eSpeed, Inc. (NASDAQ: ESPD), a leading developer of electronic
marketplaces and related trading technology for the global capital
markets, today announced that it has resolved the previously announced
evaluation of its accounting policy. As a result, the Company expects to
file within five business days a Form 10-K/A for the year ended December
31, 2006, a Form 10-Q/A for the quarter ended March 31, 2007, and a Form
10-Q for the quarter ended June 30, 2007.
The evaluation involved certain revenues and expenses related to a
portion of the development of related party software covered under the
Company’s Joint Services Agreement (the "JSA”)
with Cantor Fitzgerald, L.P. eSpeed had accounted for certain fees paid
by related parties for software development in the period in which the
cash was received. The Company has now concluded that some of these paid
fees should have been deferred and recognized over future periods.
After a thorough review by eSpeed’s management
in consultation with its outside auditors, the Company plans to restate
its financial statements for the fiscal years 2004 through 2006 and for
the first quarter ended March 31, 2007 as well as related financial
information and disclosures. The principal effect of this restatement
will be an aggregate non-cash reduction to revenue and income of less
than $4 million spread over the affected periods since 1999.
The Company expects this deferred revenue and income of less than $4
million recorded through this adjustment to be recognized between June
30, 2007 and the closing of its proposed merger with BGC Partners, Inc. ("BGC”)
and its affiliates and the related termination of the JSA. The planned
filings will reflect these restatements, and the Company believes that
no further amended filings will be required.
"BGC and eSpeed combined are expected to have
over $1.1 billion in revenue in 2008. This planned restatement is both
highly technical and non-cash and does not involve any reduction in
aggregate revenue or income for the combined company,”
said Howard W. Lutnick, Chairman, Chief Executive Officer and President
of eSpeed. "Now that this issue is resolved,
we can finalize our proxy statement and move towards the completion of
our highly-accretive proposed merger.”
In a related matter, eSpeed received an expected Staff Determination
Notice ("notice”)
from The
Nasdaq Stock Market on August 15, 2007. This notice stated that
because the Company was delayed in filing its second quarter 2007 Form
10-Q, eSpeed was not in compliance with Nasdaq Marketplace Rule
4310(c)(14) and that its Class A Common Stock was subject to potential
delisting from The Nasdaq Global Market. The notice is standard
procedure when a Nasdaq-listed company is not timely in filing a
periodic report. The Company expects to file its second quarter Form
10-Q within five business days and, accordingly, believes that the
deficiency mentioned above will be cured. In addition, eSpeed has also
requested a hearing before a Nasdaq Listing Qualifications Panel to
appeal the Staff Determination, and this request has automatically
stayed the delisting of the Company’s Class A
Common Stock pending the Panel’s review and
determination. eSpeed also believes that the planned filing will render
the purpose for the hearing moot.
About eSpeed, Inc.
eSpeed, Inc. (NASDAQ: ESPD) is a leader in developing and deploying
electronic marketplaces and related trading technology that offers
traders access to the most liquid, efficient and neutral financial
markets in the world. eSpeed operates multiple buyer, multiple seller
real-time electronic marketplaces for the global capital markets,
including the world's largest government bond markets and other fixed
income and foreign exchange marketplaces. eSpeed's suite of marketplace
tools provides end-to-end transaction solutions for the purchase and
sale of financial products over eSpeed's global private network or via
the Internet. eSpeed's neutral platform, reliable network,
straight-through processing and superior products make it the trusted
source for electronic trading at the world's largest fixed income and
foreign exchange trading firms and major exchanges. To learn more,
please visit www.espeed.com.
On May 29, 2007, eSpeed announced that it had entered into an Agreement
and Plan of Merger, dated as of May 29, 2007, with BGC Partners, Inc. ("BGC”);
Cantor Fitzgerald, L.P. ("Cantor”);
BGC Partners, L.P., a Delaware limited partnership; BGC Global Holdings,
L.P., a Cayman Islands exempted limited partnership; and BGC Holdings,
L.P., a Delaware limited partnership pursuant to which eSpeed will
acquire BGC and its affiliates through a merger of BGC Partners with and
into eSpeed. For more information, see eSpeed’s
Report on Form 8-K dated May 29, 2007.
