August 07, 2014 04:05 PM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--FXCM Inc. (NYSE:FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended June 30, 2014, U.S. GAAP revenues of $97.9 million, compared to $140.1 million for the quarter ended June 30, 2013, a decrease of 30%. U.S. GAAP net loss attributable to FXCM Inc. was $3.1 million for the Second Quarter 2014 or $(0.08) per diluted share, compared to U.S. GAAP net income of $10.1 million or $0.32 per diluted share for the Second Quarter 2013, a decrease of 130% and 125% respectively.

“In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years”

For the six months ended June 30, 2014, U.S. GAAP revenues were $212.9 million, compared to $263.0 million for the six months ended June 30, 2013, a decrease of 19%. U.S. GAAP net loss attributable to FXCM Inc. was $1.0 million for the six months ended June 30, 2014 or $(0.03) per diluted share, compared to U.S. GAAP net income of $17.0 million or $0.55 per diluted share for the six months ended June 30, 2013, a decrease of 106% and 105% respectively.

“In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years,” said Drew Niv, Chief Executive Officer. “However, despite the difficult trading conditions, we continue to gain market share and had another strong quarter of growth in customer equity, in part reflecting our strong brand and competitive position. Since year-end 2013, we have grown customer equity by $121 million or 10% and believe we are well positioned for when market conditions improve.”

Adjusted Pro Forma EBITDA for the Second Quarter 2014 was $13.4 million, compared to $54.5 million for the Second Quarter 2013, a decrease of 75%. Adjusted Pro Forma Net Loss was $1.5 million or $(0.02) per share for the Second Quarter 2014, compared to Adjusted Pro Forma Net Income of $23.3 million or $0.31 per diluted, fully exchanged share for the Second Quarter 2013, a decrease of 107% and 106% respectively.

Adjusted Pro Forma EBITDA for the six months ended June 30, 2014 was $38.0 million, compared to $98.3 million for the six months ended June 30, 2013, a decrease of 61%. Adjusted Pro Forma Net Income was $3.7 million or $0.05 per share for the six months ended June 30, 2014, compared to $40.8 million or $0.54 per diluted, fully exchanged share for the six months ended June 30, 2013, a decrease of 91% and 91% respectively.

Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC Units into FXCM Inc. Class A common stock, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity's tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges and certain equity based compensation expense granted at the time of FXCM's initial public offering in December 2010.

FXCM Inc. today announced certain key operating metrics for July 2014 for its retail and institutional foreign exchange businesses. Monthly activities included:

July 2014 Operating Metrics

Retail Trading Metrics

• Retail customer trading volume(1) of $263 billion in July 2014, 4% higher than June 2014 and 32% lower than July 2013.
• Average retail customer trading volume(1) per day of $11.4 billion in July 2014, 6% lower than June 2014 and 33% lower than July 2013.
• An average of 345,589 retail client trades per day in July 2014, 1% lower than June 2014 and 24% lower than July 2013.
• Tradeable accounts(2) of 201,794 as of July 30, 2014, an decrease of 6,571, or 3%, from June 2014, and an increase of 7,275,or 4%, from July 2013.

Institutional Trading Metrics

• Institutional customer trading volume⁽¹⁾ of $262 billion in July 2014, 16% higher than June 2014 and 42% higher than July 2013.
• Average institutional trading volume⁽¹⁾ per day of $11.4 billion in July 2014, 6% higher than June 2014 and 43% higher than July 2013.
• An average of 45,223 institutional client trades per day in July 2014, 17% lower than June 2014 and 2% higher than July 2013.

More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company's corporate website www.fxcm.com.

This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website www.fxcm.com.

⁽¹⁾ Volume that FXCM customers traded in period is translated into US dollars.

⁽²⁾ A Tradeable Account is an account with sufficient funds to place a trade in accordance with FXCM trading policies.

