Pre-tax Income Margin............... 42% 36% 39% 37%
Total Pro Forma Income Before Tax (a)........... 27.8 13.3 54.8 37.9
Pro Forma Pre-tax Income Margin (a)........ 42% 36% 39% 38%
(a) We have operated as a public company since our initial public offering
in May 2004, and the amounts for the three months and nine months ended
September 30, 2005 and three month ended September 30, 2004 reflect
actual expenses; the amounts for the nine months ended September 30,
2004 reflect pro forma expenses.
Compensation and Benefits
Our Compensation and Benefits Expense in the third quarter of 2005 was $30.7
million, which reflects a 47% ratio of compensation to revenues. This amount
compares to $16.3 million in the third quarter of 2004, which reflected a 45%
ratio of compensation to revenues. The increase of $14.4 million or 88% is due
to the higher level of revenues in the third quarter of 2005 compared to the
third quarter of 2004 and a decision to increase the compensation ratio in the
third quarter of 2005 to return the year-to-date compensation ratio to a level
consistent with its level in 2004. For the nine months ended September 30, 2005,
our Compensation and Benefits Expense was $62.4 million, which reflects a 45%
compensation ratio for the year-to-date period. This compares to $45.3 million
of pro forma Compensation and Benefits Expense for the nine months ended
September 30, 2004. The increase of $17.1 million or 38% is due to the higher
level of revenues in the first nine months of 2005 compared to the comparable
period in 2004. The pro forma compensation ratio was 45% for the nine months
ended September 30, 2004.
The principal component of our operating expenses is compensation and benefits
expense. Because we were a limited liability company prior to our initial public
offering in May 2004, payments for services rendered by our managing directors
generally were accounted for as distributions of members' capital or minority
interest
expense attributable to our European operations rather than as compensation
expense. As a result, our pre-IPO compensation and benefits expense did not
reflect a large portion of payments for services rendered by our managing
directors and understated the operating costs that we expect we would have
incurred as a public company. As a corporation, we include all payments for
services rendered by our managing directors in compensation and benefits
expense.
For the nine months ended September 30, 2004, actual Compensation and Benefits
Expense was $39.0 million.
Non-Compensation Expense
Our non-compensation expenses were $6.8 million in the third quarter of 2005,
which compared to $6.9 million in the third quarter of 2004, representing a
decrease of 1%. The decrease is related principally to lower recruiting costs
($0.3 million), the recovery of receivables previously written off ($0.4
million), and lower depreciation costs ($0.3 million), offset in part by an
increase in occupancy costs ($0.4 million) for additional office space in New
York and Dallas, increased professional fees ($0.3 million), primarily related
to Sarbanes Oxley compliance, and increased information services ($0.2 million)
as a result of additional personnel and business development activity.
For the first nine months of 2005, our non-compensation expenses were $21.3
million, which compared to $17.7 million in the first nine months of 2004,
representing an increase of 20%. The increase is related principally to the net
write-off of uncollectible accounts ($0.6 million), a third-party fee related to
the fundraising for Greenhill Capital Partners II ($1.0 million), greater travel
expenses ($0.6 million) and information services ($0.6 million) as a result of
additional personnel and business development activity, increase in occupancy
costs ($0.5 million) for additional office space in New York and Dallas, and
increases in expenses associated with operating as a public entity ($1.0
million), offset in part by lower depreciation expense ($0.6 million) and
recruiting costs ($0.4 million).
Non-compensation expenses as a percentage of revenue in the three months and
nine months ended September 30, 2005 were 10% and 15%, respectively. This
compares to 19% and 18% for the three months and nine months ended September 30,
2004, respectively. The decrease in these expenses as a percentage of revenue is
principally related to higher level of revenue offset in part by the higher
level of expenses for the nine months ended September 30, 2005.
The Firm's non-compensation expense as a percentage of revenue can vary as a
result of a variety of factors including fluctuation in quarterly revenue
amounts, the amount of recruiting and business development activity, the amount
of reimbursement of engagement-related expenses by clients, currency movements
and other factors. Accordingly, the non-compensation expense as a percentage of
revenue in any particular quarter may not be indicative of the non-compensation
expense as a percentage of revenue in future periods.
PROVISION FOR INCOME TAXES
The Provision for Taxes in the third quarter of 2005 was $10.0 million, which
reflects a 36% effective tax rate. This compares to a Provision for Taxes in the
third quarter of 2004 of $5.1 million, which reflects a 38% effective tax rate
for the period. This represents an increase of $4.9 million, which is primarily
attributable to the higher level of pre-tax income partially offset by a lower
effective tax rate due to a higher proportion of investment income and foreign
business income, which generally benefit from relatively lower tax rates than
U.S-based advisory income.
