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BGC Partners Reports Second Quarter 2008 Financial Results

Aug 05, 2008 12:30 PM

Pre-tax Distributable Earnings up 146.8% GAAP net income for fully diluted shares up 137.7% Expects Post-tax Distributable Earnings to be up 50%-80%Year-on-Year in Third Quarter Declares Quarterly Cash Dividend of $0.13 per Common Share

NEW YORK, Aug 05, 2008 (BUSINESS WIRE) -- BGC Partners, Inc. (Nasdaq: BGCP) ("BGC Partners" or "the Company"), a leading global inter-dealer broker of financial instruments, today reported its financial results for the second quarter ended June 30, 2008(1).

BGC Partners Second Quarter Financial Summary

-- Pre-tax distributable earnings(2) increased by 146.8 percent to $42.3 million in the second quarter of 2008, compared to $17.1 million in the second quarter of 2007;

-- Pre-tax distributable earnings per share more than doubled to $0.22 in the second quarter of 2008, compared to $0.09 in the second quarter of 2007;

-- Post-tax distributable earnings increased by 70.2 percent in the second quarter of 2008 to $32.2 million, compared to $18.9 million in the second quarter of 2007;

-- Post-tax distributable earnings per share were up by approximately 70 percent in the second quarter of 2008 to $0.17, compared to $0.10 per fully diluted share in the second quarter of 2007;

-- The pre-tax distributable earnings margin expanded to 13.8 percent of revenues while the post-tax distributable earnings margin increased to 10.5 percent, both of which were significant improvements when compared to 6.3 percent and 6.9 percent, respectively, in the prior-year quarter;

-- Income before minority interest and taxes, calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), increased by 196.2 percent in the second quarter of 2008 to $32.1 million, compared to $10.8 million in the year-earlier period;

-- GAAP net income for fully diluted shares increased by 137.7 percent in the second quarter of 2008 to $30.1 million, compared to $12.7 million in the year-earlier period;

-- GAAP earnings per fully diluted share more than doubled to $0.16 compared to $0.07 in the year earlier quarter;

-- Revenues increased by 11.9 percent in the second quarter of 2008 to $305.5 million, compared to $273.0 million in the second quarter of 2007;

-- BGC Partners' Board of Directors declared a quarterly cash dividend of $0.13 per share payable on September 30, 2008 to Class A and Class B common stockholders of record as of September 15, 2008.

"We continued to experience double-digit revenue growth in the second quarter, although industry-wide volumes in Rates were slower during the last three weeks of June as compared to those seen in April and May. However, our scale, built and paid for technology, and improved operating efficiencies helped us to achieve significant year-over-year increases in quarterly distributable earnings," said Howard W. Lutnick, Chairman and co-Chief Executive Officer of BGC Partners, Inc. "We are proud to have delivered such dramatic improvements in profitability, and are delighted to announce that we will pay our dividend to common shareholders on a quarterly rather than a semi-annual basis."

"BGC Partners had strong organic growth in our Equities and Credit businesses, and saw improvements in revenues and volumes from new fully electronic products, particularly in credit default swaps and foreign exchange options, where fully electronic revenues in the second quarter of 2008 exceeded the total for all of 2007," added Lee M. Amaitis, Co-Chief Executive Officer. "We continue to hire new brokers, who will add to our profitability, and our broker productivity continued to grow by double digits year over year in the quarter. We are also evaluating accretive acquisition opportunities, investing in our world-class technology, and taking other steps that will best position the Company for top- and bottom-line growth in 2009 and beyond."

Detailed Second Quarter Results

For the second quarter of 2008, BGC Partners' revenues were $305.5 million, up 11.9 percent compared to the prior year quarter's $273.0 million. Brokerage revenues were $278.6 million, up 11.9 percent compared to $249.0 million in the prior year quarter. The increase was driven primarily by gains in voice, hybrid and electronic brokerage revenues from Credit and by voice/hybrid revenues from Foreign Exchange and Other Asset Classes.

For the second quarter of 2008, Rates revenues increased by 1.8 percent to $143.1 million, reflecting lower volumes in June when compared to the year-earlier period, while Credit revenues increased by 23.7 percent to $69.1 million, Foreign Exchange revenues increased by 5.7 percent to $34.0 million, and Other Asset Classes revenues increased by 59.4 percent to $32.3 million, all compared to the prior-year quarter. The increase in Other Asset Classes was driven primarily by strong organic growth in equity derivatives and the acquisition of energy broker Radix.

In the second quarter of 2008, Rates represented 46.8 percent of BGC Partners' total revenues, Credit 22.6 percent, Foreign Exchange 11.1 percent, and Other Asset Classes 10.6 percent.

The Company recorded increases in volumes and revenues from the fully electronic trading of new products, especially credit default swaps and foreign exchange options. As the percentage of fully electronic brokerage revenues from new products rises, the Company expects this to have a meaningful and positive impact on distributable earnings margins. Overall quarterly revenues related to fully electronic trading(3) remained flat year-over-year on an absolute basis, and represented 6.9 percent of total Company revenues in the second quarter of 2008 versus 8.0 percent in the prior year period.

The Company's compensation and employee benefits were 57.9 percent of total revenues on a GAAP basis and 57.2 percent on a distributable earnings basis in the second quarter of 2008, compared to 58.5 percent in the second quarter of 2007 on both a GAAP and distributable earnings basis. Other expenses were 29.1 percent of revenue in the second quarter of 2008 on a GAAP basis and 29.0 percent on a distributable earnings basis, versus 37.5 percent and 35.3 percent, respectively, in the prior-year period.