Condensed Consolidated U.S. GAAP and Adjusted Pro Forma Results
		Unaudited													Unaudited
		U.S. GAAP (thousands, except per share amounts)													U.S. GAAP (thousands, except per share amounts)
		Three Months Ended June 30,													Six Months Ended June 30,
		2014				2013				% Change					2014				2013				% Change
Total net revenues		$	97,927			$	140,133			-30	%				$	212,935			$	262,997			-19	%
Compensation and benefits			28,821				26,587			8	%					58,711				50,120			17	%
Allocation of net income to Lucid members for services provided			2,315				15,004			-85	%					5,288				15,004			-65	%
Total compensation and benefits			31,136				41,591			-25	%					63,999				65,124			-2	%
Referring broker fees			16,495				22,422			-26	%					35,617				43,772			-19	%
Other expenses			42,756				38,306			12	%					85,746				74,421			15	%
Loss on equity method investments, net			224				397			-44	%					534				545			-2	%
Depreciation and amortization			13,122				12,481			5	%					25,752				24,455			5	%
Interest on borrowings			3,096				1,290			140	%					6,093				2,107			189	%
(Loss) Income before income taxes			(8,902	)			23,646			-138	%					(4,806	)			52,573			-109	%
Income tax (benefit) provision			(747	)			6,390			-112	%					504				14,349			-96	%
Net (Loss) Income			(8,155	)			17,256			-147	%					(5,310	)			38,224			-114	%
Net (loss) income attributable to non-controlling interest in FXCM Holdings, LLC			(2,209	)			14,093			-116	%					218				24,323			-99	%
Net loss attributable to other non-controlling interests			(2,868	)			(6,961	)		-59	%					(4,527	)			(3,083	)		47	%
Net (Loss) Income Attributable to FXCM Inc.		$	(3,078	)		$	10,124			-130	%				$	(1,001	)		$	16,984			-106	%
Weighted average Class A shares outstanding - Basic			40,287				30,695			31	%					37,793				29,589			28	%
Weighted average Class A shares outstanding - Diluted			40,287				31,829			27	%					37,793				30,759			23	%
Net (Loss) Income per Class A Share
Basic		$	(0.08	)		$	0.33			-123	%				$	(0.03	)		$	0.57			-105	%
Net (Loss) Income per Class A Share
Diluted		$	(0.08	)		$	0.32			-125	%				$	(0.03	)		$	0.55			-105	%
		Unaudited													Unaudited
		Adjusted Pro Forma (thousands, except per share amounts)													Adjusted Pro Forma (thousands, except per share amounts)
		Three Months Ended June 30,													Six Months Ended June 30,
		2014				2013				% Change					2014				2013				% Change
Total Net Revenues		$	97,927			$	140,133			-30	%				$	209,263			$	262,997			-20	%
Compensation and benefits			26,589				24,529			8	%					54,305				45,999			18	%
Allocation of net income to Lucid members for services provided			-				-			-						-				-
Total compensation and benefits			26,589				24,529			8	%					54,305				45,999			18	%
Referring broker fees			16,495				22,422			-26	%					35,617				43,772			-19	%
Loss on equity method investments, net			224				397			-44	%					534				545			-2	%
Other expenses			41,212				38,306			8	%					80,796				74,421			9	%
EBITDA			13,407				54,479			-75	%					38,011				98,260			-61	%
Depreciation and amortization			13,122				12,481			5	%					25,752				24,455			5	%
Interest on borrowings			3,096				1,290			140	%					6,093				2,107			189	%
(Loss) Income before income taxes			(2,811	)			40,708			-107	%					6,166				71,698			-91	%
Income tax (benefit) provision			(724	)			9,365			-108	%					1,454				18,960			-92	%
Net (Loss) Income			(2,087	)			31,343			-107	%					4,712				52,738			-91	%
Net income attributable to non-controlling interest in FXCM Holdings, LLC			-				-			-						-				-
Net (loss) income attributable to other non-controlling interests			(553	)			8,043			-107	%					1,051				11,921			-91	%
Net (Loss) Income Attributable to FXCM Inc.		$	(1,534	)		$	23,300			-107	%				$	3,661			$	40,817			-91	%
Pro forma fully exchanged, fully diluted weighted average shares outstanding			76,169				75,715			1	%					78,139				75,750			3	%
(Loss) Earnings Per Share		$	(0.02	)		$	0.31			-106	%				$	0.05			$	0.54			-91	%

