Annual report pursuant to section 13 and 15(d)

Segment Information

v2.4.0.8
Segment Information
 12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]  
Segment Information
Segment Information

The Company has two operating segments. The independent brokerage and advisory services segment includes the broker-dealer and investment advisory services provided by Securities America, Triad and Investacorp to their independent contractor financial advisors and wealth management services provided by Premier Trust. The Ladenburg segment includes the investment banking, sales and trading and asset management services and investment activities conducted by Ladenburg and LTAM.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for acquisition-related expense, amortization of retention loans and change in fair value of contingent consideration related to acquisitions, loss on extinguishment of debt, gains or losses on sales of assets and non-cash compensation expense, is the primary profit measure the Company's management uses in evaluating financial performance for its reportable segments. EBITDA, as adjusted, is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. The Company considers EBITDA, as adjusted, important in evaluating its financial performance on a consistent basis across various periods. Due to the significance of non-cash and non-recurring items, EBITDA, as adjusted, enables the Company's Board of Directors and management to monitor and evaluate the business on a consistent basis. The Company uses EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions. The Company believes that EBITDA, as adjusted, eliminates items that are not indicative of its core operating performance, such as amortization of retention loans for the Securities America acquisition, or do not involve a cash outlay, such as stock-related compensation. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.

Segment information for the years ended December 31, 2013, 2012 and 2011 is as follows:
 
 
Independent Brokerage and Advisory Services (5)
 
Ladenburg
 
Corporate
 
Total
2013
 
 
 
 
 
 
 
 
Revenues
 
$
723,246

(1)
$
69,603

(1)
$
267

(2)
$
793,116

Pre-tax income (loss)
 
4,850

 
11,689

 
(14,135
)
(3)(4)
2,404

EBITDA, as adjusted (6)
 
46,971

 
13,188

(4)
(8,534
)
(4)
51,625

Identifiable assets
 
320,239

 
33,950

 
6,631

 
360,820

Depreciation and amortization
 
14,475

 
791

 
49

 
15,315

Interest
 
12,527

 
75

 
2,836

 
15,438

Capital expenditures
 
4,898

 
1,963

 
—

 
6,861

Non-cash compensation
 
3,667

 
646

 
2,453

 
6,766

 
 
 
 
 
 
 
 
 
2012
 
  
 
  
 
  
 
  

Revenues
 
$
598,851

 
$
45,701

 
$
5,559

 
$
650,111

Pre-tax (loss) income
 
(6,087
)
 
65

 
(8,870
)
(3)
(14,892
)
EBITDA, as adjusted (6)
 
30,566

 
1,829

 
(1,891
)
 
30,504

Identifiable assets
 
318,005

 
17,636

 
2,488

 
338,129

Depreciation and amortization
 
15,158

 
835

 
68

 
16,061

Interest
 
19,803

 
79

 
4,659

 
24,541

Capital expenditures
 
5,356

 
115

 
6

 
5,477

Non-cash compensation
 
1,640

 
850

 
2,254

 
4,744

 
 
 
 
 
 
 
 
 
2011
 
  
 
  
 
  
 
  

Revenues
 
$
230,897

 
$
41,459

 
$
1,244

 
$
273,600

Pre-tax income (loss)
 
1,787

 
(3,131
)
 
(10,958
)
(3)
(12,302
)
EBITDA, as adjusted (6)
 
12,181

 
(1,032
)
 
(2,727
)
 
8,422

Identifiable assets
 
322,245

 
18,437

 
6,463

 
347,145

Depreciation and amortization
 
4,567

 
996

 
69

 
5,632

Interest
 
3,191

 
89

 
3,263

 
6,543

Capital expenditures
 
1,381

 
58

 
—

 
1,439

Non-cash compensation
 
1,072

 
1,014

 
1,928

 
4,014


(1)
Includes brokerage commissions of $4,240 and $908 in the Ladenburg and Independent brokerage and advisory services segments, respectively, related to the sale of the Company's Series A Preferred Stock (eliminated in consolidation).

(2)
Includes the elimination of $5,148 of revenue referred to in footnote (1).

(3)
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses.

(4)
Includes the elimination of $2,545, consisting of $5,148 of revenue, net of employee brokerage commission expenses of $2,603 charged to additional paid-in capital related to sale of the Company's Series A Preferred Stock.

(5)
Includes Securities America from November 4, 2011.

(6)
The following table reconciles EBITDA, as adjusted, to pre-tax income (loss) for the years ended December 31, 2013, 2012 and 2011:

 
 
Year Ended December 31,
EBITDA, as adjusted
 
2013
 
2012
 
2011
Independent Brokerage and Advisory Services
 
$
46,971

 
$
30,566

 
$
12,181

Ladenburg
 
13,188

 
1,829

 
(1,032
)
Corporate
 
(8,534
)
 
(1,891
)
 
(2,727
)
Total segments
 
51,625

 
30,504

 
8,422

Adjustments:
 
  

 
  

 
  

Interest income
 
194

 
185

 
70

Change in fair value of contingent consideration
 
(121
)
 
7,111

 
—

Loss on extinguishment of debt
 
(4,547
)
 
—

 
—

Interest expense
 
(15,438
)
 
(24,541
)
 
(6,543
)
Depreciation and amortization
 
(15,315
)
 
(16,061
)
 
(5,632
)
Non-cash compensation expense
 
(6,766
)
 
(4,744
)
 
(4,014
)
Amortization of retention loans
 
(7,160
)
 
(7,346
)
 
(1,634
)
Acquisition-related expense
 
—

 
—

 
(2,971
)
Loss attributable to noncontrolling interest
 
(68
)
 
—

 
—

Pre-tax income (loss)
 
$
2,404

 
$
(14,892
)
 
$
(12,302
)