The Company recorded GAAP net income from continuing operations before minority interest and taxes of $32.1 million and GAAP net income for fully diluted shares of $30.1 million or $0.16 per fully diluted share in the second quarter of 2008. This compares to GAAP net income from continuing operations before minority interest and taxes of $10.8 million and GAAP net income for fully diluted shares of $12.7 million or $0.07 per fully diluted share recorded in the second quarter of 2007.

In the second quarter of 2008, BGC Partners' pre-tax distributable earnings were $42.3 million or $0.22 per fully diluted share, compared to $17.1 million or $0.09 per fully diluted share in the second quarter of 2007. BGC Partners recorded post-tax distributable earnings of $32.2 million or $0.17 per fully diluted share in the second quarter of 2008 compared to $18.9 million or $0.10 per fully diluted share in the second quarter of 2007.

The effective tax rate for distributable earnings was 22.1 percent in the second quarter of 2008 versus a tax benefit of 15.7 percent in the prior year's June quarter. The Company had a fully diluted weighted average share count of 190.1 million for the second quarter of 2008, compared to 185.3 million in the year earlier period. At of the end of June, 2008, the Company had a fully diluted share count of 199.9 million, including in-the-money options.

As of June 30, 2008, BGC Partners had 1,281 voice/hybrid brokers, versus 1,204 voice/hybrid brokers as of June 30, 2007. Average voice/hybrid brokerage revenue per voice/hybrid broker increased by 11.3 percent to approximately $211,000 in the second quarter of 2008 compared to approximately $189,000 in the year-earlier quarter.

Cash Position

As of June 30, 2008, the Company's cash and cash equivalents and reverse repurchase agreements were $482.7 million while long-term debt was $150.0 million. In comparison, as of December 31, 2007, the Company's cash and cash equivalents, reverse repurchase agreements, and secured loan receivable from Cantor were $490.5 million and BGC Partners' long-term debt was $196.8 million.

Third Quarter Outlook

The Company expects to generate revenues of between $280 million and $300 million in the third quarter of 2008, compared with $299.4 million in the prior year period. This revenue outlook incorporates the approximately 10 percent increase in BGC Partners' monthly revenue in July of 2008 and a return to normal seasonality for August of 2008. The Company expects third quarter 2008 pre-tax distributable earnings of approximately $33 million to $40 million, which would be an increase of approximately 50 to 80 percent compared to the year-earlier quarter. The Company expects third quarter 2008 post-tax distributable earnings to increase by approximately 50 to 80 percent compared to the prior-year period and to be in the range of $26 million to $31 million.

The Company's compensation and employee benefits are expected to remain between 55 and 60 percent of total revenues for the full year 2008, exclusive of the previously disclosed first quarter non-cash compensation charges of $86.8 million.(4)

The Company still anticipates having an effective tax rate for distributable earnings of approximately 22 percent in 2008 and approximately 27 percent for 2009 and thereafter.

The outlook for BGC Partners contained in this release does not include the potentially positive impact of any accretive acquisitions, any significant increase in brokerage headcount, or a material change in the percentage of revenues from or related to fully electronic trading, Software Solutions, and Market Data. The Company intends to pursue these developments, which could have a significant beneficial effect on its revenues and distributable earnings margins were they to occur.

Quarterly Dividend

BGC Partners intends to pay not less than 75 percent of its post-tax distributable earnings per fully diluted share as cash dividends to all common stockholders. Under this policy, the Company's Board of Directors has declared a quarterly cash dividend of $0.13 per share payable on September 30, 2008 to Class A and Class B stockholders of record as of September 15, 2008. The Company plans to use the balance of its second quarter of 2008 post-tax distributable earnings, after distributions to all partnership units and dividend payments to common stockholders, to buy back shares or partnership units before the end of 2008. Given the Company's outlook, BGC Partners expects to pay another quarterly cash dividend of $0.13 per share for the third quarter of 2008 to all Class A and Class B stockholders in December, 2008.

Conference Call

BGC Partners will host a conference call on Wednesday, August 6, at 8:30 a.m. ET to discuss the results and outlook contained in this release. Investors can access the call at the "Investor Relations" section at http://www.bgcpartners.com and must have a Real Media or Windows Media plug-in and headphones or speakers in order to listen to the webcast or its replay. Additionally, call participants may dial in with the following information:

DIAL IN:                  888-680-0878
INTERNATIONAL DIAL IN:    617-213-4855
PARTICIPANT PASSCODE:     43226393
PRE REGISTRATION:         Yes
PARTICIPANT URL:          https://www.theconferencingservice.com/
                           prereg/key.process?key=PXNBKAUCV
                          (Due to its length, this URL may need to be
                           copied/pasted into your Internet browser's
                           address field. Remove the extra space if
                           one exists.)
REPLAY AVAILABLE FROM/TO: 08/06/2008 10:30 AM ET / 08/13/2008 11:59 PM
                           ET
REPLAY DIAL IN:           888-286-8010
INTERNATIONAL REPLAY:     617-801-6888
REPLAY PASSCODE:          61761191

(1) Because of BGC Partners' merger with and into eSpeed, this release discusses historical financial results on a consolidated basis.

(2) See the section of this release entitled "Distributable Earnings" for a definition of this term.