Selected Operating Metrics
		(Unaudited)
		Three Months Ended June 30,											Six Months Ended June 30,
		2014			2013			% Change					2014			2013			% Change
Total retail trading volume ($ in billions)		$	769		$	1,152		-33	%				$	1,706		$	2,193		-22	%
Total institutional trading volume ($ in billions)		$	596		$	558		7	%				$	1,142		$	931		23	%
Total active accounts			178,536			182,225		-2	%					178,536			182,225		-2	%
Trading days in period			65			65		0	%					128			128		0	%
Daily average trades			348,825			516,960		-33	%					380,860			478,129		-20	%
Daily average trades per active account			2.0			2.8		-30	%					2.1			2.6		-19	%
Retail trading revenue per million traded		$	96		$	90		7	%				$	92		$	89		3	%
Total customer equity ($ in millions)		$	1,312.3		$	1,171.5		12	%				$	1,312.3		$	1,171.5		12	%

Non-GAAP Financial Measures

Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP.

Declaration of Quarterly Dividend

The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on October 1, 2014 to Class A stockholders of record at the close of business on September 5, 2014.

Conference Call

As previously announced, the Company will host a conference call to discuss the results at 4:45 p.m. (EDT). This conference call will be available to domestic participants by dialing 877.445.4603 and 443.295.9270 for international participants. The conference ID number is 78733735.

A live audio webcast, a copy of FXCM's earnings release, and presentation slides for this conference call will be available at http://ir.fxcm.com/.

Disclosure Regarding Forward-Looking Statements

In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s Annual Report on Form 10-K and other SEC filings, which are accessible on the SEC website at sec.gov.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Visit www.fxcm.com and follow us on Twitter @FXCM, Facebook FXCM, Google+ FXCM or YouTube FXCM.

About FXCM Inc.

FXCM Inc. (NYSE:FXCM) is a leading online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide.

At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference (“CFD”) products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.

Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.

ANNEX I

Schedule			Page Number
U.S. GAAP Results
Unaudited U.S. GAAP Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013			A-1
Unaudited U.S. GAAP Condensed Consolidated Statements of Financial Condition As of June 30, 2014 and December 31, 2013			A-2
Adjusted Pro Forma Results			A-3
Unaudited Adjusted Pro Forma and U.S. GAAP Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013			A-4
Reconciliation of non-GAAP Measures to nearest U.S. GAAP Results			A-5
Reconciliation of EBITDA to U.S. GAAP Net Income			A-6