For the nine months ended September 30, 2005, the Provision for Taxes was $20.0
million compared to a pro forma Provision for Taxes of $15.4 million for the
nine months ended September 30, 2004, assuming a blended tax rate of 41% for the
period. This represents an increase of $4.6 million, primarily attributable to a
higher level of pre-tax income partially offset by the lower effective tax rate
as compared to the same period in the prior year. The decrease in the effective
rate for the nine months ended September 30, 2005 results from a higher
proportion of investment income and foreign business income, which generally
benefit from relatively lower tax rates than U.S. based advisory income.
As a limited liability company, Greenhill was not subject to U.S. federal or
state income taxes and its U.K. controlled affiliate Greenhill & Co.
International LLP, as a limited liability partnership, was generally not subject
to U.K. income taxes. Since completion of our initial public offering in May
2004, we have been subject to federal, foreign and state corporate income taxes.
Actual taxes for the nine months ended September 30, 2004 were $11.2 million.
The effective tax rate can fluctuate as a result of variations in the relative
amounts of advisory and merchant banking income earned in the tax jurisdictions
in which the Firm operates and invests. Accordingly, the effective tax rate in
any particular quarter may not be indicative of the effective tax rate in future
periods.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2005, our cash totaled $88.5 million, and we had no debt.
Our stockholders' equity as of September 30, 2005 was $123.2 million.
We had total commitments (not reflected on our balance sheet) relating to future
principal investments in merchant banking funds of $95.7 million as of September
30, 2005. These commitments are expected to be drawn on from time to time over a
period of up to five years from the relevant commitment dates.
The Firm repurchased 171,188 shares of its common stock at an average price of
$40.77 in open market transactions during the third quarter of 2005. In
addition, the Firm purchased 800,000 shares at a price of $26.22 per share from
a former employee pursuant to a previously announced agreement. The Board of
Directors of Greenhill &
Co., Inc. has previously authorized the repurchase in open market transactions
of up to $25.0 million of common stock, of which $18.0 million of repurchase
authority remains.
DIVIDEND
The Board of Directors of Greenhill & Co., Inc. has declared a dividend of $0.12
per share to be paid on December 14, 2005 to common stockholders of record on
November 23, 2005.
.................................................................................
Greenhill & Co., Inc. is an independent investment banking firm that (i)
provides financial advice on significant mergers, acquisitions, restructurings
and similar corporate finance matters and (ii) manages merchant banking funds
and commits capital to those funds. Greenhill acts for clients located
throughout the world from offices in New York, London Frankfurt and Dallas.
Cautionary Note Regarding Forward-Looking Statements
The preceding discussion should be read in conjunction with our condensed
consolidated financial statements and the related notes that appear below. We
have made statements in this discussion that are forward-looking statements. In
some cases, you can identify these statements by forward-looking words such as
"may", "might", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict", "potential" or "continue", the negative of these terms
and other comparable terminology. These forward-looking statements, which are
subject to risks, uncertainties and assumptions about us, may include
projections of our future financial performance, based on our growth strategies
and anticipated trends in our business. These statements are only predictions
based on our current expectations and projections about future events. There are
important factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements. These factors include, but are not limited to, those
discussed in our Registration Statement on Form S-1 (Commission file number
333-124082) under the caption "Risk Factors".
GREENHILL & CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2005 2004 2005 2004
-------------- -------------- -------------- --------------
REVENUES
Financial advisory fees $ 35,299,486 $ 31,275,180 $ 91,086,984 $ 84,614,422
Merchant banking revenue 29,911,754 4,994,660 46,174,382 15,881,146
Interest income 820,434 228,706 2,160,453 421,647
--------------- --------------- --------------- ---------------
Total Revenues 66,031,674 36,498,546 139,421,819 100,917,215
EXPENSES
Employee compensation and benefits 30,707,309 16,278,351 62,360,470 39,033,719
Occupancy and equipment rental 1,801,945 1,389,600 4,765,690 4,221,472
Depreciation and amortization 622,941 969,268 1,897,102 2,500,818
Information services 894,643 696,691 2,702,949 2,121,992
Professional fees 895,362 609,970 3,171,177 1,457,749
Travel related expenses 1,215,157 1,356,093 3,619,541 3,052,261
Other operating expenses 1,358,434 1,916,233 5,140,011 4,360,151
--------------- --------------- --------------- ---------------
Total Expenses 37,495,791 23,216,206 83,656,940 56,748,162
Income before Tax and Minority 28,535,883 55,764,879
Interest 13,282,340 44,169,053
Minority interest in net income of subsidiary 696,409 - 925,384 6,487,050
--------------- --------------- --------------- ---------------
Income before Tax 27,839,474 13,282,340 54,839,495 37,682,003
Provision for taxes 10,022,201 5,052,099 20,017,218 11,163,050
--------------- --------------- --------------- ---------------
Net Income $ 17,817,273 $ 8,230,241 $ 34,822,277 $ 26,518,953
=============== =============== =============== ===============
Average common shares outstanding:
Basic 30,628,431 30,829,458 30,843,199 28,050,657
Diluted 30,765,357 30,851,693 30,923,528 28,067,517
Earnings per share
Basic $ 0.58 $ 0.27 $ 1.13 $ 0.95
Diluted $ 0.58 $ 0.27 $ 1.13 $ 0.94
Pro forma average shares outstanding
(see notes a and e):
Basic 30,628,431 30,829,458 30,843,199 28,050,657
Diluted 30,765,357 30,851,693 30,923,528 28,067,517
Pro forma earnings per share (see note a):
Basic $ 0.58 $ 0.27 $ 1.13 $ 0.80
Diluted $ 0.58 $ 0.27 $ 1.13 $ 0.80
See notes to Pro Forma Condensed Consolidated Statements of Income.