(3) This includes fees captured in both the "total brokerage revenues" and "fees from related party" line items. These differing categorizations of fees for fully electronic trading have no impact on margins or revenues.

(4) See the section of this release entitled "Distributable Earnings" for a discussion of this non-cash charge.

About BGC Partners, Inc.

BGC Partners, Inc. (Nasdaq: BGCP) is a leading, fast growing, and global inter-dealer broker, specializing in the brokering of financial instruments and related derivatives products. BGC Partners provides integrated voice, hybrid, and fully electronic execution and other brokerage services to the world's largest and most creditworthy banks, broker-dealers, investment banks, trading firms, and investment firms for a broad range of global financial products, including fixed income securities, interest rate swaps, foreign exchange, equity derivatives, credit derivatives, futures, commodities, structured products, and other instruments.

Through its eSpeed and BGC Trader brands, BGC Partners uses its proprietary, built, and paid for technology to operate multiple buyer, multiple seller real-time electronic marketplaces for the world's most liquid capital markets. The Company's pioneering suite of tools provides end-to-end transaction solutions for the purchase and sale of financial products over its global private network or via the Internet. BGC Partners' neutral platform, reliable network, straight-through processing and superior products make it the trusted source for electronic trading for the world's largest financial firms. Through its BGCantor Market Data brand, the Company also offers globally distributed and innovative market data and analysis products for numerous financial instruments and markets.

BGC's unique partnership structure and extensive employee ownership creates a distinctive competitive advantage among its peers. Named after fixed income trading innovator B. Gerald Cantor, BGC Partners has 16 offices in New York and London, as well as in Beijing (representative office), Chicago, Copenhagen, Hong Kong, Istanbul, Johannesburg, Mexico City, Nyon, Paris, Seoul, Singapore, Sydney, Tokyo and Toronto.

Distributable Earnings

"Pre-tax distributable earnings "and "post-tax distributable earnings" are supplemental measures of operating performance that will be used by management to evaluate the performance of BGC Partners and its subsidiaries. We believe that distributable earnings best reflects the operating earnings generated by the Company on a consolidated basis and are the earnings which management considers available for distribution to BGC Partners, Inc. and its common stockholders as well as to holders of BGC Holdings partnership units during any period. As compared to "income (loss) from continuing operations before minority interest and income taxes", "net income (loss) for fully diluted shares," and "fully diluted earnings per share," all prepared in accordance with GAAP, distributable earnings calculations exclude certain non-cash compensation and other expenses which do not involve the receipt or outlay of cash by BGC Partners, and which do not dilute existing stockholders, as described below.

Pre-tax distributable earnings are defined as GAAP income (loss) from continuing operations before minority interest and income taxes and exclude the following items:

-- Non-cash stock based equity compensation charges, for equity granted or issued prior to the merger of BGC Partners with and into eSpeed, as well as post-merger non-cash, non-dilutive equity-based compensation related to REU conversion;

-- Non-cash undistributed income or non-cash loss from BGC Partners' equity investments such as Aqua Securities, L.P. ("Aqua") and ELX Electronic Liquidity Exchange ("ELX");

-- Allocation of net income to founding/working partner units and REUs; and

-- Non-cash asset impairment charges, if any.

Since distributable earnings are calculated on a pre-tax basis, management intends to also report "post-tax distributable earnings" and "post-tax distributable earnings per fully diluted share":

-- Post-tax distributable earnings are defined as pre-tax distributable earnings adjusted to assume that all pre-tax distributable earnings were taxed at the same effective rate.

-- Post-tax distributable earnings per fully diluted share are defined as post-tax distributable earnings divided by the weighted average number of fully diluted shares for the period.

In addition to the pro rata distribution of net income to BGC Holdings founding partner units and to Cantor for its minority interest, BGC Partners, Inc. also expects to pay a quarterly dividend to its stockholders. The amount of all of these payments is expected to be determined using the same definition of distributable earnings. The dividend to stockholders is expected to be calculated based on post-tax distributable earnings allocated to BGC Partners, Inc. and generated over the fiscal quarter ending prior to the record date for the dividend.

Distributable earnings is not meant to be an exact measure of cash generated by operations and available for distribution, nor should it be considered in isolation or as an alternative to cash flow from operations or income (loss) for fully diluted shares. Distributable earnings is a metric that is not necessarily indicative of liquidity or cash to fund our operations.

Pre- and post-tax distributable earnings are not intended to replace the presentation of BGC Partners, Inc.'s GAAP financial results. However, management does believe that they will help provide investors with a clearer understanding of the Company's financial performance and offer useful information to both management and investors regarding certain financial and business trends related to our financial condition and results from operations. In addition, management uses these measures for reviewing the financial results for BGC Partners, Inc. and in evaluating its financial performance. Management believes that distributable earnings and the GAAP measures of the Company's financial performance should be considered together.

The Company's first quarter and full year 2008 results for distributable earnings exclude $86.8 million in non-cash compensations charges, which consisted of:

-- Non-cash charges related to redemptions of partnerships units issued prior to the merger in order to settle outstanding loan obligations of certain executives and senior managers to Cantor and other institutions. The pre-merger issuance of this equity was dilutive to Cantor.

-- Non-cash charges related to additional pre-merger grants of founding partner interests to certain executives and senior managers and the activation of exchangeability of founding partner interests granted pre-merger to certain executives. The pre-merger issuance of this equity was dilutive to Cantor;

-- Non-cash charges related to compensation expense related to restricted equity units in BGC Holdings, L.P., and restricted stock units granted pre-merger.