FXCM Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
				Three Months Ended June 30,										Six Months Ended June 30,
				2014				2013						2014				2013
Revenues
Retail trading revenue				$	73,736			$	104,068					$	156,396			$	195,322
Institutional trading revenue					21,787				31,792						47,937				59,348
Trading revenue					95,523				135,860						204,333				254,670
Interest income					693				670						1,256				1,349
Brokerage interest expense					(164	)			(69	)					(260	)			(124	)
Net interest income					529				601						996				1,225
Other income					1,875				3,672						7,606				7,102
Total net revenues					97,927				140,133						212,935				262,997
Operating Expenses
Compensation and benefits					28,821				26,587						58,711				50,120
Allocation of net income to Lucid members for services provided					2,315				15,004						5,288				15,004
Total compensation and benefits					31,136				41,591						63,999				65,124
Referring broker fees					16,495				22,422						35,617				43,772
Advertising and marketing					7,084				6,157						13,581				13,508
Communication and technology					12,031				9,765						24,250				18,120
Trading costs, prime brokerage and clearing fees					8,030				8,961						16,236				16,899
General and administrative					15,611				13,423						31,679				25,894
Depreciation and amortization					13,122				12,481						25,752				24,455
Total operating expenses					103,509				114,800						211,114				207,772
Total operating (loss) income					(5,582	)			25,333						1,821				55,225
Other Expense
Loss on equity method investments, net					224				397						534				545
Interest on borrowings					3,096				1,290						6,093				2,107
(Loss) Income before income taxes					(8,902	)			23,646						(4,806	)			52,573
Income tax (benefit) provision					(747	)			6,390						504				14,349
Net (loss) income					(8,155	)			17,256						(5,310	)			38,224
Net (loss) income attributable to non-controlling interest in FXCM Holdings, LLC					(2,209	)			14,093						218				24,323
Net loss attributable to other non-controlling interests					(2,868	)			(6,961	)					(4,527	)			(3,083	)
Net (loss) income attributable to FXCM Inc.				$	(3,078	)		$	10,124					$	(1,001	)		$	16,984
Weighted average Class A shares outstanding - Basic					40,287				30,695						37,793				29,589
Weighted average Class A shares outstanding - Diluted					40,287				31,829						37,793				30,759
Net (Loss) Income per Class A Share
Basic				$	(0.08	)		$	0.33					$	(0.03	)		$	0.57
Diluted				$	(0.08	)		$	0.32					$	(0.03	)		$	0.55
A-1

FXCM Inc.
Condensed Consolidated Statements of Financial Condition
As of June 30, 2014 and December 31, 2013
(Amounts in thousands except share data)
				(Unaudited)
				June 30,						December 31,
				2014						2013
Assets
Current assets
Cash and cash equivalents				$	348,763					$	365,245
Cash and cash equivalents, held for customers					1,312,270						1,190,880
Trading securities					614						-
Due from brokers					24,357						5,450
Accounts receivables, net					13,170						9,953
Deferred tax asset					7,850						11,910
Notes receivable					-						5,992
Tax receivable					9,756						3,861
Total current assets					1,716,780						1,593,291
Deferred tax asset					171,266						166,576
Office, communication and computer equipment, net					50,654						49,165
Goodwill					328,891						307,936
Other intangible assets, net					69,269						76,713
Notes receivable					9,608						5,950
Other assets					29,482						24,316
Total assets				$	2,375,950					$	2,223,947
Liabilities and Equity
Current liabilities
Customer account liabilities				$	1,312,270					$	1,190,880
Accounts payable and accrued expenses					56,944						69,697
Credit agreement					25,000						-
Notes payable					7,460						9,800
Due to brokers					15,699						8,652
Securities sold, not yet purchased					3,435						-
Deferred tax liability					88						-
Due to related parties pursuant to tax receivable agreement					14,880						18,588
Total current liabilities					1,435,776						1,297,617
Deferred tax liability					3,439						3,687
Due to related parties pursuant to tax receivable agreement					137,157						131,670
Senior convertible notes					148,900						146,303
Other liabilities					5,957						9,289
Total liabilities					1,731,229						1,588,566
Commitments and Contingencies
Stockholders' Equity
Class A common stock, par value $0.01 per share;					459						447
3,000,000,000 shares authorized, 45,909,957 and 44,664,884 shares issued
and outstanding as of June 30, 2014 and December 31, 2013, respectively
Class B common stock, par value $0.01 per share;					1						1
1,000,000 shares authorized, 38 and 41 shares issued and outstanding
as of June 30, 2014 and December 31, 2013, respectively
Additional paid-in capital					256,508						245,426
Retained earnings					9,849						16,352
Accumulated other comprehensive loss					(2,817	)					(5,344	)
Total stockholders' equity, FXCM Inc.					264,000						256,882
Non-controlling interests					380,721						378,499
Total stockholders' equity					644,721						635,381
Total liabilities and stockholders' equity				$	2,375,950					$	2,223,947
A-2

