Florida
|
65-0701248
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock, par value $.0001 per share
|
NYSE American
|
8.00% Series A Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share
|
NYSE American
|
6.50% Senior Notes due 2027
|
NYSE American
|
7% Senior Notes due 2028
|
NYSE American
|
7.25% Senior Notes due 2028
|
NYSE American
|
|
|
|
|
|
Page
|
PART 1
|
|
|
PART II
|
|
|
PART III
|
|
|
PART IV
|
|
|
|
•
|
Provide our advisors with a differentiated independent platform.
We believe we have built a meaningfully differentiated platform by offering our independent financial advisors the unique and valued benefits of the "Ladenburg Advantage" -- access to Ladenburg’s wealth management division, capital markets products, investment banking services, proprietary investment research and fixed income trading desk, Highland's insurance solutions and annuity marketing strategies, product expertise and back-office processing for fixed and equity-indexed annuities, and Premier Trust's trust services and planning capabilities.
|
•
|
Provide technological solutions to independent financial advisors and home-office employees.
We believe that it is imperative that our independent advisory and brokerage firms possess state-of-the-art technology so their employees and independent financial advisors can effectively transact, facilitate, measure and record business activity in a timely, accurate and efficient manner. By continuing our commitment to provide a highly capable technology platform to process business, we believe our independent advisory and brokerage firms can achieve economies of scale and potentially reduce the need to hire additional back-office personnel. We continue to automate time-consuming processes to assist our advisors in their efforts to improve efficiency and accuracy.
|
•
|
Assist financial advisors to expand their business.
Our independent advisory and brokerage firms are aligned with their financial advisors in seeking to increase their revenues and improve efficiency. Each of our independent advisory and brokerage firms undertakes initiatives to assist their financial advisors with client recruitment, education, compliance and product support. Our practice management programs accelerate our advisors' efforts to grow their businesses by providing customized coaching and consulting services, study groups and conferences, educational workshops, publications and web resources and other productivity tools. Our independent advisory and brokerage firms also focus on improving back-office support to allow financial advisors more time to focus on serving their clients, rather than attending to administrative matters.
|
•
|
Build recurring revenue.
We have recognized the trend toward increased investment advisory business and are focused on providing fee-based investment advisory services, which may better suit certain clients. While these fee-based accounts generate substantially lower first year revenue than accounts invested in most commission-based products, the recurring nature of these fees provides a platform that generates recurring revenue.
|
•
|
Expand our financial advisor base through recruiting and acquisitions.
Each of our independent advisory and brokerage firms actively recruits experienced financial professionals. These efforts are supported by advertising, targeted direct mail and outbound telemarketing. Our independent firms’ recruitment efforts are enhanced by their ability to serve a variety of independent advisor models, including independent financial advisors, registered investment advisors and independent registered investment advisors. Securities America has developed strong expertise in transitioning large groups of financial advisors by acquiring certain assets and/or negotiating exclusive recruiting deals with small advisory and brokerage firms. Securities America has completed
11
such deals since 2008, and has developed detailed processes, led by a cross-departmental team of more than 25 people, to transition such groups effectively. We anticipate there will continue to be opportunities to acquire groups of financial advisors through transactions of this type, or otherwise, as increasing compliance costs disproportionately impact smaller brokerage firms and the level of services and resources they can provide to their advisors.
|
•
|
Acquire independent advisory and brokerage firms and complementary businesses.
We also may pursue the acquisition of other independent advisory and brokerage firms and other complementary businesses. Our ability to realize growth through acquisitions depends, among other things, on the availability of suitable candidates and our ability to successfully negotiate favorable terms. There can be no assurance that we will be able to consummate any such acquisitions. Further, the costs associated with the integration of new businesses and personnel may be greater than anticipated.
|
•
|
expert wealth management advice;
|
•
|
market analysis;
|
•
|
due diligence;
|
•
|
fund selection and asset allocation; and
|
•
|
diversification strategies.
|
•
|
reviews and analyzes general market conditions and industry groups;
|
•
|
issues written reports on companies;
|
•
|
furnishes information to retail and institutional customers; and
|
•
|
responds to inquiries from customers and advisors.
|
•
|
sales methods and supervision;
|
•
|
trading practices among broker-dealers;
|
•
|
use and safekeeping of customers’ funds and securities;
|
•
|
capital structure of securities firms;
|
•
|
record keeping;
|
•
|
conduct of directors, officers and employees; and
|
•
|
advertising, including regulations related to telephone solicitation.
|
•
|
limitations on the ability of investment advisors to charge clients performance-based or non-refundable fees;
|
•
|
record-keeping and reporting requirements;
|
•
|
disclosure requirements;
|
•
|
limitations on principal transactions between an advisor or its affiliates and advisory clients; and
|
•
|
general anti-fraud prohibitions.
|
•
|
a market downturn could lead to a decline in the volume of transactions executed for customers and, therefore, to a decline in the revenues we receive from commissions and spreads;
|
•
|
low interest rates adversely impact service fee revenues received from our clearing firms and other cash sweep programs;
|
•
|
adverse changes in the market could lead to a reduction in revenues from asset management fees. Even in the absence of a market downturn, below-market investment performance by portfolio managers could reduce asset management revenues and assets under management and result in reputational damage that might make it more difficult to attract new investors;
|
•
|
unfavorable financial or economic conditions could reduce the number and size of transactions in which we provide underwriting, financial advisory and other services. Our investment banking revenues, in the form of financial advisory and underwriting or placement fees, are directly related to the number and size of the transactions in which we participate and therefore could be adversely affected by unfavorable financial or economic conditions;
|
•
|
increases in credit spreads, as well as limitations on the availability of credit, can affect our ability to borrow on a secured or unsecured basis, which may adversely affect our liquidity and results of operations;
|
•
|
adverse changes in the market could lead to losses from principal transactions. To the extent that we own assets, i.e., have long positions, a downturn in the market could result in losses from a decline in the value of those long positions. Conversely, to the extent that we have sold assets that we do not own, i.e., have short positions, an upturn in the market could expose us to potentially unlimited losses as we attempt to cover our short positions by acquiring assets in a rising market; and
|
•
|
new or increased taxes on compensation payments such as bonuses or securities transactions may adversely affect our financial results.
|
•
|
requires us to dedicate a substantial portion of cash flows from operations to the payment of debt service and dividends, resulting in less cash available for operations and other purposes; and
|
•
|
limits our ability to obtain additional financing for working capital, regulatory capital requirements, acquisitions or general corporate purposes.
|
•
|
recommending transactions that are not suitable for the client or in the client’s best interests;
|
•
|
engaging in fraudulent or otherwise improper activity;
|
•
|
binding us to transactions that exceed authorized limits;
|
•
|
hiding unauthorized or unsuccessful activities, resulting in unknown and unmanaged risks or losses;
|
•
|
improperly using or disclosing confidential information;
|
•
|
failure, whether negligent or intentional, to effect securities transactions on behalf of clients;
|
•
|
failure to perform reasonable diligence on a security, product or strategy;
|
•
|
failure to supervise a financial advisor;
|
•
|
failure to provide insurance carriers with complete and accurate information;
|
•
|
engaging in unauthorized or excessive trading to the detriment of clients;
|
•
|
engaging in improper transactions with clients; or
|
•
|
otherwise not complying with laws or our control procedures.
|
•
|
trading counterparties;
|
•
|
customers;
|
•
|
clearing agents;
|
•
|
other broker-dealers;
|
•
|
exchanges;
|
•
|
clearing houses; and
|
•
|
other financial intermediaries as well as issuers whose securities we hold.
|
•
|
holding securities of third parties;
|
•
|
executing securities trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries; and
|
•
|
extending credit to clients through bridge or margin loans or other arrangements.
|
•
|
the volatility of domestic and international financial, bond and stock markets;
|
•
|
extensive governmental regulation;
|
•
|
litigation;
|
•
|
intense competition;
|
•
|
poor performance of investment products our advisors recommend or sell;
|
•
|
substantial fluctuations in the volume and price level of securities; and
|
•
|
dependence on the solvency of various third parties.
|
•
|
sales methods and supervision;
|
•
|
trading practices among broker-dealers;
|
•
|
use and safekeeping of customers’ funds and securities;
|
•
|
capital structure of securities firms;
|
•
|
record keeping;
|
•
|
conduct of directors, officers and employees; and
|
•
|
advertising, including regulations related to telephone solicitation.
|
•
|
censure;
|
•
|
fines;
|
•
|
civil penalties, including treble damages in the case of insider trading violations;
|
•
|
the issuance of cease-and-desist orders;
|
•
|
the termination or suspension of our broker-dealer activities;
|
•
|
the suspension or disqualification of our officers, employees or financial advisors; or
|
•
|
other adverse consequences.
|
•
|
variations in quarterly operating results;
|
•
|
general economic and business conditions, including conditions in the securities brokerage and investment banking markets;
|
•
|
prevailing interest rates, increases in which may have an adverse effect on the market price of the Series A Preferred Stock and senior notes;
|
•
|
trading prices of similar securities, including, but not limited to, any additional securities of ours that become listed for trading in the future;
|
•
|
the annual yield from dividends on the Series A Preferred Stock and interest on the senior notes as compared to yields on other comparable financial instruments;
|
•
|
our announcements of significant contracts, milestones or acquisitions;
|
•
|
our relationships with other companies;
|
•
|
our ability to obtain needed capital;
|
•
|
additions or departures of key personnel;
|
•
|
the initiation or outcome of litigation or arbitration proceedings;
|
•
|
sales of common stock, conversion of securities convertible into common stock, exercise of options and warrants to purchase common stock or termination of stock transfer restrictions;
|
•
|
our level of indebtedness;
|
•
|
legislation or regulatory policies, practices or actions;
|
•
|
changes in financial estimates by securities analysts; and
|
•
|
fluctuations in stock market prices and volume.
|
Subsidiary
|
|
Location
|
|
Approximate Square Footage
|
|
Lease Expiration Date
|
|
Securities America
|
|
La Vista, NE
|
|
81,424
|
|
|
January 2030
|
Triad
|
|
Norcross, GA
|
|
21,835
|
|
|
February 2025
|
SSN
|
|
Knoxville, TN
|
|
15,000
|
|
|
March 2020
(1)
|
Investacorp
|
|
Miami, FL
|
|
11,475
|
|
|
September 2020
|
KMS
|
|
Seattle, WA
|
|
8,575
|
|
|
September 2024
|
Premier Trust
|
|
Las Vegas, NV
|
|
14,455
|
|
|
September 2019
|
(1)
|
The lessor is Cogdill Capital LLC, an entity of which SSN's CFO and CEO are members.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)
|
||||||
October 1 to October 31, 2018
|
|
2,757,548
|
|
|
$
|
2.60
|
|
|
2,484,282
|
|
|
3,183,775
|
|
|
November 1 to November 30, 2018
|
|
671,973
|
|
|
2.84
|
|
|
671,973
|
|
|
2,511,802
|
|
||
December 1 to December 31, 2018
|
|
51,297,451
|
|
(2
|
)
|
2.50
|
|
|
195,907
|
|
|
2,315,895
|
|
|
Total
|
|
54,726,972
|
|
|
$
|
2.51
|
|
|
3,352,162
|
|
|
|
|
(1)
|
In March 2007, October 2011, November 2014 and November 2016, our board of directors authorized in the aggregate the repurchase of up to
27,500,000
shares of our common stock from time to time on the open market or in privately negotiated transactions depending on market conditions. As of December 31, 2018,
25,184,105
shares had been repurchased for $
66,116
under the program and
2,315,895
shares remain available for purchase under the program.
|
(2)
|
On December 24, 2018, we entered into an agreement with our former principal shareholder, Phillip Frost, M.D., and an entity affiliated with Dr. Frost, Frost Nevada Investments Trust, pursuant to which the company agreed to repurchase 50,900,000 shares of our common stock directly from the sellers in a private transaction at a price of $2.50 per share. We funded this share repurchase with $50,900 in cash on hand and by issuing $76,350 aggregate principal amount of 7.25% senior notes due 2028 to the sellers.
|
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
|
2018
(1)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||||
|
|
(In thousands, except share and per share amounts)
|
|
||||||||||||||||||
Operating Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues
|
|
$
|
1,391,136
|
|
|
$
|
1,268,152
|
|
|
$
|
1,106,953
|
|
|
$
|
1,152,118
|
|
|
$
|
921,253
|
|
(2)
|
Total expenses
|
|
1,343,733
|
|
|
1,266,991
|
|
|
1,119,023
|
|
|
1,163,868
|
|
|
911,259
|
|
|
|||||
Income (loss) before item shown below
|
|
47,403
|
|
|
1,161
|
|
|
(12,070
|
)
|
|
(11,750
|
)
|
|
9,994
|
|
|
|||||
Change in fair value of contingent consideration
|
|
(238
|
)
|
|
19
|
|
|
(216
|
)
|
|
55
|
|
|
12
|
|
|
|||||
Income (loss) before income taxes
|
|
47,165
|
|
|
1,180
|
|
|
(12,286
|
)
|
|
(11,695
|
)
|
|
10,006
|
|
|
|||||
Net income (loss)
|
|
33,786
|
|
|
7,682
|
|
|
(22,311
|
)
|
|
(11,213
|
)
|
|
33,352
|
|
|
|||||
Per common and equivalent share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income per common share - basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.09
|
|
|
(Loss) income per common share - diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.08
|
|
|
Cash dividend declared per common share
|
|
$
|
0.05
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Basic weighted average common shares
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
|
183,660,993
|
|
|
182,768,494
|
|
|
|||||
Diluted weighted average common shares
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
|
183,660,993
|
|
|
206,512,437
|
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
740,904
|
|
|
$
|
632,025
|
|
|
$
|
546,003
|
|
|
$
|
574,105
|
|
|
$
|
510,758
|
|
|
Total liabilities
|
|
487,727
|
|
|
261,634
|
|
|
183,502
|
|
|
198,074
|
|
|
174,287
|
|
|
|||||
Shareholders’ equity
|
|
253,126
|
|
|
370,379
|
|
|
362,474
|
|
|
376,002
|
|
|
336,460
|
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share
|
|
$
|
1.73
|
|
|
$
|
1.87
|
|
|
$
|
1.87
|
|
|
$
|
2.06
|
|
|
$
|
1.82
|
|
|
(1)
|
As a result of adopting ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" effective January 1, 2018, we amended our accounting policies on the recognition and presentation of certain revenues and related expenses, which may affect the comparability of such information and the related analysis.
|
(2)
|
Includes $26,164 of revenue from Highland (acquired July 31, 2014) and $19,840 of revenue from KMS (acquired October 15, 2014).