In addition, BGC Partners' first quarter and full year 2008 final results for distributable earnings exclude $1.8 million in non-cash loss from BGC Partners' equity investments.

Management does not anticipate providing an outlook for GAAP "income (loss) from continuing operations before minority interest and income taxes", "net income (loss) for fully diluted shares," and "fully diluted earnings per share", because the items previously identified as excluded from pre-tax distributable earnings and post-tax distributable earnings are difficult to forecast. Management will instead provide its outlook only as it relates to pre- and post-tax distributable earnings.

For more information on this topic, please see the table in this release entitled "Reconciliation Between GAAP and Distributable Earnings", which provides a summary reconciliation between pre- and post-tax distributable earnings and GAAP net income (loss) for fully diluted shares and GAAP Income (loss) from continuing operations before minority interest and income taxes for the Company for the first and second quarters of 2008 and 2007.

Discussion of Forward-Looking Statements

The information in this release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements.

The actual results of BGC Partners, Inc. ("we," "our", or the "Company") and the outcome and timing of certain events may differ significantly from the expectations discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy for the Company include, but are not limited to, our relationship with Cantor and its affiliates and any related conflicts of interests, competition for and retention of brokers and other managers and key employees, pricing and commissions and market position with respect to any of our products, and that of our competitors, the effect of industry concentration and consolidation, and market conditions, including trading volume and volatility, as well as economic or geopolitical conditions or uncertainties. Results may also be affected by the extensive regulation of our businesses and risks relating to compliance matters, as well as factors related to specific transactions or series of transactions, including credit, performance and unmatched principal risk as well as counterparty failure. Factors may also include the costs and expenses of developing, maintaining and protecting intellectual property, including judgments or settlements paid or received in connection with intellectual property or employment or other litigation and their related costs, and certain financial risks, including the possibility of future losses and negative cash flow from operations, risks of obtaining financing and risks of the resulting leverage, as well as interest and currency rate fluctuations. Our ability to meet expectations with respect to payment of dividends, if any, will depend from period to period on our business and financial condition, our available cash, accounting or other charges and other factors relating to our business and financial condition and needs at the time.

Discrepancies may also result from such factors as the ability to enter new markets or develop new products, trading desks, marketplaces or services and to induce customers to use these products, trading desks, marketplaces or services, to secure and maintain market share, to enter into marketing and strategic alliances, and other transactions, including acquisitions, dispositions, reorganizations, partnering opportunities, and joint ventures, and the integration of any completed transactions, to hire new personnel, to expand the use of technology and to effectively manage any growth that may be achieved. Results are also subject to risks relating to the separation of the BGC businesses and merger and the relationship between the various entities, financial reporting, accounting and internal control factors, including identification of any material weaknesses in our internal controls, our ability to prepare historical and pro forma financial statements and reports in a timely manner, and other factors, including those that are discussed under "Risk Factors" in eSpeed Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on March 17, 2008; in eSpeed's definitive proxy statement, which was filed with the SEC on February 11, 2008; and in BGC Partners' final prospectus, which was filed with the SEC on June 6, 2008.

We believe that all forward-looking statements are based upon reasonable assumptions when made. However, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that accordingly you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made and we undertake no obligation to update these statements in light of subsequent events or developments.

                          BGC PARTNERS, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH
                                 GAAP
                (in thousands, except per share data)
                             (unaudited)

                                               June 30,   December 31,
                                                 2008         2007
                                             ------------ ------------
Assets
Cash and cash equivalents                    $   305,505  $   277,299
Cash segregated under regulatory
 requirements                                      2,109        2,683
Reverse repurchase agreements                    177,209      148,249
Loan receivable from related party                     -       65,000
Securities owned, at fair value                   31,672       34,088
Receivables from brokers, dealers, clearing
 organizations, customers and related
 broker-dealers                                  618,488      221,079
Accrued commissions receivable                   156,988      140,887
Forgivable and other loans receivable from
 employees and partners                           67,965       63,304
Fixed assets, net                                137,991      137,815
Investments                                       29,748       12,264
Goodwill                                          67,826       62,826
Other intangible assets, net                      14,529       15,676
Receivable from related parties                  102,790      131,811
Other assets                                      68,204       64,648
                                             ------------ ------------
   Total assets                              $ 1,781,024  $ 1,377,629
                                             ============ ============

Liabilities and Stockholders' and Members'
 Equity
Accrued compensation                         $   107,455  $    85,470
Payables to brokers, dealers, clearing
 organizations, customers and related
 broker-dealers                                  400,500      270,465
Securities loaned                                289,117            -
Payable to related parties                       120,512      139,500
Accounts payable and accrued liabilities         209,876      206,847
Deferred revenue                                  18,843        6,852
Long-term debt to related parties                      -      196,818
Long-term debt                                   150,000            -
                                             ------------ ------------
   Total liabilities                           1,296,303      905,952
Commitments, contingencies and guarantees              -            -
Redeemable partnership interest (a)              106,221
Minority interest (a)                            190,186        2,352
Stockholders' and members' equity
   Members' equity                                     -      235,454

Class A common stock, par value $0.01 per
 share 500,000 shares authorized; 57,582 and
 36,796 shares issued at June 30, 2008 and
 December 31, 2007, respectively, and 50,905
 and 30,294 shares outstanding at June 30,
 2008 and December 31, 2007, respectively            576          368