Important Information
In connection with the proposed Merger, the Company intends to file a
proxy statement and related materials with the U.S. Securities and
Exchange Commission (the "SEC”)
for the meeting of stockholders to vote on the proposed Merger. BECAUSE
THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION, HOLDERS OF THE
COMPANY’S COMMON STOCK ARE URGED TO READ THEM
CAREFULLY, IF AND WHEN THEY BECOME AVAILABLE. When filed with the SEC,
the proxy statement and related materials will be available for free
(along with any other documents and reports filed by the Company with
the SEC) at the SEC’s website, www.sec.gov,
and at the Company’s website, www.espeed.com.
Participant Information
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company’s
stockholders in connection with the proposed Merger. Certain information
regarding the participants and their interests in the solicitation are
set forth in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006, which was filed with the
SEC on March 15, 2007, and will be set forth in the proxy statement for
the Company’s meeting of stockholders to vote
on the proposed Merger. Stockholders may obtain additional information
regarding the proposed Merger by reading the proxy statement and the
related materials relating to the proposed Merger, if and when they
become available.
Discussion of Forward-Looking Statements
The information in this release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements are based upon current expectations that
involve risks and uncertainties. Any statements contained herein that
are not statements of historical fact may be deemed to be
forward-looking statements. For example, words such as "may,” "will,” "should,” "estimates,” "predicts,” "potential,” "continue,” "strategy,” "believes,” "anticipates,” "plans,” "expects,” "intends”
and similar expressions are intended to identify forward-looking
statements.
The actual results of eSpeed, BGC or the combined company in the merger ("we”,
"our” or the "combined
company”) and the outcome and timing of
certain events may differ significantly from the expectations discussed
in the forward-looking statements. Factors that might cause or
contribute to such a discrepancy for eSpeed, BGC and/or the combined
company include, but are not limited to, the combined company’s
relationship with Cantor and its affiliates and any related conflicts of
interests, competition for and retention of brokers and other managers
and key employees, pricing and commissions and market position with
respect to any of our products, and that of the combined company’s
respective competitors, the effect of industry concentration and
consolidation, and market conditions, including trading volume and
volatility, as well as economic or geopolitical conditions or
uncertainties. Results may also be impacted by the extensive regulation
of our respective businesses and risks relating to compliance matters,
as well as factors related to specific transactions or series of
transactions, including credit, performance and unmatched principal risk
as well as counterparty failure. Factors may also include the costs and
expenses of developing, maintaining and protecting intellectual
property, including judgments or settlements paid or received in
connection with intellectual property or employment or other litigation
and their related costs, and certain financial risks, including the
possibility of future losses and negative cash flow from operations,
risks of obtaining financing and risks of the resulting leverage, as
well as interest and currency rate fluctuations.
Discrepancies may also result from such factors as the ability to enter
new markets or develop new products, trading desks, marketplaces or
services and to induce customers to use these products, trading desks,
marketplaces or services, to secure and maintain market share, to enter
into marketing and strategic alliances, and other transactions,
including acquisitions, dispositions, reorganizations, partnering
opportunities, and joint ventures, and the integration of any completed
transactions, to hire new personnel, to expand the use of technology for
screen-assisted, voice-assisted and fully electronic trading and to
effectively manage any growth that may be achieved. Results are also
subject to risks relating to the proposed merger and separation of the
BGC businesses and the relationship between the various entities,
financial reporting, accounting and internal control factors, including
identification of any material weaknesses in our internal controls, our
ability to prepare historical and pro forma financial statements and
reports in a timely manner, and other factors, including those that are
discussed under "Risk Factors”
in each of eSpeed’s Annual Report on Form
10-K for the year ended December 31, 2006 filed with the SEC on March
15, 2007 and BGC’s Registration Statement on
Form S-1 filed with the SEC on February 8, 2007 (Registration No.
333-140531) to the extent applicable.
We believe that all forward-looking statements are based upon reasonable
assumptions when made. However, we caution that it is impossible to
predict actual results or outcomes or the effects of risks,
uncertainties or other factors on anticipated results or outcomes and
that accordingly you should not place undue reliance on these
statements. Forward-looking statements speak only as of the date when
made and we undertake no obligation to update these statements in light
of subsequent events or developments.