Adjusted Pro Forma Results

Throughout the discussion of FXCM Inc.’s results, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), adjusted to exclude certain items and reflects the conversion of all units of FXCM Holdings, LLC for shares of Class A common stock of FXCM Inc. FXCM believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare FXCM’s results across several periods and facilitate an understanding of FXCM’s operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:

1. Assumed Exchange of Units of FXCM Holdings, LLC for FXCM Inc. Class A Shares. As a result of the exchange of FXCM Holdings units, the non-controlling interest related to these units is converted to controlling interest. The Company's management believes that it is useful to provide the per-share effect associated with the assumed exchange of all FXCM Holdings units.
2. Compensation Expense. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate expense relating to stock based compensation relating to the Company's initial public offering as well as costs associated with the acquisition of V3 Markets, LLC. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses.
3. Lucid Minority Interest/Compensation Expense. Our reported U.S. GAAP results reflect the portion of the 49.9% of Lucid earnings allocated among the non-controlling members of Lucid based on services provided as a component of compensation expense under "Allocation of Net Income to Lucid Members for Services Provided." Adjustments have been made to the Adjusted Pro Forma Earnings to reclassify this allocation of Lucid's earnings attributable to non-controlling members to "Net income (loss) attributable to other non-controlling interests." The Company's management believes that this reclassification provides a more meaningful view of the Company's operating expenses and the Company's economic arrangement with Lucid's non-controlling members. This adjustment has no impact on net income as reported by FXCM Inc.
4. Acquisition Costs/Income. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain acquisition related costs/income. Given the nature of these items, they are not viewed by management as expenses/income incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these items.
5. Regulatory Costs. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain costs (including client reimbursements) associated with ongoing discussions and settling certain regulatory matters. Given the nature of these expenses they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses.
6. Income Taxes. Prior to the initial public offering FXCM was organized as a series of limited liability companies and foreign corporations, and even following the initial public offering not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted Pro Forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C corporation in the U.S. at the prevailing corporate rates. This assumption is consistent with the assumption that all of FXCM Holdings' units are exchanged for shares of FXCM Inc. Class A common stock, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company. In addition, the Adjusted Pro Forma income tax provision reflects the tax effect of any adjusted pro forma adjustments.

A-3

FXCM Inc.
Adjusted Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
				Three Months Ended June 30,
				2014																		2013
				As											Adjusted							As											Adjusted
				Reported				Adjustments							Pro Forma							Reported				Adjustments							Pro Forma
Revenues
Retail trading revenue				$	73,736			$	-						$	73,736						$	104,068			$	-						$	104,068
Institutional trading revenue					21,787				-							21,787							31,792				-							31,792
Trading revenue					95,523				-							95,523							135,860				-							135,860
Interest income					693				-							693							670				-							670
Brokerage interest expense					(164	)			-							(164	)						(69	)			-							(69	)
Net interest income					529				-							529							601				-							601
Other income					1,875				-							1,875							3,672				-							3,672
Total net revenues					97,927				-							97,927							140,133				-							140,133
Operating Expenses
Compensation and benefits					28,821				(2,232	)		(2)				26,589							26,587				(2,058	)		(2)				24,529
Allocation of net income to Lucid members for services provided					2,315				(2,315	)		(4)				-							15,004				(15,004	)		(4)				-
Total compensation and benefits					31,136				(4,547	)						26,589							41,591				(17,062	)						24,529
Referring broker fees					16,495				-							16,495							22,422				-							22,422
Advertising and marketing					7,084				-							7,084							6,157				-							6,157
Communication and technology					12,031				-							12,031							9,765				-							9,765
Trading costs, prime brokerage and clearing fees					8,030				-							8,030							8,961				-							8,961
General and administrative					15,611				(1,544	)		(6)				14,067							13,423				-							13,423
Depreciation and amortization					13,122				-							13,122							12,481				-							12,481
Total operating expenses					103,509				(6,091	)						97,418							114,800				(17,062	)						97,738
Total operating (loss) income					(5,582	)			6,091							509							25,333				17,062							42,395
Loss on equity method investments, net					224				-							224							397				-							397
Interest on borrowings					3,096				-							3,096							1,290				-							1,290
(Loss) Income before income taxes					(8,902	)			6,091							(2,811	)						23,646				17,062							40,708
Income tax (benefit) provision					(747	)			23			(8)				(724	)						6,390				2,975			(8)				9,365
Net (loss) income					(8,155	)			6,068							(2,087	)						17,256				14,087							31,343
Net (loss) income attributable to non-controlling interest in FXCM Holdings, LLC					(2,209	)			2,209			(9)				-							14,093				(14,093	)		(9)				-
Net (loss) income attributable to other non-controlling interests					(2,868	)			2,315			(10)				(553	)						(6,961	)			15,004			(10)				8,043
Net (loss) income attributable to FXCM Inc.				$	(3,078	)		$	1,544						$	(1,534	)					$	10,124			$	13,176						$	23,300
Diluted weighted average shares outstanding as reported and pro forma fully exchanged, fully diluted weighted average shares outstanding					40,287											76,169			(11)				31,829											75,715			(11)
Diluted net (loss) income per share as reported and adjusted pro forma net (loss) income per fully exchanged, fully diluted weighted average shares outstanding				$	(0.08	)									$	(0.02	)					$	0.32										$	0.31