Class B common stock, par value $0.01 per
 share 100,000 shares authorized; 31,848 and
 20,498 shares outstanding at June 30, 2008
 and December 31, 2007, respectively,
 convertible into Class A common stock               318          205
Additional paid-in capital                       297,814      313,238

Treasury stock, at cost: 6,677 and 6,502
 shares of Class A common stock at June 30,
 2008 and
December 31, 2007, respectively                  (63,948)     (62,597)
Retained deficit                                 (46,446)     (17,282)
Accumulated other comprehensive loss                   -          (61)
                                             ------------ ------------
   Total stockholders' and members' equity
    (a)                                          188,314      469,325

  Total liabilities and stockholders' and
   members' equity                           $ 1,781,024  $ 1,377,629
                                             ============ ============

(a) Total Capital for BGC Partners, Inc. as at June 30, 2008 equals
 $484,721 and is comprised of redeemable partnership interest,
 minority interests and total stockholders' equity.

                          BGC PARTNERS, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH
                                 GAAP
                (in thousands, except per share data)
                             (unaudited)


                      Three Months Ended June  Six Months Ended June
                                30,                      30,
                      -----------------------  -----------------------
                         2008        2007         2008        2007
                      ----------- -----------  ----------- -----------
                         (in thousands, except for per share data)
Revenues:
  Commissions         $  212,541  $  190,711   $  466,572  $  380,815
  Principal
   transactions           66,062      58,263      117,958     111,273
  Fees from related
   parties                18,599       7,898       39,512      18,791
  Market data              5,101       5,359       10,645       9,732
  Software solutions       1,454       2,778        3,537       6,342
  Interest income          3,931       5,945        7,784      15,012
  Other revenues          (2,216)      2,002       (1,630)      4,067
                      ----------- -----------  ----------- -----------
      Total revenues     305,472     272,956      644,378     546,032


Expenses:
  Compensation and
   employee benefits     176,921     159,613      451,466     318,320
  Allocation of net
   income to
   founding/working
   partners units          7,133           -        7,133           -
  Allocation of net
   income to REUs            252           -          252           -
                      ----------- -----------  ----------- -----------
   Total compensation
    and employee
    benefits             184,306     159,613      458,851     318,320
  Occupancy and
   equipment              28,775      29,581       59,497      59,030
  Fees to related
   parties                 3,140       4,607        9,680      10,963
  Professional and
   consulting fees        11,803      14,329       27,349      23,854
  Communications          17,041      13,950       33,761      28,068
  Selling and
   promotion              15,070      13,795       30,305      26,799
  Commissions and
   floor brokerage         6,185       2,588        9,898       7,966
  Interest expense         3,628       9,065       11,291      18,748
  Other expenses           3,391      14,580       11,422      19,908
                      ----------- -----------  ----------- -----------
       Total expenses    273,339     262,108      652,054     513,656
                      ----------- -----------  ----------- -----------
  GAAP income (loss)
   from continuing
   operations before
   minority interest
   and income taxes       32,133      10,848       (7,676)     32,376
  Minority interest       11,426         894       12,080       1,049
  Provision (benefit)
   for income taxes        8,723      (2,697)      16,793        (365)
                      ----------- -----------  ----------- -----------
  GAAP net income
   (loss) available
   to common
   stockholders       $   11,984  $   12,651   $  (36,549) $   31,692
                      =========== ===========  =========== ===========


Per share data:

 Basic earnings
  (loss) per share
  Net income (loss)
   available to
   common
   stockholders       $   11,984  $   12,651   $  (36,549) $   31,692
                      =========== ===========  =========== ===========
  Basic earnings
   (loss) per share   $     0.16  $     0.07   $    (0.28) $     0.17
                      =========== ===========  =========== ===========
  Basic weighted
   average shares of
   common stock
   outstanding            75,194     184,308      130,081     184,295
                      =========== ===========  =========== ===========

 Fully diluted
  earnings (loss) per
  share (a)
  Net income (loss)
   for fully diluted
   shares             $   30,069  $   12,651   $  (18,464) $   31,692
                      =========== ===========  =========== ===========
  Fully diluted
   earnings (loss)
   per share          $     0.16  $     0.07   $    (0.10) $     0.17
                      =========== ===========  =========== ===========
  Diluted weighted
   average shares of
   common stock
   outstanding           190,121     185,353      188,493     185,451
                      =========== ===========  =========== ===========
(a) For 2008, fully diluted earnings (loss) per share is computed from
 the summation of the GAAP net income (loss) available to common
 stockholders, the allocation of net income to founding/working
 partners units, the allocation of net income to REUs and the minority
 interest allocation to Cantor of $10.7 million for the quarter ended
 June 30, 2008.  Prior to the merger in 2008 of BGC Partners Inc. and
 eSpeed, Inc. there was no allocation of income to these unit holders.