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
|
Year Ended December 31,
|
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Total revenues
|
|
$
|
1,391,136
|
|
|
$
|
1,268,152
|
|
|
$
|
1,106,953
|
|
|
Total expenses
|
|
1,343,733
|
|
|
1,266,991
|
|
|
1,119,023
|
|
|
|||
Income (loss) before income taxes
|
|
47,165
|
|
|
1,180
|
|
|
(12,286
|
)
|
|
|||
Net income (loss) attributable to the Company
|
|
33,758
|
|
|
7,697
|
|
|
(22,269
|
)
|
|
|||
Reconciliation of net income (loss) attributable to the Company to EBITDA, as adjusted:
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to the Company
|
|
33,758
|
|
|
7,697
|
|
|
(22,269
|
)
|
|
|||
Less:
|
|
|
|
|
|
|
|
|
|||||
Interest income
|
|
(2,504
|
)
|
|
(506
|
)
|
|
(672
|
)
|
|
|||
Change in fair value of contingent consideration
|
|
238
|
|
|
(19
|
)
|
|
216
|
|
|
|||
Add:
|
|
|
|
|
|
|
|
|
|||||
Interest expense
|
|
10,796
|
|
|
2,710
|
|
|
4,262
|
|
|
|||
Income tax expense (benefit)
|
|
13,379
|
|
|
(6,502
|
)
|
|
10,025
|
|
|
|||
Depreciation and amortization
|
|
24,039
|
|
|
28,835
|
|
|
28,334
|
|
|
|||
Non-cash compensation expense
|
|
5,882
|
|
|
5,539
|
|
|
5,311
|
|
|
|||
Amortization of retention and forgivable loans
|
|
417
|
|
|
7,396
|
|
|
5,472
|
|
|
|||
Amortization of contract acquisition costs
(4)
|
|
9,671
|
|
|
—
|
|
|
—
|
|
|
|||
Financial advisor recruiting expense
|
|
370
|
|
|
5,721
|
|
|
1,882
|
|
|
|||
Acquisition-related expense
|
|
1,010
|
|
|
3,469
|
|
|
1,357
|
|
|
|||
Other
|
|
3,392
|
|
(1)
|
1,661
|
|
(2)
|
1,853
|
|
(3)
|
|||
EBITDA, as adjusted
|
|
$
|
100,448
|
|
|
$
|
56,001
|
|
|
$
|
35,771
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Independent advisory and brokerage services
|
$
|
1,161,043
|
|
|
$
|
1,140,380
|
|
|
$
|
1,003,282
|
|
Ladenburg
|
78,094
|
|
|
66,680
|
|
|
49,425
|
|
|||
Insurance Brokerage
|
147,127
|
|
|
57,132
|
|
|
50,483
|
|
|||
Corporate
|
4,872
|
|
|
3,960
|
|
|
3,763
|
|
|||
Total revenues
|
$
|
1,391,136
|
|
|
$
|
1,268,152
|
|
|
$
|
1,106,953
|
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes:
|
|
|
|
|
|
||||||
Independent advisory and brokerage services
|
$
|
62,748
|
|
|
$
|
19,858
|
|
|
$
|
15,071
|
|
Ladenburg
|
11,464
|
|
|
6,346
|
|
|
(3,674
|
)
|
|||
Insurance Brokerage
|
1,983
|
|
|
(5,338
|
)
|
|
(6,074
|
)
|
|||
Corporate
(1)
|
(29,030
|
)
|
|
(19,686
|
)
|
|
(17,609
|
)
|
|||
Total income (loss) before income taxes
|
$
|
47,165
|
|
|
$
|
1,180
|
|
|
$
|
(12,286
|
)
|
|
|
|
|
|
|
||||||
EBITDA, as adjusted
(2)
|
|
|
|
|
|
||||||
Independent advisory and brokerage services
|
$
|
98,411
|
|
|
$
|
59,756
|
|
|
$
|
47,977
|
|
Ladenburg
|
12,966
|
|
|
8,115
|
|
|
(1,676
|
)
|
|||
Insurance Brokerage
|
4,166
|
|
|
2,698
|
|
|
2,255
|
|
|||
Corporate
|
(15,095
|
)
|
|
(14,568
|
)
|
|
(12,785
|
)
|
|||
Total EBITDA, as adjusted
|
$
|
100,448
|
|
|
$
|
56,001
|
|
|
$
|
35,771
|
|
(1)
|
See Note 20, "Segment Information," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K for a reconciliation of income (loss) before income taxes to EBITDA, as adjusted.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
63,372
|
|
|
$
|
16,215
|
|
|
$
|
14,246
|
|
Investing activities
|
|
(17,808
|
)
|
|
(10,075
|
)
|
|
(11,229
|
)
|
|||
Financing activities
|
|
(29,146
|
)
|
|
66,782
|
|
|
(22,764
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
16,418
|
|
|
$
|
72,922
|
|
|
$
|
(19,747
|
)
|
Cash and cash equivalents, beginning of period
|
|
172,863
|
|
|
99,941
|
|
|
119,688
|
|
|||
Cash and cash equivalents, end of period
|
|
$
|
189,281
|
|
|
$
|
172,863
|
|
|
$
|
99,941
|
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 year
|
|
1 – 3 years
|
|
4 – 5 years
|
|
After 5 years
|
||||||||||
Operating leases(1)
|
|
$
|
67,690
|
|
|
$
|
8,341
|
|
|
$
|
16,084
|
|
|
$
|
11,980
|
|
|
$
|
31,285
|
|
Deferred compensation plan(2)
|
|
21,546
|
|
|
3,851
|
|
|
2,813
|
|
|
1,325
|
|
|
13,557
|
|
|||||
Notes payable under subsidiary's revolver with bank (3)
|
|
92
|
|
|
77
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|||||
Note payable under subsidiary's term loan with bank
(4)
|
|
7,620
|
|
|
2,117
|
|
|
5,080
|
|
|
423
|
|
|
—
|
|
|||||
Notes payable to Kestler Financial Group's former shareholders (5)
|
|
8,534
|
|
|
854
|
|
|
1,377
|
|
|
845
|
|
|
5,458
|
|
|||||
Notes payable to Four Seasons Financial Group's former shareholders (6)
|
|
1,292
|
|
|
554
|
|
|
647
|
|
|
88
|
|
|
3
|
|
|||||
6.5% Senior Notes (7)
|
|
130,805
|
|
|
5,383
|
|
|
10,765
|
|
|
10,765
|
|
|
103,892
|
|
|||||
7% Senior Notes (8)
|
|
70,547
|
|
|
2,976
|
|
|
5,953
|
|
|
5,953
|
|
|
55,665
|
|
|||||
7.25% Senior Notes (9)
|
|
102,413
|
|
|
4,350
|
|
|
8,700
|
|
|
8,700
|
|
|
80,663
|
|
|||||
7.25% Phillip Frost Note (10)
|
|
8,534
|
|
|
362
|
|
|
725
|
|
|
725
|
|
|
6,722
|
|
|||||
7.25% Frost Nevada Trust Note (11)
|
|
121,786
|
|
|
5,173
|
|
|
10,346
|
|
|
10,346
|
|
|
95,921
|
|
|||||
Total
|
|
$
|
540,859
|
|
|
$
|
34,038
|
|
|
$
|
62,505
|
|
|
$
|
51,150
|
|
|
$
|
393,166
|
|
(1)
|
Includes lease obligation of approximately $24,000 related to a twelve-year lease for a new office building to be built for Securities America. This lease obligation commences upon the completion of the construction of such building, which is currently estimated to occur in 2020. See Note 14, "Commitments and Contingencies," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(2)
|
See Note 11, "Deferred Compensation Plan," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(3)
|
Notes bear interest at 5.5% per annum and are payable in 58 and 60 monthly installments. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(4)
|
On February 6, 2019, Securities America Financial Corporation entered into an amendment to its loan agreement with a third-party financial institution to provide for a term loan in the aggregate principal amount of $7,000. Note bears interest at 5.52% per annum and is payable in 36 monthly installments. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(5)
|
Notes bear interest at 4% per annum and mature on November 15, 2036. Includes annual cash payments to be made on each anniversary of the closing date for the next three years. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(6)
|
Notes bear interest at 3.99% and 4.75% per annum and mature on October 1, 2021 and January 15, 2024, respectively. Includes annual cash payments to be made on each anniversary of the closing date for the next two years. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(7)
|
Senior notes bear interest at 6.5% per annum and mature on November 30, 2027. Interest will be paid quarterly in arrears. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(8)
|
Senior notes bear interest at 7% per annum and mature on May 31, 2028. Interest will be paid quarterly in arrears. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(9)
|
Senior notes bear interest at 7.25% per annum and mature on September 30, 2028. Interest will be paid quarterly in arrears. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(10)
|
Note bears interest at 7.25% per annum and matures on September 30, 2028. Interest will be paid quarterly in arrears. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(11)
|
Note bears interest at 7.25% per annum and matures on September 30, 2028. Interest will be paid quarterly in arrears. See Note 13, "Notes Payable," to the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K.