⁽¹⁾ Represents the elimination of a $3.7 million benefit recorded to reduce the contingent consideration related to the Faros acquisition.

⁽²⁾ Represents the elimination of IPO stock-based compensation.

⁽³⁾ Represents the elimination of $4.1 million of IPO stock-based compensation and $0.3 million of compensation cost related to the V3 Markets, LLC ("V3") acquisition.

⁽⁴⁾ Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes to Net (loss) income attributable to other non-controlling interests.

⁽⁵⁾ Represents the elimination of V3 acquisition costs.

⁽⁶⁾ Represents $0.2 million to eliminate costs associated with regulatory settlements and a $1.3 million charge related to a put option payment for Online Courses.

⁽⁷⁾ Represents the elimination of $0.7 million of V3 acquisition costs, $2.7 million to eliminate costs associated with regulatory settlements and a $1.3 million charge related to a put option payment for Online Courses.

⁽⁸⁾ Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 25.8% and 23.0% for the three months ended June 30, 2014 and 2013, respectively, and 23.6% and 26.4% for the six months ended June 30, 2014 and June 30, 2013, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC ("Holdings") units for shares of Class A common stock of the Company and reflects the tax effect of any proforma adjustments.

⁽⁹⁾ Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽¹⁰⁾ Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes to Net (loss) income attributable to other non-controlling interests and the impact of other proforma adjustments impacting non-controlling interests.