BGC Partners, Inc.
NON-GAAP DISTRIBUTABLE EARNINGS AND KEY METRICS
2007 and 2008 Comparisons


                               ---------------------------------------
(in thousands, except per
 share data)                                    2008
                               ---------------------------------------
                                                      Six Months Ended
                                  Q1    (a)    Q2         June 30
                               ---------    --------- ----------------
Revenues:
 Brokerage revenues:
 Rates                         $152,450     $143,100  $       295,550
 Credit                          87,193       69,114          156,307
 Foreign exchange                37,466       34,048           71,514
 Other asset classes             28,818       32,341           61,159
                               ---------    --------- ----------------
   Total brokerage revenues     305,927      278,603          584,530

 Market data and software
  solutions                       7,627        6,555           14,182
 Fees from related parties,
  interest and other revenues    24,781       21,590           46,371
                               ---------    --------- ----------------
   Total revenues               338,335      306,748          645,083
                               ---------    --------- ----------------


Expenses:
 Compensation and employee
  benefits (b)                  187,776      175,450          363,226
 Other expenses                  99,761       89,033          188,794
                               ---------    --------- ----------------
   Total expenses               287,537      264,483          552,020
                               ---------    --------- ----------------

Pre-tax Distributable
 Earnings, before minority
 interest and taxes              50,798       42,265           93,063

Minority interest (c)               654          726            1,380
Provision for income taxes       10,703        9,327           20,030
                               ---------    --------- ----------------

Post-tax distributable
 earnings to fully diluted
 shareholders                  $ 39,441     $ 32,212  $        71,654
                               =========    ========= ================

Earnings per share:
 Fully diluted pre-tax
  distributable earnings per
  share                        $   0.27     $   0.22  $          0.49
                               =========    ========= ================
 Fully diluted post-tax
  distributable earnings per
  share                        $   0.21     $   0.17  $          0.38
                               =========    ========= ================

 Fully diluted weighted
  average shares of common
  stock outstanding             184,967      190,121          188,493


Total Revenues, per GAAP
 financials                     338,906      305,472          644,378

Compensation expense as a
 percent of revenues               55.4%        57.4%            56.4%

Pre-tax distributable earnings
 margins                           15.0%        13.8%            14.4%

Post-tax distributable
 earnings margins                  11.6%        10.5%            11.1%


                                  ------------------------------------
(in thousands, except per share
 data)                                          2007 (a)
                                  ------------------------------------
                                                      Six Months Ended
                                     Q1        Q2         June 30
                                  --------- --------- ----------------
Revenues:
 Brokerage revenues:
 Rates                            $146,277  $140,611  $       286,888
 Credit                             50,821    55,857          106,678
 Foreign exchange                   27,320    32,215           59,535
 Other asset classes                18,696    20,291           38,987
                                  --------- --------- ----------------
   Total brokerage revenues        243,114   248,974          492,088

 Market data and software
  solutions                          7,937     8,137           16,074
 Fees from related parties,
  interest and other revenues       22,025    15,845           37,870
                                  --------- --------- ----------------
   Total revenues                  273,076   272,956          546,032
                                  --------- --------- ----------------


Expenses:
 Compensation and employee
  benefits (b)                     158,707   159,613          318,320
 Other expenses                     90,524    96,217          186,741
                                  --------- --------- ----------------
   Total expenses                  249,231   255,830          505,061
                                  --------- --------- ----------------

Pre-tax Distributable Earnings,
 before minority interest and
 taxes                              23,845    17,126           40,971

Minority interest (c)                  155       894            1,049
Provision for income taxes           2,332    (2,697)            (365)
                                  --------- --------- ----------------

Post-tax distributable earnings
 to fully diluted shareholders    $ 21,358  $ 18,929  $        40,287
                                  ========= ========= ================

Earnings per share:
 Fully diluted pre-tax
  distributable earnings per
  share                           $   0.13  $   0.09  $          0.22
                                  ========= ========= ================
 Fully diluted post-tax
  distributable earnings per
  share                           $   0.12  $   0.10  $          0.22
                                  ========= ========= ================

 Fully diluted weighted average
  shares of common stock
  outstanding                      185,301   185,353          185,451


Total Revenues, per GAAP
 financials                        273,076   272,956          546,032

Compensation expense as a percent
 of revenues                          58.1%     58.5%            58.3%

Pre-tax distributable earnings
 margins                               8.7%      6.3%             7.5%

Post-tax distributable earnings
 margins                               7.8%      6.9%             7.4%

Notes
-----
(a) - All periods prior to April 1 of 2008 are presented on a pro
       forma basis to reflect the effects of the merger related debt
       restructure.
(b) - Compensation charges exclude all one-time merger related non-
       cash compensation, equity grants prior to the merger and
       allocations of income to Founding/Working Partners.
(C) - Minority interest allocation associated with joint ownership of
       administrative services company.

BGC Partners, Inc.
RECONCILIATION OF GAAP INCOME TO NON-GAAP DISTRIBUTABLE EARNINGS

(in thousands except per share
 data)
                                  ------------------------------------
                                                  2008
                                  ------------------------------------
                                                      Six Months Ended
                                     Q1        Q2         June 30
                                  --------- --------- ----------------
 GAAP income (loss) from
  continuing operations before
  minority interest and income
  taxes                           $(39,809) $ 32,133           (7,676)

  Allocation of net income to
   founding/working partners
   units                                 -     7,133            7,133

  Allocation of net income to
   REUs                                  -       252              252

  Pro forma adjustments for
   recapitalization (a)              2,042         -            2,042
                                  --------- --------- ----------------

 Pro forma pre-tax operating
  income (loss) available to
  fully diluted shareholders       (37,767)   39,518            1,751

 Pre-tax adjustments:

 Compensation expenses related to
  redemption of partnership units
  issued prior to the merger;
  additional pre-merger grants of
  founding partner interests to
  management and the activation
  of exchangeability of founding
  partner interests granted pre-
  merger                            84,063         -           84,063