|
(i)
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
(ii)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
(iii)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Incorporated By Reference from Document
|
|
No. in Document
|
2.1
|
|
|
FF
|
|
2.1
|
|
2.2
|
|
|
K
|
|
2.1
|
|
3.1
|
|
|
A
|
|
3.1
|
|
3.2
|
|
|
B
|
|
3.2
|
|
3.3
|
|
|
C
|
|
3.1
|
|
3.4
|
|
|
N
|
|
3.1
|
|
3.5
|
|
|
O
|
|
3.6
|
|
3.6
|
|
|
P
|
|
3.1
|
|
3.7
|
|
|
Q
|
|
3.1
|
|
3.8
|
|
|
S
|
|
3.1
|
|
3.9
|
|
|
T
|
|
3.1
|
|
3.10
|
|
|
W
|
|
3.1
|
|
3.11
|
|
|
Y
|
|
3.1
|
|
3.12
|
|
|
Z
|
|
3.1
|
|
3.13
|
|
|
D
|
|
3.2
|
|
4.1
|
|
|
A
|
|
4.1
|
|
4.2
|
|
|
O
|
|
4.1
|
4.3
|
|
|
|
BB
|
|
4.1
|
4.4
|
|
|
BB
|
|
4.2
|
|
4.5
|
|
|
BB
|
|
4.2
|
|
4.6
|
|
|
|
FF
|
|
4.1
|
4.7
|
|
|
|
GG
|
|
4.1
|
4.8
|
|
|
GG
|
|
4.2
|
|
4.9
|
|
|
HH
|
|
4.1
|
|
4.10
|
|
|
|
HH
|
|
4.2
|
4.11
|
|
|
II
|
|
4.1
|
|
10.1
|
|
|
E
|
|
4.1
|
|
10.2
|
|
|
R
|
|
Exhibit A
|
|
10.3
|
|
|
F
|
|
Appendix A
|
|
10.4
|
|
|
G
|
|
10.1
|
|
10.5
|
|
|
M
|
|
10.1
|
|
10.6
|
|
|
EE
|
|
10.1
|
|
10.7
|
|
|
H
|
|
10.1
|
|
10.8
|
|
|
U
|
|
10.2
|
|
10.9
|
|
|
U
|
|
10.1
|
|
10.10
|
|
|
L
|
|
10.1
|
|
10.11
|
|
|
I
|
|
10.1
|
|
10.12
|
|
|
|
CC
|
|
10.1
|
10.13
|
|
|
J
|
|
10.1
|
|
10.14
|
|
|
AA
|
|
10.1
|
10.15
|
|
|
Z
|
|
1.1
|
|
10.16
|
|
|
V
|
|
10.4
|
|
10.17
|
|
|
X
|
|
10.1
|
|
10.18
|
|
|
DD
|
|
1.1
|
|
10.19
|
|
|
|
JJ
|
|
10.4
|
10.20
|
|
|
|
KK
|
|
1.1
|
10.21
|
|
|
LL
|
|
1.1
|
|
10.22
|
|
|
|
II
|
|
10.1
|
10.23
|
|
|
|
II
|
|
10.2
|
21
|
|
|
**
|
|
—
|
|
23.1
|
|
|
**
|
|
—
|
|
24
|
|
Power of Attorney
|
|
***
|
|
—
|
31.1
|
|
|
|
**
|
|
—
|
|
31.2
|
|
|
|
**
|
|
—
|
|
32.1
|
|
|
|
****
|
|
—
|
|
32.2
|
|
|
|
****
|
|
—
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
**
|
|
—
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
**
|
|
—
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
**
|
|
—
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
**
|
|
—
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
**
|
|
—
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
**
|
|
—
|
|
*
|
Management Compensation Contract
|
|
**
|
Filed herewith
|
|
***
|
Contained on the signature page hereto
|
|
****
|
Furnished herewith
|
|
A.
|
Registration statement on Form SB-2 (File No. 333-31001).
|
|
B.
|
Annual report on Form 10-K for the year ended August 24, 1999.
|
|
C.
|
Quarterly report on Form 10-Q for the quarter ended June 30, 2006.
|
|
D.
|
Current report on Form 8-K, dated September 20, 2007 and filed with the SEC on September 21, 2007.
|
|
E.
|
Registration statement on Form S-8 (File No. 333-139254).
|
|
F.
|
Definitive proxy statement filed with the SEC on August 27, 2012 relating to the annual meeting of shareholders held on September 28, 2012.
|
|
G.
|
Current report on Form 8-K, dated March 30, 2007 and filed with the SEC on April 2, 2007.
|
|
H.
|
Current report on Form 8-K, dated February 26, 2014 and filed with the SEC on February 28, 2014.
|
|
I.
|
Current report on Form 8-K, dated March 27, 2008 and filed with the SEC on March 28, 2008.
|
|
J.
|
Current report on Form 8-K, dated August 10, 2010 and filed with the SEC on August 13, 2010.
|
|
K.
|
Current report on Form 8-K, dated August 16, 2011 and filed with the SEC on August 18, 2011.
|
|
|
|
|
L.
|
Current report on Form 8-K, dated January 30, 2013 and filed with the SEC on February 4, 2013.
|
|
|
|
|
M.
|
Current report on Form 8-K, dated March 8, 2013 and filed with the SEC on March 8, 2013.
|
|
|
|
|
N.
|
Current report on Form 8-K, dated May 9, 2013 and filed with the SEC on May 15, 2013.
|
|
|
|
|
O.
|
Registration statement on Form 8-A, filed with the SEC on May 24, 2013.
|
|
|
|
|
P.
|
Current report on Form 8-K, dated June 24, 2013 and filed with the SEC on June 25, 2013.
|
|
Q.
|
Current report on Form 8-K, dated June 12, 2014 and filed with the SEC on June 13, 2014.
|
|
R.
|
Definitive proxy statement filed with the SEC on May 19, 2014 relating to the annual meeting of shareholders held on June 25, 2014.
|
|
S.
|
Current report on Form 8-K, dated June 25, 2014 and filed with the SEC on June 27, 2014.
|
|
T.
|
Current report on Form 8-K, dated November 21, 2014 and filed with the SEC on November 21, 2014.
|
|
U.
|
Current report on Form 8-K, dated January 20, 2015 and filed with the SEC on January 23, 2015.
|
|
V.
|
Quarterly report on Form 10-Q for the quarter ended March 31, 2015.
|
|
W.
|
Current report on Form 8-K, dated May 22, 2015 and filed with the SEC on May 22, 2015.
|
|
X.
|
Current report on Form 8-K, dated February 22, 2016 and filed with the SEC on February 26, 2016.
|
|
Y.
|
Current report on Form 8-K, dated May 18, 2016 and filed with the SEC on May 20, 2016.
|
|
Z.
|
Current report on Form 8-K, dated May 22, 2017 and filed with the SEC on May 22, 2017.
|
|
AA.
|
Current report on Form 8-K, dated November 8, 2017 and filed with the SEC on November 9, 2017.
|
|
BB.
|
Current report on Form 8-K, dated November 21, 2017 and filed with the SEC on November 21, 2017.
|
|
CC.
|
Current report on Form 8-K, dated January 16, 2018 and filed with the SEC on January 22, 2018.
|
|
DD.
|
Current report on Form 8-K, dated February 15, 2018 and filed with the SEC on February 16, 2018.
|
|
EE.
|
Current report on Form 8-K, dated February 28, 2018 and filed with the SEC on March 6, 2018.
|
|
FF.
|
Current report on Form 8-K, dated August 31, 2018 and filed with the SEC on September 7, 2018.
|
|
GG.
|
Current report on Form 8-K, dated May 30, 2018 and filed with the SEC on May 30, 2018.
|
|
HH.
|
Current report on Form 8-K, dated August 16, 2018 and filed with the SEC on August 16, 2018.
|
|
II.
|
Current report on Form 8-K, dated December 24, 2018 and filed with the SEC on December 26, 2018.
|
|
JJ.
|
Quarterly report on Form 10-Q for the quarter ended March 31, 2018.
|
|
KK.
|
Current report on Form 8-K, dated June 8, 2018 and filed with the SEC on June 12, 2018.
|
|
LL.
|
Current report on Form 8-K, dated June 22, 2018 and filed with the SEC on June 22, 2018.
|
|
|
|
|
LADENBURG THALMANN FINANCIAL SERVICES INC.
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Dated: March 15, 2019
|
|
|
|
|
|
|
By:
|
/s/ Brett H. Kaufman
|
|
|
|
|
|
|
Name: Brett H. Kaufman
|
|
|
|
|
|
|
Title: Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
Signatures
|
|
Title
|
/s/ Richard J. Lampen
Richard J. Lampen
|
|
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
|
/s/ Brett H. Kaufman
Brett H. Kaufman
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
/s/ Henry C. Beinstein
Henry C. Beinstein
|
|
Director
|
/s/ Glenn C. Davis
Glenn C. Davis
|
|
Director
|
/s/ Brian S. Genson
Brian S. Genson
|
|
Director
|
/s/ Dr. Richard M. Krasno
Dr. Richard M. Krasno
|
|
Director
|
/s/ Michael S. Liebowitz
Michael S. Liebowitz
|
|
Director
|
/s/ Howard M. Lorber
Howard M. Lorber
|
|
Director
|
/s/ Adam Malamed
Adam Malamed
|
|
Director
|
/s/ Jacqueline M. Simkin
Jacqueline M. Simkin
|
|
Director
|
/s/ Mark Zeitchick
Mark Zeitchick
|
|
Director
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
182,693
|
|
|
$
|
172,103
|
|
Securities owned, at fair value
|
10,923
|
|
|
3,881
|
|
||
Receivables from clearing brokers
|
24,068
|
|
|
48,543
|
|
||
Receivables from other broker-dealers
|
7,078
|
|
|
2,822
|
|
||
Notes receivable from financial advisors, net
|
5,809
|
|
|
47,369
|
|
||
Other receivables, net
|
133,242
|
|
|
60,707
|
|
||
Fixed assets, net
|
29,994
|
|
|
23,621
|
|
||
Restricted assets
|
6,588
|
|
|
760
|
|
||
Intangible assets, net
|
73,064
|
|
|
103,611
|
|
||
Goodwill
|
126,079
|
|
|
124,210
|
|
||
Contract acquisition costs, net
|
80,726
|
|
|
—
|
|
||
Cash surrender value of life insurance
|
11,406
|
|
|
12,711
|
|
||
Income taxes receivable
|
2,156
|
|
|
—
|
|
||
Other assets
|
47,078
|
|
|
31,687
|
|
||
|
|
|
|
||||
Total assets
|
$
|
740,904
|
|
|
$
|
632,025
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
|
|
|
|
||||
Securities sold, but not yet purchased, at fair value
|
$
|
2,575
|
|
|
$
|
231
|
|
Accrued compensation
|
39,192
|
|
|
33,343
|
|
||
Commissions and fees payable
|
105,306
|
|
|
67,221
|
|
||
Accounts payable and accrued liabilities
|
48,813
|
|
|
40,478
|
|
||
Deferred rent
|
2,956
|
|
|
2,151
|
|
||
Deferred income taxes
|
14,068
|
|
|
2,968
|
|
||
Deferred compensation liability
|
20,622
|
|
|
18,161
|
|
||
Accrued interest
|
123
|
|
|
232
|
|
||
Notes payable, net of unamortized discount of $6,372 and $424 in 2018 and 2017, respectively, and net of debt issuance costs of $7,086 and $3,412 in 2018 and 2017 respectively.