GREENHILL & CO., INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Nine Months
Ended September 30,
-------------------
2005 2004
---- ----
(a) (ACTUAL) (PRO FORMA)
(IN THOUSANDS)
Total Revenues $ 139,422 $ 100,917
Compensation and benefits (b) 62,360 45,267
Other expenses 21,297 17,714
------------ ------------
Total expenses 83,657 62,981
------------ ------------
Income before tax and minority interest 55,765 37,936
Minority interest in net income of
subsidiary (c) 926 -
------------ ------------
Income before tax 54,839 37,936
Tax expense (d) 20,017 15,406
------------ ------------
Net income $ 34,822 $ 22,530
============ ============
Actual and pro forma average common
shares outstanding: (e)
Basic 30,843 28,051
Diluted 30,924 28,068
Actual and pro forma earnings per share:
Basic $ 1.13 $ 0.80
Diluted $ 1.13 $ 0.80
See notes to Pro Forma Condensed Consolidated Statements of Income.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(a) Prior to the initial public offering we were a limited liability company
and our historical earnings did not fully reflect the compensation expense
we pay our managing directors or taxes that we pay as a public corporation.
Additionally, a portion of our earnings attributable to our European
operations was recorded as minority interest. We believe that the pro forma
results, which increase compensation expense and tax expense to amounts we
expect we would have paid as a corporation and eliminate the minority
interest of our European operations, more accurately depict our results as
a public company. During the three and nine months ended September 30, 2005
and the three months ended September 30, 2004, we operated as a public
company for the entire period, and the amounts presented above reflect
actual results of operations for that period. The amounts for the nine
months ended September 30, 2004 include the pro forma results of operations
as if the Firm operated as a public company during the period January 1,
2004 to the date of our public offering on May 11, 2004 combined with the
actual results of operations for the period after the public offering.
(b) Because the Firm had been a limited liability company prior to the initial
public offering, payments for services rendered by managing directors
generally had been accounted for as distributions of members' capital
rather than as compensation expense. As a corporation, the Firm includes
all payments for services rendered by managing directors in compensation
and benefits expense.
Compensation and benefits expense, reflecting the Firm's conversion to
corporate form, consists of cash compensation and non-cash compensation
related to the restricted stock units awarded to employees at the time of
the Firm's initial public offering consummated on May 11, 2004, as well as
any additional restricted stock units awarded in the future. It is the
Firm's policy that total compensation and benefits, including that payable
to the managing directors, will not exceed 50% of total revenues each year
(although the Firm retains the ability to change this policy in the
future). An adjustment to increase compensation expense for the nine months
ended September 30, 2004 of $6.2 million has been made to record total
compensation and benefits expense at 45% of total revenues, which is
consistent with the compensation expense ratio we used as a public company
in 2004.
(c) For the nine months ended September 30, 2004, historical income before tax
has been increased by $6.5 million to reflect the elimination on a pro
forma basis of minority interests held by the European managing directors
in Greenhill & Co. International.
(d) As a limited liability company, the Firm was generally not subject to
income taxes except in foreign and local jurisdictions. For the nine months
ended September 30, 2004, the provision for taxes was increased by $4.2
million on a pro forma basis to adjust the Firm's effective tax rate to
42%, reflecting assumed federal, foreign, state and local income taxes as
if we were a corporation on January 1, 2004.
(e) For the nine months ended September 30, 2004 the actual and pro forma
numbers of common shares outstanding give effect to (i) 25,000,000 shares
issued in
connection with the reorganization of the Firm in conjunction with the
initial public offering as if it occurred on January 1, 2004 and (ii) the
weighted average of the 5,750,000 shares and the common stock equivalents
issued in conjunction with and subsequent to the initial public offering.