 Charges related to compensation
  expense for restricted stock
  units and restricted equity
  units granted pre-merger           2,706     1,471            4,177

  Equity loss on investments         1,796     1,276            3,072

  Asset impairment charges               -         -                -
                                  --------- --------- ----------------

  Total pre-tax adjustments         88,565     2,747           91,312

 Pre-tax distributable earnings   $ 50,798  $ 42,265         $ 93,063
                                  ========= ========= ================


 GAAP net income (loss) available
  to common stockholders          $(48,533) $ 11,984         $(36,549)

  Allocation of net income to
   founding/working partners
   units                                 -     7,133            7,133

  Allocation of net income to
   REUs                                  -       252              252

  Allocation of net income to
   Cantor's minority interest            -    10,700           10,700

  Pro forma adjustments for
   recapitalization (a)              2,042         -            2,042
                                  --------- --------- ----------------

 Pro forma GAAP net income (loss)
  for fully diluted shares         (46,491)   30,069          (16,422)

 Total pre-tax adjustments (from
  above)                            88,565     2,747           91,312
 Income tax impact of pre-tax
  adjustments                       (2,633)     (604)          (3,237)
                                  --------- --------- ----------------

 Post-tax distributable earnings  $ 39,441  $ 32,212         $ 71,653
                                  ========= ========= ================

 Pre-tax distributable earnings
  per share                       $   0.27  $   0.22
                                  ========= =========
 Post-tax distributable earnings
  per share                       $   0.21  $   0.17
                                  ========= =========


  Fully diluted weighted average
   shares of common stock
   outstanding                     184,967   190,121
                                  ========= =========


(in thousands except per share
 data)
                                    ----------------------------------
                                                   2007
                                    ----------------------------------
                                                      Six Months Ended
                                       Q1       Q2        June 30
                                    -------- -------- ----------------
 GAAP income (loss) from continuing
  operations before minority
  interest and income taxes         $ 21,528 $ 10,848 $         32,376

  Allocation of net income to
   founding/working partners units         -        -                -

  Allocation of net income to REUs         -        -                -

  Pro forma adjustments for
   recapitalization (a)                2,317    2,268            4,585
                                    -------- -------- ----------------

 Pro forma pre-tax operating income
  (loss) available to fully diluted
  shareholders                        23,845   13,116           36,961

 Pre-tax adjustments:

 Compensation expenses related to
  redemption of partnership units
  issued prior to the merger;
  additional pre-merger grants of
  founding partner interests to
  management and the activation of
  exchangeability of founding
  partner interests granted pre-
  merger                                   -        -                -

 Charges related to compensation
  expense for restricted stock
  units and restricted equity units
  granted pre-merger                       -        -                -

  Equity loss on investments               -        -                -

  Asset impairment charges                 -    4,010            4,010
                                    -------- -------- ----------------

  Total pre-tax adjustments                -    4,010            4,010

 Pre-tax distributable earnings     $ 23,845 $ 17,126 $         40,971
                                    ======== ======== ================


 GAAP net income (loss) available
  to common stockholders            $ 19,041 $ 12,651 $         31,692

  Allocation of net income to
   founding/working partners units         -        -                -

  Allocation of net income to REUs         -        -                -

  Allocation of net income to
   Cantor's minority interest              -        -                -

  Pro forma adjustments for
   recapitalization (a)                2,317    2,268            4,585
                                    -------- -------- ----------------

 Pro forma GAAP net income (loss)
  for fully diluted shares            21,358   14,919           36,277

 Total pre-tax adjustments (from
  above)                                   -    4,010            4,010
 Income tax impact of pre-tax
  adjustments                              -        -                -
                                    -------- -------- ----------------

 Post-tax distributable earnings    $ 21,358 $ 18,929 $         40,287
                                    ======== ======== ================

 Pre-tax distributable earnings per
  share                             $   0.13 $   0.09
                                    ======== ========
 Post-tax distributable earnings
  per share                         $   0.12 $   0.10
                                    ======== ========


  Fully diluted weighted average
   shares of common stock
   outstanding                       185,301  185,353
                                    ======== ========


(a) Reflects a net decrease in interest income and interest expense
 related to the separation and recapitalization transactions in
 connection with the merger.

BGC Partners, Inc. Quarterly Market Activity Report
The following table provides certain volume and transaction count
 information on BGC Partner's eSpeed system for the periods indicated.


                               ---------------------------------------
                                 2Q07      3Q07      4Q07      1Q08
                               ---------------------------------------
Volume (in billions)
----------------------------
Fully Electronic Volume -
 Excluding New Products*          10,281    12,689    11,364    13,155
Fully Electronic Volume - New
 Products**                        1,066       990     1,335     1,405
                               ---------------------------------------
Total Fully Electronic Volume     11,347    13,679    12,699    14,560

Voice-Assisted Volume              9,820    10,883     9,769    12,967
Screen-Assisted Volume             7,317     8,438     7,503     9,016
   Total Hybrid Volume***         17,137    19,321    17,272    21,983

                               ---------------------------------------
   Total Volume                   28,484    33,000    29,971    36,543
                               =======================================

Transaction Count
----------------------------
Fully Electronic Transactions
 - Excluding New Products      1,749,219 2,660,756 2,810,937 3,865,649
Fully Electronic Transactions
 - New Products**                153,673   128,425   125,631   248,286
                               ---------------------------------------
  Total Fully Electronic
   Transactions                1,902,892 2,789,181 2,936,568 4,113,935