|
254,072
|
|
|
96,849
|
|
||
Total liabilities
|
487,727
|
|
|
261,634
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $.0001 par value; authorized 50,000,000 shares: 8% Series A cumulative redeemable preferred stock; designated 23,844,916 shares in 2018 and 2017; shares issued and outstanding 17,012,075 in 2018 and 2017 (liquidation preference $425,302 in 2018 and 2017)
|
2
|
|
|
2
|
|
||
Common stock, $.0001 par value; authorized 1,000,000,000 shares in 2018 and 2017; shares issued and outstanding, 146,535,796 in 2018 and 198,583,941 in 2017
|
14
|
|
|
20
|
|
||
Additional paid-in capital
|
344,356
|
|
|
520,135
|
|
||
Accumulated deficit
|
(91,246
|
)
|
|
(149,778
|
)
|
||
|
|
|
|
||||
Total shareholders’ equity of the Company
|
253,126
|
|
|
370,379
|
|
||
|
|
|
|
||||
Noncontrolling interest
|
51
|
|
|
12
|
|
||
|
|
|
|
||||
Total shareholders' equity
|
253,177
|
|
|
370,391
|
|
||
|
|
|
|
||||
Total liabilities and shareholders' equity
|
$
|
740,904
|
|
|
$
|
632,025
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
||||||
Commissions
|
|
$
|
696,331
|
|
|
$
|
536,028
|
|
|
$
|
510,023
|
|
|
Advisory fees
|
|
474,423
|
|
|
560,930
|
|
|
464,136
|
|
|
|||
Investment banking
|
|
56,256
|
|
|
46,453
|
|
|
25,453
|
|
|
|||
Principal transactions
|
|
(328
|
)
|
|
857
|
|
|
751
|
|
|
|||
Interest and dividends
|
|
4,971
|
|
|
2,550
|
|
|
2,879
|
|
|
|||
Service fees
|
|
119,430
|
|
|
85,330
|
|
|
71,515
|
|
|
|||
Other income
|
|
40,053
|
|
|
36,004
|
|
|
32,196
|
|
|
|||
Total revenues
|
|
1,391,136
|
|
|
1,268,152
|
|
|
1,106,953
|
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
|
976,596
|
|
|
928,430
|
|
|
818,000
|
|
|
|||
Compensation and benefits
|
|
194,045
|
|
|
171,344
|
|
|
152,592
|
|
|
|||
Non-cash compensation
|
|
5,882
|
|
|
5,539
|
|
|
5,311
|
|
|
|||
Brokerage, communication and clearance fees
|
|
16,088
|
|
|
18,124
|
|
|
15,719
|
|
|
|||
Rent and occupancy, net of sublease revenue
|
|
9,977
|
|
|
9,356
|
|
|
9,673
|
|
|
|||
Professional services
|
|
21,927
|
|
|
19,588
|
|
|
14,126
|
|
|
|||
Interest
|
|
10,796
|
|
|
2,710
|
|
|
4,262
|
|
|
|||
Depreciation and amortization
|
|
24,039
|
|
|
28,835
|
|
|
28,334
|
|
|
|||
Acquisition-related expenses
|
|
1,010
|
|
|
3,469
|
|
|
1,357
|
|
|
|||
Amortization of retention and forgivable loans
|
|
417
|
|
|
7,396
|
|
|
5,472
|
|
|
|||
Amortization of contract acquisition costs
|
|
9,671
|
|
|
—
|
|
|
—
|
|
|
|||
Other
|
|
73,285
|
|
|
72,200
|
|
|
64,177
|
|
|
|||
Total expenses
|
|
1,343,733
|
|
|
1,266,991
|
|
|
1,119,023
|
|
|
|||
Income (loss) before item shown below
|
|
47,403
|
|
|
1,161
|
|
|
(12,070
|
)
|
|
|||
Change in fair value of contingent consideration
|
|
(238
|
)
|
|
19
|
|
|
(216
|
)
|
|
|||
Income (loss) before income taxes
|
|
47,165
|
|
|
1,180
|
|
|
(12,286
|
)
|
|
|||
Income tax expense (benefit)
|
|
13,379
|
|
|
(6,502
|
)
|
|
10,025
|
|
|
|||
Net income (loss)
|
|
33,786
|
|
|
7,682
|
|
|
(22,311
|
)
|
|
|||
Net income (loss) attributable to noncontrolling interest
|
|
28
|
|
|
(15
|
)
|
|
(42
|
)
|
|
|||
Net income (loss) attributable to the Company
|
|
$
|
33,758
|
|
|
$
|
7,697
|
|
|
$
|
(22,269
|
)
|
|
Dividends declared on preferred stock
|
|
(34,031
|
)
|
|
(32,482
|
)
|
|
(30,438
|
)
|
|
|||
Net loss available to common shareholders
|
|
$
|
(273
|
)
|
|
$
|
(24,785
|
)
|
|
$
|
(52,707
|
)
|
|
Net loss per share available to common shareholders (basic)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
Net loss per share available to common shareholders (diluted)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares used in computation of per share data:
|
|
|
|
|
|
|
|
||||||
Basic
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
|
|||
Diluted
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Noncontrolling Interest
|
|
Total
|
||||||||||||||
Balance - December 31, 2015
|
14,683,021
|
|
|
$
|
1
|
|
|
182,338,038
|
|
|
$
|
19
|
|
|
$
|
511,138
|
|
|
$
|
(135,156
|
)
|
|
$
|
29
|
|
|
$
|
376,031
|
|
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
210,330
|
|
|
—
|
|
|
481
|
|
|
—
|
|
|
—
|
|
|
481
|
|
||||||
Exercise of stock options, net of 1,129,195 shares tendered in payment of exercise price
|
—
|
|
|
—
|
|
|
3,920,950
|
|
|
—
|
|
|
2,580
|
|
|
—
|
|
|
—
|
|
|
2,580
|
|
||||||
Exercise of warrants, net of 846,789 shares tendered in payment of exercise price
|
—
|
|
|
—
|
|
|
12,389,544
|
|
|
—
|
|
|
17,976
|
|
|
—
|
|
|
—
|
|
|
17,976
|
|
||||||
Stock-based compensation to consultants and independent financial advisors
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||||
Stock-based compensation to employees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,261
|
|
|
—
|
|
|
—
|
|
|
5,261
|
|
||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
1,331,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase and retirement of common stock, including 901,691 shares surrendered for tax withholding of $2,038
|
—
|
|
|
—
|
|
|
(6,132,124
|
)
|
|
—
|
|
|
(14,749
|
)
|
|
—
|
|
|
—
|
|
|
(14,749
|
)
|
||||||
Third party investment in noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
||||||
Preferred stock issued, net of underwriting discount and expense of $723
|
1,161,895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,580
|
|
|
—
|
|
|
—
|
|
|
27,580
|
|
||||||
Preferred stock dividends declared and paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,438
|
)
|
|
—
|
|
|
—
|
|
|
(30,438
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,269
|
)
|
|
(42
|
)
|
|
(22,311
|
)
|
||||||
Balance - December 31, 2016
|
15,844,916
|
|
|
$
|
1
|
|
|
194,057,738
|
|
|
$
|
19
|
|
|
$
|
519,879
|
|
|
$
|
(157,425
|
)
|
|
$
|
27
|
|
|
$
|
362,501
|
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Noncontrolling Interest
|
|
Total
|
||||||||||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
167,016
|
|
|
—
|
|
|
420
|
|
|
—
|
|
|
—
|
|
|
420
|
|
||||||
Exercise of stock options, net of 1,715,019 shares tendered in payment of exercise price
|
—
|
|
|
—
|
|
|
2,661,647
|
|
|
1
|
|
|
4,825
|
|
|
—
|
|
|
—
|
|
|
4,826
|
|
||||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
2,000,000
|
|
|
—
|
|
|
3,820
|
|
|
—
|
|
|
—
|
|
|
3,820
|
|
||||||
Stock-based compensation to consultants and independent financial advisors
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||||
Stock-based compensation to employees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,482
|
|
|
—
|
|
|
—
|
|
|
5,482
|
|
||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
1,791,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeitures
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase and retirement of common stock, including 218,587 shares surrendered for taxes and expenses and 19,658 shares tendered in payment of exercise price
|
—
|
|
|
—
|
|
|
(2,088,460
|
)
|
|
—
|
|
|
(5,293
|
)
|
|
—
|
|
|
—
|
|
|
(5,293
|
)
|
||||||
Repurchase of option award for cash
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(850
|
)
|
|
—
|
|
|
—
|
|
|
(850
|
)
|
||||||
Preferred stock issued, net of underwriting discount and expense of $958
|
1,167,159
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
28,094
|
|
|
—
|
|
|
—
|
|
|
28,095
|
|
||||||
Preferred stock dividends declared and paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,482
|
)
|
|
—
|
|
|
—
|
|
|
(32,482
|
)
|
||||||
Commons stock dividends declared and paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,880
|
)
|
|
—
|
|
|
—
|
|
|
(3,880
|
)
|
||||||
Cumulative effect of adoption of ASU 2016-09 (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
(50
|
)
|
|
|
|
|
13
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,697
|
|
|
(15
|
)
|
|
7,682
|
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Noncontrolling Interest
|
|
Total
|
||||||||||||||
Balance - December 31, 2017
|
17,012,075
|
|
|
$
|
2
|
|
|
198,583,941
|
|
|
$
|
20
|
|
|
$
|
520,135
|
|
|
$
|
(149,778
|
)
|
|
$
|
12
|
|
|
$
|
370,391
|
|
Cumulative effect of adoption of ASC 606 (See Note 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,774
|
|
|
11
|
|
|
24,785
|
|
||||||
Balance - January 1, 2018
|
17,012,075
|
|
|
$
|
2
|
|
|
198,583,941
|
|
|
$
|
20
|
|
|
$
|
520,135
|
|
|
$
|
(125,004
|
)
|
|
$
|
23
|
|
|
$
|
395,176
|
|
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
161,968
|
|
|
—
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
453
|
|
||||||
Exercise of stock options (net of 1,194,324 shares tendered in payment of exercise price)
|
—
|
|
|
—
|
|
|
3,199,511
|
|
|
—
|
|
|
3,813
|
|
|
—
|
|
|
—
|
|
|
3,813
|
|
||||||
Stock-based compensation granted to consultants and independent financial advisors
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||
Stock-based compensation to employees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,848
|
|
|
—
|
|
|
—
|
|
|
5,848
|
|
||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
2,172,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeitures
|
—
|
|
|
—
|
|
|
(106,250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase and retirement of common stock, including 522,190 shares surrendered for tax withholdings and 19,294 shares tendered in payment of exercise price
|
—
|
|
|
—
|
|
|
(57,475,374
|
)
|
|
(6
|
)
|
|
(139,829
|
)
|
|
—
|
|
|
—
|
|
|
(139,835
|
)
|
||||||
Repurchase of option award for cash
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
||||||
Preferred stock issued, net of underwriting discount and expense of $273
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(273
|
)
|
|
—
|
|
|
—
|
|
|
(273
|
)
|
||||||
Preferred stock dividends declared and paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,031
|
)
|
|
—
|
|
|
—
|
|
|
(34,031
|
)
|
||||||
Commons stock dividends declared and paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,794
|
)
|
|
—
|
|
|
—
|
|
|
(8,794
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,758
|
|
|