⁽¹¹⁾ Diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

A-4

FXCM Inc.
Reconciliation of Non-GAAP Measures to Nearest U.S. GAAP Results
(In thousands)
(Unaudited )
				Three Months Ended June 30,																Six Months Ended June 30,
				2014							2013									2014							2013
GAAP Net (loss) income attributable to FXCM Inc.				$	(3,078	)					$	10,124								$	(1,001	)					$	16,984
Contingent Consideration - Faros Follow-On Payment					-							-									(3,672	)		(1)				-
IPO Stock Options					2,232			(2)				2,058			(2)						4,134			(2)				4,121			(2)
V3 Acquisition related costs					-							-									1,213			(3)				-
On-line Courses put option payment					1,297			(8)				-									1,297			(8)				-
Regulatory fees and fines					247			(4)				-									2,712			(4)				-
Non-Controlling interest adjustment related to the above adjustments					-							-									(290	)						-
FXCM Holdings Conversion					(2,209	)		(6)				14,093			(6)						218			(6)				24,323			(6)
Tax adjustments related to the above					(23	)		(5)				(2,975	)		(5)						(950	)		(5)				(4,611	)		(5)
Non GAAP Adjusted Proforma Net (Loss) Income				$	(1,534	)					$	23,300								$	3,661						$	40,817
All other stock compensation					1,256							1,232									2,566							2,398
Amortization of intangibles					7,387							6,969									14,368							13,996
Amortization of debt discount					1,302							390									2,597							390
Non-Controlling interest adjustment related to the above adjustments					(3,358	)						(3,029	)								(6,642	)						(6,058	)
Tax adjustments related to the above					(1,596	)		(5)				(1,189	)		(5)						(2,415	)		(5)				(2,579	)		(5)
Non GAAP Adjusted Proforma Net Income excluding other stock compensation and amortization				$	3,457						$	27,673								$	14,135						$	48,964
GAAP Weighted average Class A shares outstanding - Diluted					40,287							31,829									37,793							30,759
FXCM Holdings Conversion					35,882			(7)				43,886			(7)						40,346			(7)				44,991			(7)
Non GAAP Weighted average Proforma shares outstanding - Diluted					76,169							75,715									78,139							75,750
GAAP Net (Loss) Income per Class A Share -Diluted				$	(0.08	)					$	0.32								$	(0.03	)					$	0.55
Non GAAP Adjusted Proforma Net (Loss) Income per Proforma Share - Diluted				$	(0.02	)					$	0.31								$	0.05						$	0.54
Non GAAP Adjusted Proforma Net Income excluding other stock compensation and amortization per Proforma Share - Diluted				$	0.05						$	0.37								$	0.18						$	0.65

⁽¹⁾ Represents the elimination of a $3.7 million benefit recorded to reduce the contingent consideration related to the Faros acquisition.

⁽²⁾ Represents the elimination of stock-based compensation associated with the IPO.

⁽³⁾ Represents the elimination of V3 acquisition costs.

⁽⁴⁾ Represents the net expense relating to pre-August 2010 trade execution practices and other regulatory fees and fines.

⁽⁵⁾ Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 25.8% and 23.0% for the three months ended June 30, 2014 and 2013, respectively, and 23.6% and 26.4% for the six months ended June 30, 2014 and June 30, 2013, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC ("Holdings") units for shares of Class A common stock of the Company and reflects the tax effect of any proforma adjustments.

⁽⁶⁾ Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽⁷⁾ Diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽⁸⁾ Represents $1.3 million charge related to a put option payment for Online Courses.

A-5

FXCM Inc.
Reconciliation of EBITDA to Net Income
(In thousands)
(Unaudited )
				Three Months Ended June 30,																			Six Months Ended June 30,
				Adjusted Pro Forma									U.S. GAAP										Adjusted Pro Forma								U.S. GAAP
				2014				2013					2014				2013						2014			2013					2014				2013
Net Revenues				$	97,927			$	140,133				$	97,927			$	140,133					$	209,263		$	262,997				$	212,935			$	262,997
Net (loss) income attributable to FXCM Inc.				$	(1,534	)		$	23,300				$	(3,078	)		$	10,124					$	3,661		$	40,817				$	(1,001	)		$	16,984
Net (loss) income attributable to non-controlling interest in FXCM Holdings, LLC					-				-					(2,209	)			14,093						-			-					218				24,323
Net (loss) income attributable to other non-controlling interests					(553	)			8,043					(2,868	)			(6,961	)					1,051			11,921					(4,527	)			(3,083	)
(Benefit) Provision for income taxes					(724	)			9,365					(747	)			6,390						1,454			18,960					504				14,349
Depreciation and amortization					13,122				12,481					13,122				12,481						25,752			24,455					25,752				24,455
Interest on borrowings					3,096				1,290					3,096				1,290						6,093			2,107					6,093				2,107
EBITDA				$	13,407			$	54,479				$	7,316			$	37,417					$	38,011		$	98,260				$	27,039			$	79,135
A-6

 

Contacts

FXCM Inc.
Jaclyn Klein, 646-432-2463
Vice-President, Corporate Communications and Investor Relations
jklein@fxcm.com