Voice-Assisted Transactions      209,504   216,436   202,500   232,137
Screen-Assisted Transactions     114,320   119,370   116,826   135,671
  Total Hybrid Transactions      323,824   335,806   319,326   367,808

                               ---------------------------------------
  Total Transactions           2,226,716 3,124,987 3,255,894 4,481,743
                               =======================================

Trading Days                          64        63        62        61


                                              % Change     % Change
                                 ------------------------------------
                                    2Q08    2Q08 vs 1Q08 2Q08 vs 2Q07
                                 ----------
Volume (in billions)
-------------------------------
Fully Electronic Volume -
 Excluding New Products*             11,043      (16.1%)        7.4%
Fully Electronic Volume - New
 Products**                           2,054       46.2%        92.6%
                                 ------------------------------------
Total Fully Electronic Volume        13,097      (10.0%)       15.4%

Voice-Assisted Volume                13,010        0.3%        32.5%
Screen-Assisted Volume                8,956       (0.7%)       22.4%
   Total Hybrid Volume***            21,966       (0.1%)       28.2%

                                 ------------------------------------
   Total Volume                      35,063       (4.1%)       23.1%
                                 ====================================

Transaction Count
-------------------------------
Fully Electronic Transactions -
 Excluding New Products           3,530,869       (8.7%)      101.9%
Fully Electronic Transactions -
 New Products**                     330,361       33.1%       115.0%
                                 ------------------------------------
  Total Fully Electronic
   Transactions                   3,861,230       (6.1%)      102.9%

Voice-Assisted Transactions         206,572      (11.0%)       (1.4%)
Screen-Assisted Transactions        134,422       (0.9%)       17.6%
  Total Hybrid Transactions         340,994       (7.3%)        5.3%

                                 ------------------------------------
  Total Transactions              4,202,224       (6.2%)       88.7%
                                 ====================================

Trading Days                             64


* Defined as U.S. Treasuries, Canadian Sovereigns and European
 Government Bonds.
** New Products defined as Foreign Exchange, Interest Rate Swaps,
 Repos, Futures, and Credit Default Swaps.
*** Defined notional volume from Hybrid transactions conducted by BGC
 brokers using the eSpeed system, exclusive of voice-only
 transactions.


                          2Q07        3Q07        4Q07        1Q08
                       -----------------------------------------------

Global Interest Rate
 Futures Volume (1)
 CBOT - US Treasury
  Contracts            171,180,151 190,159,708 169,104,983 194,563,399
 CME - Euro $
  Contracts            148,244,973 180,358,177 140,142,461 191,121,345
 EUREX - Bund
  Contracts             88,867,284  91,302,644  72,162,362  84,683,863

Fed UST Primary Dealer
 Volume (in billions)
 (2)
 UST Volume                 33,100      39,414      35,044      41,815
 Average Daily UST
  Volume                       517         626         565         685


NYSE - Volume (shares
 traded) - in millions
 (3)                       127,755     145,470     135,045     158,453
 Transaction Value -
  in millions            5,339,909   6,015,397   5,577,200   5,781,700

NASDAQ - Volume
 (shares traded) - in
 millions (4)              134,007     136,916     139,202     149,378
 Transaction Value -
  in millions            3,526,949   3,896,657   4,536,801   4,363,261

                                              % Change     % Change
                                   2Q08     2Q08 vs 1Q08 2Q08 vs 2Q07
                               ------------

Global Interest Rate Futures
 Volume (1)
 CBOT - US Treasury Contracts   156,735,725      (19.4%)       (8.4%)
 CME - Euro $ Contracts         165,141,437      (13.6%)       11.4%
 EUREX - Bund Contracts          65,580,034      (22.6%)      (26.2%)

Fed UST Primary Dealer Volume
 (in billions) (2)
 UST Volume                          35,689      (14.7%)        7.8%
 Average Daily UST Volume               558      (18.7%)        7.8%


NYSE - Volume (shares traded) -
 in millions (3)                    140,709      (11.2%)       10.1%
 Transaction Value - in
  millions                        5,207,000       (9.9%)       (2.5%)

NASDAQ - Volume (shares traded)
 - in millions (4)                  134,511      (10.0%)        0.4%
 Transaction Value - in
  millions                        3,912,200      (10.3%)       10.9%


                                                   -------------------
                                                      Trading Days
                                                   -------------------
Sources:(1) Futures Industry Association - Monthly
         Volume Report - (www.cme.com,
         www.eurexchange.com)                             2008
                                                   -------------------
        (2)
         www.newyorkfed.org/markets/statrel.html -
         Federal Reserve Bank                       Q1   Q2   Q3   Q4
                                                   ---- ---- ---- ----
        (3) NYSE - www.nyse.com                     61   64   64   62
        (4) NASDAQ - www.nasdaqtrader.com
Note: CBOT Futures volume calculated based on per
 contract notional value of $200,000 for the two
 year contract and $100,000 for all others.               2007
                                                   -------------------
                                                    Q1   Q2   Q3   Q4
                                                   ---- ---- ---- ----
                                                    62   64   63   62

SOURCE: BGC Partners, Inc.

BGC Partners, Inc.
Media:
Florencia Panizza, 212-294-7938
fpanizza@bgcpartners.com
or
Investors:
Nneoma Njoku, 212-610-2297
nnjoku@bgcpartners.com
or
Jason McGruder, 212-829-4988
jmcgruder@bgcpartners.com