28
|
|
|
33,786
|
|
||||||
Balance - December 31, 2018
|
17,012,075
|
|
|
$
|
2
|
|
|
146,535,796
|
|
|
$
|
14
|
|
|
$
|
344,356
|
|
|
$
|
(91,246
|
)
|
|
$
|
51
|
|
|
$
|
253,177
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
33,786
|
|
|
$
|
7,682
|
|
|
$
|
(22,311
|
)
|
Adjustments to reconcile net income (loss) to
|
|
|
|
|
|
||||||
net cash provided by operating activities:
|
|
|
|
|
|
||||||
Change in fair value of contingent consideration
|
238
|
|
|
(19
|
)
|
|
216
|
|
|||
Adjustment to deferred rent
|
805
|
|
|
387
|
|
|
213
|
|
|||
Amortization of intangible assets
|
15,578
|
|
|
21,327
|
|
|
20,703
|
|
|||
Depreciation and other amortization
|
8,461
|
|
|
7,508
|
|
|
7,631
|
|
|||
Amortization of debt discount
|
432
|
|
|
449
|
|
|
620
|
|
|||
Amortization of debt issue cost
|
591
|
|
|
41
|
|
|
253
|
|
|||
Amortization of retention and forgivable loans
|
417
|
|
|
7,396
|
|
|
5,472
|
|
|||
Amortization of contract acquisition costs
|
9,671
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
8,130
|
|
|
(7,662
|
)
|
|
9,096
|
|
|||
Benefit attributable to reduction of goodwill
|
541
|
|
|
—
|
|
|
—
|
|
|||
Non-cash interest expense on forgivable loan
|
—
|
|
|
24
|
|
|
43
|
|
|||
Gain on forgiveness of accrued interest under forgivable loans
|
(79
|
)
|
|
(295
|
)
|
|
(408
|
)
|
|||
Gain on forgiveness of principal of note payable under forgivable loans
|
(2,143
|
)
|
|
(2,143
|
)
|
|
(2,143
|
)
|
|||
Non-cash compensation expense
|
5,882
|
|
|
5,539
|
|
|
5,311
|
|
|||
Loss on write-off of furniture, fixtures and leasehold improvements, net
|
26
|
|
|
21
|
|
|
1
|
|
|||
|
|
|
|
|
|
||||||
(Increase) decrease in operating assets:
|
|
|
|
|
|
||||||
Securities owned, at fair value
|
(7,042
|
)
|
|
(338
|
)
|
|
536
|
|
|||
Receivables from clearing brokers
|
24,475
|
|
|
(7,051
|
)
|
|
2,974
|
|
|||
Receivables from other broker-dealers
|
(4,256
|
)
|
|
(1,969
|
)
|
|
1,297
|
|
|||
Other receivables, net
|
(13,886
|
)
|
|
(6,073
|
)
|
|
(6,070
|
)
|
|||
Contract acquisition costs, net
|
(29,057
|
)
|
|
—
|
|
|
—
|
|
|||
Notes receivable from financial advisors, net
|
577
|
|
|
(21,563
|
)
|
|
(11,116
|
)
|
|||
Cash surrender value of life insurance
|
1,305
|
|
|
(2,501
|
)
|
|
(963
|
)
|
|||
Income taxes receivable
|
(2,156
|
)
|
|
—
|
|
|
—
|
|
|||
Other assets
|
(15,366
|
)
|
|
219
|
|
|
1,191
|
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
||||||
Securities sold, but not yet purchased, at fair value
|
2,344
|
|
|
(151
|
)
|
|
144
|
|
|||
Accrued compensation
|
5,959
|
|
|
7,044
|
|
|
(2,816
|
)
|
|||
Accrued interest
|
(30
|
)
|
|
222
|
|
|
(177
|
)
|
|||
Commissions and fees payable
|
8,690
|
|
|
6,627
|
|
|
599
|
|
|||
Deferred compensation liability
|
2,461
|
|
|
914
|
|
|
36
|
|
|||
Accounts payable and accrued liabilities
|
7,018
|
|
|
580
|
|
|
3,914
|
|
|||
Net cash provided by operating activities
|
63,372
|
|
|
16,215
|
|
|
14,246
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of Kestler Financial Group, net of cash received
|
(2,850
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of Four Seasons Financial Group, net of cash received
|
(450
|
)
|
|
—
|
|
|
—
|
|
|||
Other business acquisitions
|
—
|
|
|
(179
|
)
|
|
(4,097
|
)
|
|||
Purchases of fixed assets
|
(14,502
|
)
|
|
(9,896
|
)
|
|
(7,132
|
)
|
|||
Purchase of intangible assets
|
(6
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(17,808
|
)
|
|
(10,075
|
)
|
|
(11,229
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Issuance of Series A preferred stock
|
(273
|
)
|
|
28,095
|
|
|
27,580
|
|
|||
Issuance of common stock
|
4,266
|
|
|
9,066
|
|
|
3,061
|
|
|||
Series A preferred stock dividends paid
|
(34,031
|
)
|
|
(32,482
|
)
|
|
(30,438
|
)
|
|||
Common stock dividends paid
|
(8,794
|
)
|
|
(3,880
|
)
|
|
—
|
|
|||
Repurchases and retirement of common stock
|
(69,746
|
)
|
|
(5,293
|
)
|
|
(14,749
|
)
|
|||
Repurchase of stock option award for cash
|
(3,000
|
)
|
|
(850
|
)
|
|
—
|
|
|||
Additional issuance costs related to SSN notes
|
—
|
|
|
(40
|
)
|
|
—
|
|
|||
Issuance of senior notes
|
104,375
|
|
|
73,197
|
|
|
—
|
|
|||
Borrowings on term loan
|
—
|
|
|
8,000
|
|
|
—
|
|
|||
Principal repayments on notes payable
|
(15,253
|
)
|
|
(7,039
|
)
|
|
(7,516
|
)
|
|||
Principal repayments under a revolving credit facility, net
|
—
|
|
|
—
|
|
|
(114
|
)
|
|||
Bank loan and revolver repayments
|
(6,690
|
)
|
|
(1,992
|
)
|
|
(628
|
)
|
|||
Third party investment in subsidiary
|
—
|
|
|
—
|
|
|
40
|
|
|||
Net cash (used in) provided by financing activities
|
(29,146
|
)
|
|
66,782
|
|
|
(22,764
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
16,418
|
|
|
72,922
|
|
|
(19,747
|
)
|
|||
Cash and cash equivalents including restricted cash, beginning of period
|
172,863
|
|
|
99,941
|
|
|
119,688
|
|
|||
Cash and equivalents at end of period:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
182,693
|
|
|
$
|
172,103
|
|
|
$
|
98,930
|
|
Restricted cash
|
6,588
|
|
|
760
|
|
|
1,011
|
|
|||
Cash and cash equivalents including restricted cash, end of period
|
$
|
189,281
|
|
|
$
|
172,863
|
|
|
$
|
99,941
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
9,870
|
|
|
$
|
1,974
|
|
|
$
|
3,523
|
|
Taxes paid
|
6,956
|
|
|
1,487
|
|
|
1,036
|
|
|||
|
|
|
|
|
|
||||||
Acquisition of Wall Street Financial Group:
|
|
|
|
|
|
||||||
Assets acquired
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,468
|
|
Payable to seller
|
—
|
|
|
—
|
|
|
(2,276
|
)
|
|||
Net cash paid in acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,192
|
|
Acquisition of Foothill Securities Inc.:
|
|
|
|
|
|
||||||
Assets acquired
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,571
|
|
Payable to seller
|
—
|
|
|
(179
|
)
|
|
(2,666
|
)
|
|||
Net cash paid in acquisition
|
$
|
—
|
|
|
$
|
(179
|
)
|
|
$
|
2,905
|
|
Acquisition of Kestler Financial Group:
|
|
|
|
|
|
||||||
Assets acquired
|
$
|
9,093
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities assumed
|
(793
|
)
|
|
—
|
|
|
—
|
|
|||
Net assets acquired
|
8,300
|
|
|
—
|
|
|
—
|
|
|||
Promissory note
|
(5,450
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash paid in acquisition
|
$
|
2,850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Acquisition of Four Seasons Financial Group:
|
|
|
|
|
|
||||||
Assets acquired
|
$
|
2,345
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities assumed
|
(1,523
|
)
|
|
—
|
|
|
—
|
|
|||
Net assets acquired
|
822
|
|
|
—
|
|
|
—
|
|
|||
Promissory note
|
(372
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash paid in acquisition
|
$
|
450
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash financing activities:
|
|
|
|
|
|
||||||
Issuance of 7.25% notes for repurchase of common stock
|
$
|
76,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cancellation of promissory notes as consideration for exercise price of warrants
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,976
|
|
For the Twelve Months Ended December 31, 2018
|
|
Independent Advisory and Brokerage Services
|
|
Ladenburg
|
|
Insurance Brokerage
|
|
Corporate
|
|
Total
|
||||||||||
Commissions
|
|
$
|
540,523
|
|
|
$
|
11,468
|
|
|
$
|
144,340
|
|
|
$
|
—
|
|
|
$
|
696,331
|
|
Advisory fees
|
|
467,044
|
|
|
7,170
|
|
|
—
|
|
|
209
|
|
|
474,423
|
|
|||||
Investment banking
|
|
947
|
|
|
56,163
|
|
|
—
|
|
|
(854
|
)
|
|
56,256
|
|
|||||
Principal transactions
|
|
22
|
|
|
(524
|
)
|
|
—
|
|
|
174
|
|
|
(328
|
)
|
|||||
Interest and dividends
|
|
2,566
|
|
|
839
|
|
|
—
|
|
|
1,566
|
|
|
4,971
|
|
|||||
Service fees
|
|
116,047
|
|
|
2,495
|
|
|
—
|
|
|
888
|
|
|
119,430
|
|
|||||
Other income
|
|
33,894
|
|
|
483
|
|
|
2,787
|
|
|
2,889
|
|
|
40,053
|
|
|||||
Total revenues
|
|
$
|
1,161,043
|
|
|
$
|
78,094
|
|
|
$
|
147,127
|
|
|
$
|
4,872
|
|
|
$
|
1,391,136
|
|
|
|
As of December 31, 2018
|
|
As of January 1, 2018 ( Adoption Date)
|
||||
Contract assets - Insurance trailing commissions
|
|
$
|
64,300
|
|
|
$
|
58,786
|
|
Contract liabilities - Insurance trailing commissions
|
|
31,854
|
|
|
29,395
|
|
Consolidated Statement of Financial Condition
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
|
|
As Reported
|
|
Adjustments
|
|
Adjusted
|
||||||||||||
|
|
December 31, 2017
|
|
Investment Banking
|
Insurance Renewals
|
Costs to obtain or fulfill a contract
|
|
January 1, 2018
|
||||||||||
ASSETS
|
|
(Audited)
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
172,103
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
172,103
|
|
Securities owned, at fair value
|
|
3,881
|
|
|
—
|
|
—
|
|
—
|
|
|
3,881
|
|
|||||
Receivables from clearing brokers
|
|
48,543
|
|
|
—
|
|
—
|
|
—
|
|
|
48,543
|
|
|||||
Receivables from other broker-dealers
|
|
2,822
|
|
|
—
|
|
—
|
|
—
|
|
|
2,822
|
|
|||||
Notes receivable from financial advisors, net
|
|
47,369
|
|
|
—
|
|
—
|
|
(40,566
|
)
|
|
6,803
|
|
|||||
Other receivables, net
|
|
60,707
|
|
|
(137
|
)
|
58,786
|
|
—
|
|
|
119,356
|
|
|||||
Fixed assets, net
|
|
23,621
|
|
|
—
|
|
—
|
|
—
|
|
|
23,621
|
|
|||||
Restricted assets
|
|
760
|
|
|
—
|
|
—
|
|
—
|
|
|
760
|
|
|||||
Intangible assets, net
|
|
103,611
|
|
|
—
|
|
(23,645
|
)
|
—
|
|
|
79,966
|
|
|||||
Goodwill
|
|
124,210
|
|
|
—
|
|
—
|
|
—
|
|
|
124,210
|
|
|||||
Contract acquisition costs, net
|
|
—
|
|
|
—
|
|
—
|
|
61,340
|
|
|
61,340
|
|
|||||
Cash surrender value of life insurance
|
|
12,711
|
|
|
—
|
|
—
|
|
—
|
|
|
12,711
|
|
|||||
Other assets
|
|
31,687
|
|
|
25
|
|
—
|
|
—
|
|
|
31,712
|
|
|||||
Total assets
|
|
$
|
632,025
|
|
|
$
|
(112
|
)
|
$
|
35,141
|
|
$
|
20,774
|
|
|
$
|
687,828
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
||||||||||
Securities sold, but not yet purchased, at fair value
|
|
$
|
231
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
231
|
|
Accrued compensation
|
|
33,343
|
|
|
(110
|
)
|
—
|
|
—
|
|
|
33,233
|
|
|||||
Commissions and fees payable
|
|
67,221
|
|
|
—
|
|
29,395
|
|
—
|
|
|
96,616
|
|
|||||
Accounts payable and accrued liabilities
|
|
40,478
|
|
|
(104
|
)
|
—
|
|
(1,133
|
)
|
|
39,241
|
|
|||||
Deferred rent
|
|
2,151
|
|
|
—
|
|
—
|
|
—
|
|
|
2,151
|
|
|||||
Deferred income taxes
|
|
2,968
|
|
|
28
|
|
1,462
|
|
1,480
|
|
|
5,938
|
|
|||||
Deferred compensation liability
|
|
18,161
|
|
|
—
|
|
—
|
|
—
|
|
|
18,161
|
|
|||||
Accrued interest
|
|
232
|
|
|
—
|
|
—
|
|
—
|
|
|
232
|
|
|||||
Notes payable
|
|
96,849
|
|
|
—
|
|
—
|
|
—
|
|
|
96,849
|
|
|||||
Total liabilities
|
|
$
|
261,634
|
|
|
$
|
(186
|
)
|
$
|
30,857
|
|
$
|
347
|
|
|
$
|
292,652
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders' equity:
|
|
|
|
|
|
|
|
|
||||||||||
Preferred stock
|
|
2
|
|
|
—
|
|
—
|
|
—
|
|
|
2
|
|
|||||
Common stock
|
|
20
|
|
|
—
|
|
—
|
|
—
|
|
|
20
|
|
|||||
Additional paid-in capital
|
|
520,135
|
|
|
—
|
|
—
|
|
—
|
|
|
520,135
|
|
|||||
Accumulated deficit
|
|
(149,778
|
)
|
|
74
|
|
4,284
|
|
20,416
|
|
|
(125,004
|
)
|
|||||
Total shareholders' equity of the Company
|
|
370,379
|
|
|
74
|
|
4,284
|
|
20,416
|
|
|
395,153
|
|
|||||
Noncontrolling interest
|
|
12
|
|
|
—
|
|
—
|
|
11
|
|
|
23
|
|
|||||
Total shareholders' equity
|
|
370,391
|
|
|
74
|
|
4,284
|
|
20,427
|
|
|
395,176
|
|
|||||
Total liabilities and shareholders' equity
|
|
$
|
632,025
|
|
|
$
|
(112
|
)
|
$
|
35,141
|
|
$
|
20,774
|
|
|
$
|
687,828
|
|
Consolidated Statement of Financial Condition
|
||||||||||||
|
|
As of December 31, 2018
|
|
|
||||||||
|
|
As Reported
|
|
Balances without the adoption of ASC 606
|
|
Effects of Change Higher/(Lower)
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
182,693
|
|
|
$
|
182,693
|
|
|
$
|
—
|
|
Securities owned, at fair value
|
|
10,923
|
|
|
10,923
|
|
|
—
|
|
|||
Receivables from clearing brokers
|
|
24,068
|
|
|
24,068
|
|
|
—
|
|
|||
Receivables from other broker-dealers
|
|
7,078
|
|
|
7,078
|
|
|
—
|
|
|||
Notes receivable from financial advisors, net
|
|
5,809
|
|
|
57,417
|
|
|
(51,608
|
)
|
|||
Other receivables, net
|
|
133,242
|
|
|
69,209
|
|
|
64,033
|
|
|||
Fixed assets, net
|
|
29,994
|
|
|
29,994
|
|
|
—
|
|
|||
Restricted assets
|
|
6,588
|
|
|
6,588
|
|
|
—
|
|
|||
Intangible assets, net
|
|
73,064
|
|
|
91,454
|
|
|
(18,390
|
)
|
|||
Goodwill
|
|
126,079
|
|
|
126,079
|
|
|
—
|
|
|||
Contract acquisition costs, net
|
|
80,726
|
|
|
—
|
|
|
80,726
|
|
|||
Cash surrender value of life insurance
|
|
11,406
|
|
|
11,406
|
|
|
—
|
|
|||
Income taxes receivable
|
|
2,156
|
|
|
—
|
|
|
2,156
|
|
|||
Other assets
|
|
47,078
|
|
|
46,578
|
|
|
500
|
|
|||
Total assets
|
|
$
|
740,904
|
|
|
$
|
663,487
|
|
|
$
|
77,417
|
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Securities sold, but not yet purchased, at market value
|
|
$
|
2,575
|
|
|
$
|
2,575
|
|
|
$
|
—
|
|
Accrued compensation
|
|
39,192
|
|
|
39,257
|
|
|
(65
|
)
|
|||
Commissions and fees payable
|
|
105,306
|
|
|
73,452
|
|
|
31,854
|
|
|||
Accounts payable and accrued liabilities
|
|
48,813
|
|
|
41,026
|
|
|
7,787
|
|
|||
Deferred rent
|
|
2,956
|
|
|
2,956
|
|
|
—
|
|
|||
Deferred income taxes
|
|
14,068
|
|
|
9,742
|
|
|
4,326
|
|
|||
Deferred compensation liability
|
|
20,622
|
|
|
20,622
|
|
|
—
|
|
|||
Accrued interest
|
|
123
|
|
|
123
|
|
|
—
|
|
|||
Notes payable
|
|
254,072
|
|
|
254,072
|
|
|
—
|
|
|||
Total liabilities
|
|
$
|
487,727
|
|
|
$
|
443,825
|
|
|
$
|
43,902
|
|
|
|
|
|
|
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
||||||
Shareholders' equity:
|
|
|
|
|
|
|
||||||
Preferred stock
|
|
2
|
|
|
2
|
|
|
—
|
|
|||
Common stock
|
|
14
|
|
|
14
|
|
|
—
|
|
|||
Additional paid-in capital
|
|
344,356
|
|
|
344,356
|
|
|
—
|
|
|||
Accumulated deficit
|
|
(91,246
|
)
|
|
(124,750
|
)
|
|
33,504
|
|
|||
|
|
|
|
|
|
|
||||||
Total shareholders' equity of the Company
|
|
253,126
|
|
|
219,622
|
|
|
33,504
|
|
|||
|
|
|
|
|
|
|
||||||
Noncontrolling interest
|
|
51
|
|
|
40
|
|
|
11
|
|
|||
|
|
|
|
|
|
|
||||||
Total shareholders' equity
|
|
253,177
|
|
|
219,662
|
|
|
33,515
|
|
|||
|
|
|
|
|
|
|
||||||
Total liabilities and shareholders' equity
|
|
$
|
740,904
|
|
|
$
|
663,487
|
|
|
$
|
77,417
|
|
Consolidated Statement of Operations
|
||||||||||||
|
|
|
|
|
||||||||
|
|
Twelve Months Ended December 31, 2018
|
|
|
||||||||
|
|
As Reported
|
|
Amounts without the adoption of ASC 606
|
|
Effects of Change Higher/(Lower)
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Commissions
|
|
$
|
696,331
|
|
|
$
|
609,400
|
|
|
$
|
86,931
|
|
Advisory fees
|
|
474,423
|
|
|
695,094
|
|
|
(220,671
|
)
|
|||
Investment banking
|
|
56,256
|
|
|
51,335
|
|
|
4,921
|
|
|||
Principal transactions
|
|
(328
|
)
|
|
(346
|
)
|
|
18
|
|
|||
Interest and dividends
|
|
4,971
|
|
|
4,964
|
|
|
7
|
|
|||
Service fees
|
|
119,430
|
|
|
119,430
|
|
|
—
|
|
|||
Other income
|
|
40,053
|
|
|
40,147
|
|
|
(94
|
)
|
|||
Total revenues
|
|
1,391,136
|
|
|
1,520,024
|
|
|
(128,888
|
)
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Commissions and fees
|
|
976,596
|
|
|
1,113,389
|
|
|
(136,793
|
)
|
|||
Compensation and benefits
|
|
194,045
|
|
|
195,433
|
|
|
(1,388
|
)
|
|||
Non-cash compensation
|
|
5,882
|
|
|
5,882
|
|
|
—
|
|
|||
Brokerage, communication and clearance fees
|
|
16,088
|
|
|
15,525
|
|
|
563
|
|
|||
Rent and occupancy, net of sublease revenue
|
|
9,977
|
|
|
9,977
|
|
|
—
|
|
|||
Professional services
|
|
21,927
|
|
|
20,022
|
|
|
1,905
|
|
|||
Interest
|
|
10,796
|
|
|
10,756
|
|
|
40
|
|
|||
Depreciation and amortization
|
|
24,039
|
|
|
29,294
|
|
|
(5,255
|
)
|
|||
Acquisition-related expenses
|
|
1,010
|
|
|
1,010
|
|
|
—
|
|
|||
Amortization of retention and forgivable loans
|
|
417
|
|
|
13,890
|
|
|
(13,473
|
)
|
|||
Amortization of contract acquisition costs
|
|
9,671
|
|
|
—
|
|
|
9,671
|
|
|||
Other
|
|
73,285
|
|
|
73,805
|
|
|
(520
|
)
|
|||
Total expenses
|
|
1,343,733
|
|
|
1,488,983
|
|
|
(145,250
|
)
|
|||
Income before item shown below
|
|
47,403
|
|
|
31,041
|
|
|
16,362
|
|
|||
Change in fair value of contingent consideration
|
|
(238
|
)
|
|
(238
|
)
|
|
—
|
|
|||
Income before income taxes
|
|
47,165
|
|
|
30,803
|
|
|
16,362
|
|
|||
Income tax expense
|
|
13,379
|
|
|
5,745
|
|
|
7,634
|
|
|||
Net income
|
|
33,786
|
|
|
25,058
|
|
|
8,728
|
|
|||
Net income attributable to noncontrolling interest
|
|
28
|
|
|
28
|
|
|
—
|
|
|||
Net income attributable to the Company
|
|
$
|
33,758
|
|
|
$
|
25,030
|
|
|
$
|
8,728
|
|
Dividends declared on preferred stock
|
|
(34,031
|
)
|
|
(34,031
|
)
|
|
—
|
|
|||
Net loss available to common shareholders
|
|
$
|
(273
|
)
|
|
$
|
(9,001
|
)
|
|
$
|
8,728
|
|
Net loss per share available to common shareholders (basic)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
0.05
|
|
Net loss per share available to common shareholders (diluted)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
0.05
|
|
Weighted average common shares used in computation of per share data:
|
|
|
|
|
|
|
||||||
Basic
|
|
194,562,916
|
|
|
194,562,916
|
|
|
—
|
|
|||
Diluted
|
|
194,562,916
|
|
|
194,562,916
|
|
|
—
|
|
|
|
December 31, 2018
|
||||||||||||||
Assets
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Total Estimated Fair Value
|
||||||||
Cash and cash equivalents
|
|
$
|
182,693
|
|
|
$
|
182,693
|
|
|
$
|
—
|
|
|
$
|
182,693
|
|
Receivables from clearing brokers
|
|
24,068
|
|
|
—
|
|
|
24,068
|
|
|
24,068
|
|
||||
Receivables from other broker-dealers
|
|
7,078
|
|
|
—
|
|
|
7,078
|
|
|
7,078
|
|
||||
Notes receivables, net
(1)
|
|
5,809
|
|
|
—
|
|
|
5,809
|
|
|
5,809
|
|
||||
Other receivables, net
|
|
133,242
|
|
|
—
|
|
|
133,242
|
|
|
133,242
|
|
||||
|
|
$
|
352,890
|
|
|
$
|
182,693
|
|
|
$
|
170,197
|
|
|
$
|
352,890
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Accrued compensation
|
|
$
|
39,192
|
|
|
$
|
—
|
|
|
$
|
39,192
|
|
|
$
|
39,192
|
|
Commissions and fees payable
|
|
105,306
|
|
|
—
|
|
|
105,306
|
|
|
105,306
|
|
||||
Accounts payable and accrued liabilities
(2)
|
|
46,583
|
|
|
—
|
|
|
46,583
|
|
|
46,583
|
|
||||
Accrued interest
|
|
123
|
|
|
—
|
|
|
123
|
|
|
123
|
|
||||
Notes payable, net
(3)
|
|
254,072
|
|
|
—
|
|
|
266,844
|
|
|
266,844
|
|
||||
|
|
$
|
445,276
|
|
|
$
|
—
|
|
|
$
|
458,048
|
|
|
$
|
458,048
|
|
|
|
December 31, 2017
|
||||||||||||||
Assets
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Total Estimated Fair Value
|
||||||||
Cash and cash equivalents
|
|
$
|
172,103
|
|
|
$
|
172,103
|
|
|
$
|
—
|
|
|
$
|
172,103
|
|
Receivables from clearing brokers
|
|
48,543
|
|
|
—
|
|
|
48,543
|
|
|
48,543
|
|
||||
Receivables from other broker-dealers
|
|
2,822
|
|
|
—
|
|
|
2,822
|
|
|
2,822
|
|
||||
Notes receivables, net
(1)
|
|
47,369
|
|
|
—
|
|
|
47,369
|
|
|
47,369
|
|
||||
Other receivables, net
|
|
60,707
|
|
|
—
|
|
|
60,707
|
|
|
60,707
|
|
||||
|
|
$
|
331,544
|
|
|
$
|
172,103
|
|
|
$
|
159,441
|
|
|
$
|
331,544
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Accrued compensation
|
|
$
|
33,343
|
|
|
$
|
—
|
|
|
$
|
33,343
|
|
|
$
|
33,343
|
|
Commissions and fees payable
|
|
67,221
|
|
|
—
|
|
|
67,221
|
|
|
67,221
|
|
||||
Accounts payable and accrued liabilities
(2)
|
|
38,374
|
|
|
—
|
|
|
38,374
|
|
|
38,374
|
|
||||
Accrued interest
|
|
232
|
|
|
—
|
|
|
232
|
|
|
232
|
|
||||
Notes payable, net
(3)
|
|
96,849
|
|
|
—
|
|
|
99,129
|
|
|
99,129
|
|
||||
|
|
$
|
236,019
|
|
|
$
|
—
|
|
|
$
|
238,299
|
|
|
$
|
238,299
|
|
|
|
December 31, 2018
|
||||||||||||||||||
Assets
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Estimated Fair Value
|
||||||||||
Certificates of deposit
|
|
$
|
426
|
|
|
$
|
426
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
426
|
|
Debt securities
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|
—
|
|
|
1,447
|
|
|||||
U.S. Treasury notes
|
|
794
|
|
|
—
|
|
|
794
|
|
|
—
|
|
|
794
|
|
|||||
Common stock and warrants
|
|
8,256
|
|
|
7,070
|
|
|
1,186
|
|
|
—
|
|
|
8,256
|
|
|||||
Total
|
|
$
|
10,923
|
|
|
$
|
7,496
|
|
|
$
|
3,427
|
|
|
$
|
—
|
|
|
$
|
10,923
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contingent consideration payable
|
|
$
|
2,230
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,230
|
|
|
$
|
2,230
|
|
Debt securities
|
|
196
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
196
|
|
|||||
U.S. Treasury notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock and warrants
|
|
2,379
|
|
|
2,379
|
|
|
—
|
|
|
—
|
|
|
2,379
|
|
|||||
Total
|
|
$
|
4,805
|
|
|
$
|
2,379
|
|
|
$
|
196
|
|
|
$
|
2,230
|
|
|
$
|
4,805
|
|
|
|
December 31, 2017
|
||||||||||||||||||
Assets
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Estimated Fair Value
|
||||||||||
Certificates of deposit
|
|
$
|
568
|
|
|
$
|
568
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
568
|
|
Debt securities
|
|
1,918
|
|
|
—
|
|
|
1,918
|
|
|
—
|
|
|
1,918
|
|
|||||
U.S. Treasury notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock and warrants
|
|
1,395
|
|
|
765
|
|
|
630
|
|
|
—
|
|
|
1,395
|
|
|||||
Total
|
|
$
|
3,881
|
|
|
$
|
1,333
|
|
|
$
|
2,548
|
|
|
$
|
—
|
|
|
$
|
3,881
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contingent consideration payable
|
|
$
|
2,104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,104
|
|
|
$
|
2,104
|
|
Debt securities
|
|
151
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
|||||
U.S. Treasury notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock
|
|
80
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|||||
Total
|
|
$
|
2,335
|
|
|
$
|
80
|
|
|
$
|
151
|
|
|
$
|
2,104
|
|
|
$
|
2,335
|
|
Fair value of contingent consideration as of December 31, 2015
|
|
$
|
2,813
|
|
Payments
|
|
(827
|
)
|
|
Change in fair value of contingent consideration
|
|
216
|
|
|
Fair value of contingent consideration in connection with 2016 acquisitions
|
|
4,942
|
|
|
Fair value of contingent consideration as of December 31, 2016
|
|
7,144
|
|
|
Payments
|
|
(5,021
|
)
|
|
Change in fair value of contingent consideration
|
|
(19
|
)
|
|
Fair value of contingent consideration as of December 31, 2017
|
|
2,104
|
|
|
Payments
|
|
(1,353
|
)
|
|
Change in fair value of contingent consideration
|
|
238
|
|
|
Fair value of contingent consideration in connection with KFG and FSFG acquisitions
|
|
1,241
|
|
|
Fair value of contingent consideration as of December 31, 2018
|
|
$
|
2,230
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cost:
|
|
|
|
|
|
|
||
Leasehold improvements
|
|
$
|
4,727
|
|
|
$
|
4,112
|
|
Computer equipment
|
|
22,850
|
|
|
18,604
|
|
||
Furniture and fixtures
|
|
4,618
|
|
|
3,816
|
|
||
Software
|
|
33,207
|
|
|
25,115
|
|
||
Other
|
|
5,836
|
|
|
5,003
|
|
||
|
|
71,238
|
|
|
56,650
|
|
||
Less: accumulated depreciation and amortization
|
|
(41,244
|
)
|
|
(33,029
|
)
|
||
Total
|
|
$
|
29,994
|
|
|
$
|
23,621
|
|
|
|
Weighted-Average
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Estimated Useful Life (years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Technology
|
|
7.9
|
|
$
|
25,563
|
|
|
$
|
22,187
|
|
|
$
|
25,563
|
|
|
$
|
19,020
|
|
Relationships with financial advisors
|
|
14.3
|
|
126,122
|
|
|
59,584
|
|
|
117,995
|
|
|
49,925
|
|
||||
Vendor relationships
|
|
7
|
|
3,613
|
|
|
3,613
|
|
|
3,613
|
|
|
3,613
|
|
||||
Covenants not-to-compete
|
|
3.8
|
|
6,964
|
|
|
6,258
|
|
|
6,421
|
|
|
5,732
|
|
||||
Customer accounts
|
|
8.3
|
|
2,029
|
|
|
2,029
|
|
|
2,029
|
|
|
2,029
|
|
||||
Trade names
|
|
7.7
|
|
16,916
|
|
|
14,472
|
|
|
16,910
|
|
|
12,245
|
|
||||
Renewal revenue
(1)
|
|
—
|
|
—
|
|
|
—
|
|
|
41,381
|
|
|
17,737
|
|
||||
Relationships with investment banking clients
|
|
4
|
|
2,586
|
|
|
2,586
|
|
|
2,586
|
|
|
2,586
|
|
||||
Leases
|
|
6
|
|
861
|
|
|
861
|
|
|
861
|
|
|
861
|
|
||||
Referral agreement
|
|
6.6
|
|
124
|
|
|
124
|
|
|
124
|
|
|
124
|
|
||||
Other
|
|
6
|
|
67
|
|
|
67
|
|
|
67
|
|
|
67
|
|
||||
Total
|
|
|
|
$
|
184,845
|
|
|
$
|
111,781
|
|
|
$
|
217,550
|
|
|
$
|
113,939
|
|
|
|
||
2019
|
$
|
13,071
|
|
2020
|
11,466
|
|
|
2021
|
6,628
|
|
|
2022
|
6,554
|
|
|
2023
|
6,217
|
|
|
Thereafter
|
29,128
|
|
|
|
$
|
73,064
|
|
|
|
Ladenburg
|
|
Independent Advisory and Brokerage Services
|
|
Insurance Brokerage
|
|
Total
|
||||||||
Balance as of December 31, 2016
|
|
$
|
301
|
|
|
$
|
111,031
|
|
|
$
|
12,699
|
|
|
$
|
124,031
|
|
Correction related to Foothill acquisition purchase price allocation
(1)
|
|
—
|
|
|
179
|
|
|
—
|
|
|
179
|
|
||||
Balance as of December 31, 2017
|
|
$
|
301
|
|
|
$
|
111,210
|
|
|
$
|
12,699
|
|
|
$
|
124,210
|
|
Benefit applied to reduce goodwill
|
|
—
|
|
|
(541
|
)
|
|
—
|
|
|
(541
|
)
|
||||
Business acquisitions
|
|
—
|
|
|
246
|
|
|
2,164
|
|
|
2,410
|
|
||||
Balance as of December 31, 2018
|
|
$
|
301
|
|
|
$
|
110,915
|
|
|
$
|
14,863
|
|
|
$
|
126,079
|
|
|
Federal
|
|
State and Local
|
|
Total
|
|
||||||
2018:
|
|
|
|
|
|
|
||||||
Current
|
$
|
2,933
|
|
|
$
|
1,776
|
|
|
$
|
4,709
|
|
|
Deferred
|
8,329
|
|
|
341
|
|
|
8,670
|
|
|
|||
|
$
|
11,262
|
|
|
$
|
2,117
|
|
|
$
|
13,379
|
|
|
2017:
|
|
|
|
|
|
|
||||||
Current
|
$
|
364
|
|
|
$
|
807
|
|
|
$
|
1,171
|
|
|
Deferred
|
(7,695
|
)
|
|
22
|
|
|
(7,673
|
)
|
|
|||
|
$
|
(7,331
|
)
|
|
$
|
829
|
|
|
$
|
(6,502
|
)
|
|
2016:
|
|
|
|
|
|
|
||||||
Current
|
$
|
—
|
|
|
$
|
929
|
|
|
$
|
929
|
|
|
Deferred
|
8,992
|
|
|
104
|
|
|
9,096
|
|
|
|||
|
$
|
8,992
|
|
|
$
|
1,033
|
|
|
$
|
10,025
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income (loss) before income taxes
|
$
|
47,165
|
|
|
$
|
1,180
|
|
|
$
|
(12,286
|
)
|
Expense (benefit) under statutory U.S. tax rates
|
9,905
|
|
|
413
|
|
|
(4,300
|
)
|
|||
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
||||||
(Decrease) increase in valuation allowance
|
(66
|
)
|
|
(11,261
|
)
|
|
12,540
|
|
|||
Nondeductible items
|
1,867
|
|
|
4,475
|
|
|
1,323
|
|
|||
State taxes, net of federal benefit
|
1,625
|
|
|
431
|
|
|
671
|
|
|||
Impact of tax reform
|
—
|
|
|
(660
|
)
|
|
—
|
|
|||
Other, net
|
48
|
|
|
100
|
|
|
(209
|
)
|
|||
Income tax expense (benefit)
|
$
|
13,379
|
|
|
$
|
(6,502
|
)
|
|
$
|
10,025
|
|
|
2018
|
|
2017
|
|
||||
Deferred tax assets (liabilities):
|
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
2,938
|
|
|
$
|
8,642
|
|
|
AMT credit carryforward
|
—
|
|
|
440
|
|
|
||
Accrued expenses
|
4,731
|
|
|
4,105
|
|
|
||
Compensation and benefits
|
9,370
|
|
|
10,877
|
|
|
||
Deferred compensation liability
|
5,164
|
|
|
4,492
|
|
|
||
Securities owned
|
780
|
|
|
514
|
|
|
||
Total deferred tax assets
|
22,983
|
|
|
29,070
|
|
|
||
Valuation allowance
|
(1,863
|
)
|
|
(5,520
|
)
|
|
||
Net deferred tax assets
|
21,120
|
|
|
23,550
|
|
|
||
Fixed assets
|
(6,081
|
)
|
|
(4,707
|
)
|
|
||
Intangibles
|
(4,160
|
)
|
|
(13,589
|
)
|
|
||
Contract acquisition costs
|
(7,108
|
)
|
|
—
|
|
|
||
Deferred revenues
|
(8,576
|
)
|
|
—
|
|
|
||
Goodwill
|
(9,263
|
)
|
|
(8,222
|
)
|
|
||
Total deferred liabilities
|
(35,188
|
)
|
|
(26,518
|
)
|
|
||
Net deferred tax liability
|
$
|
(14,068
|
)
|
|
$
|
(2,968
|
)
|
|
|
2018
|
2017
|
||||
Balance at January 1,
|
$
|
526
|
|
$
|
503
|
|
Increases in tax positions for prior years
|
—
|
|
(33
|
)
|
||
Increases in tax positions for current years
|
97
|
|
56
|
|
||
Balance at December 31,
|
$
|
623
|
|
$
|
526
|
|
13.
|
Notes Payable
|
|
December 31,
|
|
||||||
|
2018
|
|
2017
|
|
||||
Notes payable to clearing firm under forgivable loans
|
$
|
—
|
|
|
$
|
2,143
|
|
|
Notes payable under subsidiary's term loan with bank
|
—
|
|
|
6,563
|
|
|
||
Note payable under subsidiary's revolver with bank
|
89
|
|
|
216
|
|
|
||
Notes payable by subsidiary to certain former shareholders of Highland
|
—
|
|
|
6,738
|
|
|
||
Notes payable to KMS's former shareholders, net of $98 of unamortized discount in 2017
|
—
|
|
|
1,958
|
|
|
||
Notes payable to SSN's former shareholders, net of $326 unamortized discount in 2017
|
—
|
|
|
6,074
|
|
|
||
Notes payable to Kestler Financial Group's former shareholders
|
5,399
|
|
|
—
|
|
|
||
Notes payable to Four Seasons Financial Group's former shareholders
|
364
|
|
|
—
|
|
|
||
6.5% Senior Notes, net of $67 and $0 of unamortized discount in 2018 and 2017, respectively
|
82,742
|
|
|
76,569
|
|
|
||
7% Senior Notes, net of $45 of unamortized discount in 2018
|
42,475
|
|
|
—
|
|
|
||
7.25% Senior Notes
|
60,000
|
|
|
—
|
|
|
||
7.25% Frost Notes, net of $6,261 of unamortized discount in 2018
|
70,089
|
|
|
|
|
|||
Less: Unamortized debt issuance costs
|
(7,086
|
)
|
|
(3,412
|
)
|
|
||
Total
|
$
|
254,072
|
|
|
$
|
96,849
|
|
|
Year Ending December 31,
|
|
Lease Commitments
|
|
Sublease Rentals
|
|
Net
|
||||||
2019
|
|
$
|
8,341
|
|
|
$
|
41
|
|
|
$
|
8,300
|
|
2020
(1)
|
|
8,902
|
|
|
28
|
|
|
8,874
|
|
|||
2021
(1)
|
|
7,182
|
|
|
—
|
|
|
7,182
|
|
|||
2022
(1)
|
|
6,558
|
|
|
—
|
|
|
6,558
|
|
|||
2023
(1)
|
|
5,423
|
|
|
—
|
|
|
5,423
|
|
|||
Thereafter
(1)
|
|
31,284
|
|
|
—
|
|
|
31,284
|
|
|||
Total
(1)
|
|
$
|
67,690
|
|
|
$
|
69
|
|
|
$
|
67,621
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Basic weighted-average common shares outstanding - basic
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|||
Options to purchase common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
Restricted shares
|
|
—
|
|
|
—
|
|
|
—
|
|
Dilutive potential common shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding and dilutive potential common shares
|
|
194,562,916
|
|
|
193,064,550
|
|
|
182,987,850
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted- Average Exercise Price
|
|
Weighted- Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
|
|||||
Options outstanding, December 31, 2017
|
|
8,632,000
|
|
|
$
|
1.36
|
|
|
|
|
|
||
Exercised
|
|
(3,127,000
|
)
|
|
1.70
|
|
|
|
|
|
|||
Forfeited
|
|
(1,620,000
|
)
|
|
1.04
|
|
|
|
|
|
|||
Expired
|
|
(30,000
|
)
|
|
2.69
|
|
|
|
|
|
|||
Options outstanding, December 31, 2018
|
|
3,855,000
|
|
|
$
|
1.20
|
|
|
1.52
|
|
$
|
4,551
|
|
Options exercisable, December 31, 2018
|
|
3,855,000
|
|
|
$
|
1.20
|
|
|
1.52
|
|
$
|
4,551
|
|
|
|
Shares
|
|
Weighted- Average Exercise Price
|
|
Weighted- Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
|
|||||
Options outstanding, December 31, 2017
|
|
20,488,860
|
|
|
$
|
2.28
|
|
|
|
|
|
||
Exercised
|
|
(1,266,837
|
)
|
|
1.63
|
|
|
|
|
|
|||
Forfeited
|
|
(2,229,983
|
)
|
|
2.75
|
|
|
|
|
|
|
||
Options outstanding, December 31, 2018
|
|
16,992,040
|
|
|
$
|
2.26
|
|
|
3.94
|
|
$
|
7,749
|
|
Options exercisable, December 31, 2018
|
|
16,338,290
|
|
|
$
|
2.22
|
|
|
3.83
|
|
$
|
7,749
|
|
|
|
Restricted Stock
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Nonvested at December 31, 2017
|
|
3,380,145
|
|
|
$
|
2.60
|
|
Issued during 2018
|
|
2,172,000
|
|
|
3.24
|
|
|
Vested during 2018
|
|
(1,185,770
|
)
|
|
2.75
|
|
|
Forfeited during 2018
|
|
(106,250
|
)
|
|
3.11
|
|
|
Nonvested at December 31, 2018
|
|
4,260,125
|
|
|
$
|
2.87
|
|
|
|
Independent Advisory and Brokerage Services
|
|
Ladenburg
|
|
Insurance Brokerage
|
|
Corporate
|
|
Total
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,161,043
|
|
|
$
|
78,094
|
|
|
$
|
147,127
|
|
|
$
|
4,872
|
|
|
$
|
1,391,136
|
|
Income (loss) before income taxes
|
|
62,748
|
|
|
11,464
|
|
|
1,983
|
|
|
(29,030
|
)
|
(1)
|
47,165
|
|
|||||
EBITDA, as adjusted
(2)
|
|
98,411
|
|
|
12,966
|
|
|
4,166
|
|
|
(15,095
|
)
|
|
100,448
|
|
|||||
Identifiable assets
|
|
515,720
|
|
|
59,798
|
|
|
97,708
|
|
|
67,678
|
|
|
740,904
|
|
|||||
Depreciation and amortization
|
|
22,403
|
|
|
471
|
|
|
1,146
|
|
|
19
|
|
|
24,039
|
|
|||||
Interest
|
|
905
|
|
|
62
|
|
|
472
|
|
|
9,357
|
|
|
10,796
|
|
|||||
Capital expenditures
|
|
13,787
|
|
|
351
|
|
|
244
|
|
|
120
|
|
|
14,502
|
|
|||||
Non-cash compensation
|
|
1,220
|
|
|
705
|
|
|
113
|
|
|
3,844
|
|
|
5,882
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
1,140,380
|
|
|
$
|
66,680
|
|
|
$
|
57,132
|
|
|
$
|
3,960
|
|
|
$
|
1,268,152
|
|
Income (loss) before income taxes
|
|
19,858
|
|
|
6,346
|
|
|
(5,338
|
)
|
|
(19,686
|
)
|
(1)
|
1,180
|
|
|||||
EBITDA, as adjusted
(2)
|
|
59,756
|
|
|
8,115
|
|
|
2,698
|
|
|
(14,568
|
)
|
|
56,001
|
|
|||||
Identifiable assets
|
|
443,670
|
|
|
43,148
|
|
|
47,166
|
|
|
98,041
|
|
|
632,025
|
|
|||||
Depreciation and amortization
|
|
21,455
|
|
|
505
|
|
|
6,841
|
|
|
34
|
|
|
28,835
|
|
|||||
Interest
|
|
1,157
|
|
|
—
|
|
|
683
|
|
|
870
|
|
|
2,710
|
|
|||||
Capital expenditures
|
|
8,923
|
|
|
753
|
|
|
216
|
|
|
4
|
|
|
9,896
|
|
|||||
Non-cash compensation
|
|
1,035
|
|
|
629
|
|
|
183
|
|
|
3,692
|
|
|
5,539
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
1,003,282
|
|
|
$
|
49,425
|
|
|
$
|
50,483
|
|
|
$
|
3,763
|
|
|
$
|
1,106,953
|
|
Income (loss) before income taxes
|
|
15,071
|
|
|
(3,674
|
)
|
|
(6,074
|
)
|
|
(17,609
|
)
|
(1)
|
(12,286
|
)
|
|||||
EBITDA, as adjusted
(2)
|
|
47,977
|
|
|
(1,676
|
)
|
|
2,255
|
|
|
(12,785
|
)
|
|
35,771
|
|
|||||
Identifiable assets
|
|
423,288
|
|
|
38,665
|
|
|
54,166
|
|
|
29,884
|
|
|
546,003
|
|
|||||
Depreciation and amortization
|
|
20,406
|
|
|
703
|
|
|
7,161
|
|
|
64
|
|
|
28,334
|
|
|||||
Interest
|
|
2,828
|
|
|
4
|
|
|
682
|
|
|
748
|
|
|
4,262
|
|
|||||
Capital expenditures
|
|
6,784
|
|
|
139
|
|
|
209
|
|
|
—
|
|
|
7,132
|
|
|||||
Non-cash compensation
|
|
1,010
|
|
|
537
|
|
|
245
|
|
|
3,519
|
|
|
5,311
|
|
(1)
|
Includes interest on revolving credit and forgivable loan notes, compensation, professional fees and other general and administrative expenses related to the Corporate segment.
|
(2)
|
The following table reconciles income (loss) before income taxes to EBITDA, as adjusted, for the years ended December 31, 2018, 2017 and 2016:
|
|
|
Year Ended December 31,
|
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Income (loss) before income taxes
|
|
$
|
47,165
|
|
|
$
|
1,180
|
|
|
$
|
(12,286
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|||
Interest income
|
|
(2,504
|
)
|
|
(506
|
)
|
|
(672
|
)
|
|
|||
Change in fair value of contingent consideration
|
|
238
|
|
|
(19
|
)
|
|
216
|
|
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
Interest expense
|
|
10,796
|
|
|
2,710
|
|
|
4,262
|
|
|
|||
Depreciation and amortization
|
|
24,039
|
|
|
28,835
|
|
|
28,334
|
|
|
|||
Non-cash compensation expense
|
|
5,882
|
|
|
5,539
|
|
|
5,311
|
|
|
|||
Amortization of retention and forgivable loans
|
|
417
|
|
|
7,396
|
|
|
5,472
|
|
|
|||
Amortization of contract acquisition costs
(6)
|
|
9,671
|
|
|
—
|
|
|
—
|
|
|
|||
Financial advisor recruiting expense
|
|
370
|
|
|
5,721
|
|
|
1,882
|
|
|
|||
Acquisition-related expense
|
|
1,010
|
|
|
3,469
|
|
|
1,357
|
|
|
|||
Loss attributable to noncontrolling interest
|
|
(28
|
)
|
|
15
|
|
|
42
|
|
|
|||
Other
|
|
3,392
|
|
(3)
|
1,661
|
|
(4)
|
1,853
|
|
(5)
|
|||
EBITDA, as adjusted
|
|
$
|
100,448
|
|
|
$
|
56,001
|
|
|
$
|
35,771
|
|
|
|
|
|
|
|
|
|
|
||||||
EBITDA, as adjusted
|
|
|
|
|
|
|
|
||||||
Independent Advisory and Brokerage Services
|
|
$
|
98,411
|
|
|
$
|
59,756
|
|
|
$
|
47,977
|
|
|
Ladenburg
|
|
12,966
|
|
|
8,115
|
|
|
(1,676
|
)
|
|
|||
Insurance Brokerage
|
|
4,166
|
|
|
2,698
|
|
|
2,255
|
|
|
|||
Corporate
|
|
(15,095
|
)
|
|
(14,568
|
)
|
|
(12,785
|
)
|
|
|||
Total segments
|
|
$
|
100,448
|
|
|
$
|
56,001
|
|
|
$
|
35,771
|
|
|
|
|
Quarters
|
|||||||||||||||
|
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
|
||||||||
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues
|
|
$
|
329,384
|
|
|
$
|
357,756
|
|
|
$
|
348,875
|
|
|
$
|
355,121
|
|
|
Expenses
(1)
|
|
321,687
|
|
|
343,822
|
|
|
336,164
|
|
|
342,060
|
|
|
||||
Income before item shown below
|
|
7,697
|
|
|
13,934
|
|
|
12,711
|
|
|
13,061
|
|
|
||||
Change in fair value of contingent consideration
|
|
(61
|
)
|
|
(50
|
)
|
|
(54
|
)
|
|
(73
|
)
|
|
||||
Income before income taxes
|
|
$
|
7,636
|
|
|
$
|
13,884
|
|
|
$
|
12,657
|
|
|
$
|
12,988
|
|
|
Net income
|
|
$
|
5,464
|
|
|
$
|
9,310
|
|
|
$
|
9,450
|
|
|
$
|
9,562
|
|
|
Income attributable to noncontrolling interest
|
|
(1
|
)
|
|
(8
|
)
|
|
(13
|
)
|
|
(6
|
)
|
|
||||
Net income attributable to the Company
|
|
$
|
5,463
|
|
|
$
|
9,302
|
|
|
$
|
9,437
|
|
|
$
|
9,556
|
|
|
Dividends declared on preferred stock
|
|
(8,508
|
)
|
|
(8,508
|
)
|
|
(8,507
|
)
|
|
(8,508
|
)
|
|
||||
Net (loss) income available to common shareholders
|
|
$
|
(3,045
|
)
|
|
$
|
794
|
|
|
$
|
930
|
|
|
$
|
1,048
|
|
|
Basic (loss) income per common share
(2)
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
Diluted (loss) income per common share
(2)
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
Basic weighted average common shares
|
|
195,898,794
|
|
|
196,557,837
|
|
|
196,381,910
|
|
|
189,463,849
|
|
|
||||
Diluted weighted average common shares
|
|
195,898,794
|
|
|
209,855,936
|
|
|
208,387,236
|
|
|
198,743,096
|
|
|
(1)
|
Includes a
$1,494
,
$1,568
,
$1,380
and
$1,440
charge for non-cash compensation in the first, second, third and fourth quarters of 2018, respectively.
|
(2)
|
Due to rounding, the sum of the quarters' basic and diluted loss per common share do not equal the full fiscal year amount.
|
|
|
Quarters
|
|||||||||||||||
|
|
1
st
|
|
2
nd
|
|
3
rd
|
|
4th
|
|
||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues
|
|
$
|
290,291
|
|
|
$
|
311,536
|
|
|
$
|
322,309
|
|
|
$
|
344,016
|
|
|
Expenses
(1)
|
|
294,961
|
|
|
310,286
|
|
|
317,649
|
|
|
344,095
|
|
|
||||
(Loss) income before item shown below
|
|
(4,670
|
)
|
|
1,250
|
|
|
4,660
|
|
|
(79
|
)
|
|
||||
Change in fair value of contingent consideration
|
|
152
|
|
|
(63
|
)
|
|
(3
|
)
|
|
(67
|
)
|
|
||||
(Loss) income before income taxes
|
|
$
|
(4,518
|
)
|
|
$
|
1,187
|
|
|
$
|
4,657
|
|
|
$
|
(146
|
)
|
|
Net (loss) income
|
|
$
|
(3,679
|
)
|
|
$
|
1,325
|
|
|
$
|
3,402
|
|
|
$
|
6,634
|
|
|
Loss (income) attributable to noncontrolling interest
|
|
5
|
|
|
3
|
|
|
(3
|
)
|
|
10
|
|
|
||||
Net (loss) income attributable to the Company
|
|
$
|
(3,674
|
)
|
|
$
|
1,328
|
|
|
$
|
3,399
|
|
|
$
|
6,644
|
|
|
Dividends declared on preferred stock
|
|
(7,924
|
)
|
|
(7,953
|
)
|
|
(8,149
|
)
|
|
(8,456
|
)
|
|
||||
Net loss available to common shareholders
|
|
$
|
(11,598
|
)
|
|
$
|
(6,625
|
)
|
|
$
|
(4,750
|
)
|
|
$
|
(1,812
|
)
|
|
Basic loss per common share
(2)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
Diluted loss per common share
(2)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
Basic weighted average common shares
|
|
192,270,615
|
|
|
192,304,828
|
|
|
192,912,643
|
|
|
194,749,001
|
|
|
||||
Diluted weighted average common shares
|
|
192,270,615
|
|
|
192,304,828
|
|
|
192,912,643
|
|
|
194,749,001
|
|
|
(1)
|
Includes a
$1,429
,
$1,378
,
$1,341
and
$1,391
charge for non-cash compensation in the first, second, third and fourth quarters of 2017, respectively.
|
(2)
|
Due to rounding, the sum of the quarters' basic and diluted loss per common share do not equal the full fiscal year amount.
|
NAME
|
STATE OF ORGANIZATION
|
HCHC Acquisition Inc.
|
Delaware
|
Highland Capital Brokerage, Inc.
|
Delaware
|
Highland Capital Holding Corporation
|
Delaware
|
KMS Financial Services, Inc.
|
Washington
|
Securities America Financial Corporation
|
Nebraska
|
Securities America, Inc.
|
Delaware
|
Securities America Advisors, Inc.
|
Nebraska
|
Securities Service Network, LLC
|
Tennessee
|
Ladenburg Thalmann Advisor Network LLC
|
Florida
|
Ladenburg Thalmann & Co. Inc.
|
Delaware
|
Ladenburg Thalmann Asset Management Inc.
|
New York
|
Ladenburg Thalmann Annuity Insurance Services, LLC
|
Florida
|
Investacorp, Inc.
|
Florida
|
Investacorp Advisory Services Inc.
|
Florida
|
Triad Advisors, LLC
|
Florida
|
Triad Hybrid Solutions, LLC
|
Florida
|
Premier Trust, Inc.
|
Nevada
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|