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Discontinued Operations | 3 Months Ended
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Mar. 31, 2019
Newmark [Member] |
Discontinued Operations |
2 5. | Discontinued Operations
On November 30, 2018, the Company completed the Spin-Off of Newmark, and distributed to its stockholders all of the Class A common shares and Class B common shares of Newmark that the Company then owned in a manner that is intended to qualify as generally tax-free for U.S. federal income tax purposes. The shares of Class A common stock of Newmark held by the Company were distributed to the holders of shares of Class A common stock of BGC, and shares of Class B common stock of Newmark held by the Company were distributed to the holders of shares of Class B common stock of BGC. Therefore, the Company no longer consolidates Newmark within its financial results subsequent to the Spin-Off. The Company has determined that the Spin-Off of Newmark met the criteria for reporting the financial results of Newmark as discontinued operations within BGC’s consolidated results for all periods through the November 30, 2018 Spin-Off date. Newmark’s results are presented in “Consolidated net income (loss) from discontinued operations, net of tax” and the related noncontrolling interest in Newmark and its subsidiaries is presented in “Net income (loss) from discontinued operations attributable to noncontrolling interest in subsidiaries” in the Company’s unaudited condensed consolidated statements of operations for the three months ended March 31, 2018. The following table provides the components of consolidated net income (loss) from discontinued operations, net of tax and net income (loss) from discontinued operations attributable to noncontrolling interest in subsidiaries for the three months ended March 31, 2018:
|  | For the Three Months Ended March 31, 2018 |
Revenues: |  |  |  |
Commissions |  | $ | 260,742 |
Gains from mortgage banking activities/originations, net |  |  | 38,914 |
Real estate management and other services |  |  | 96,878 |
Servicing fees |  |  | 28,926 |
Fees from related parties |  |  | 291 |
Interest income |  |  | 6,073 |
Other revenues |  |  | 48 |
Total revenues |  |  | 431,872 |
Expenses: |  |  |  |
Compensation and employee benefits |  |  | 264,200 |
Equity-based compensation and allocations of net income to limited partnership units and FPUs |  |  | 18,607 |
Total compensation and employee benefits |  |  | 282,807 |
Occupancy and equipment |  |  | 17,637 |
Fees to related parties |  |  | 3,713 |
Professional and consulting fees |  |  | 8,173 |
Communications |  |  | 3,451 |
Selling and promotion |  |  | 13,624 |
Commissions and floor brokerage |  |  | 180 |
Interest expense |  |  | 17,770 |
Other expenses |  |  | 51,253 |
Total expenses |  |  | 398,608 |
Other income (losses), net: |  |  |  |
Gains (losses) on equity method investments |  |  | 3,177 |
Other income (loss) |  |  | 2,531 |
Total other income (losses), net |  |  | 5,708 |
Income (loss) from operations before income taxes |  |  | 38,972 |
Provision (benefit) for income taxes |  |  | 14,213 |
Consolidated net income (loss) from discontinued operations, net of tax |  |  | 24,759 |
Less: Net income (loss) from discontinued operations attributable to noncontrolling interest in subsidiaries |  |  | 9,983 |
Net income (loss) from discontinued operations available to common stockholders |  | $ | 14,776 |
Total net cash used in operating activities from discontinued operations was $485.5 million for the three months ended March 31, 2018. Total net cash provided by investing activities from discontinued operations was $40.8 million for the three months ended March 31, 2018. During the three months ended March 31, 2018, exchangeability was granted on 1.5 million and 0.7 million limited partnership units in BGC Holdings and Newmark Holdings, respectively, held by Newmark employees, for which Newmark incurred compensation expense of $21.7 million. This expense was recorded as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the table above, and are included in “Consolidated net income (loss) from discontinued operations, net of tax” in the Company’s unaudited condensed consolidated statements of operations. Certain limited partnership units generally receive quarterly allocations of net income, which are cash distributed on a quarterly basis and generally contingent upon services provided by the unit holder. Newmark’s allocation of income to Newmark Holdings limited partnership units held by Newmark employees was $5.3 million for the three months ended March 31, 2018. This expense was recorded as part of “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in the table above, and is included in “Consolidated net income (loss) from discontinued operations, net of tax” in the Company’s unaudited condensed consolidated statements of operations. In connection with the Separation, on December 13, 2017, Newmark OpCo assumed all of BGC U.S. OpCo’s rights and obligations under the 2042 Promissory Note in relation to the 8.125% Senior Notes and the 2019 Promissory Note in relation to the 5.375% Senior Notes. Newmark repaid the $112.5 million outstanding principal amount under the 2042 Promissory Note on September 5, 2018, and repaid the $300.0 million outstanding principal amount under the 2019 Promissory Note on November 23, 2018. In addition, as part of the Separation, Newmark assumed the obligations of BGC as borrower under the Term Loan and Converted Term Loan. Newmark repaid the outstanding balance of the Term Loan as of March 31, 2018, and repaid the outstanding balance of the Converted Term Loan as of November 6, 2018. For the three months ended March 31, 2018, $13.8 million of interest expense on the obligations assumed as part of the Separation, was included as part of discontinued operations in the table above. In addition, on March 19, 2018, the Company borrowed $150.0 million under the BGC Credit Agreement from Cantor, and loaned Newmark $150.0 million under the Intercompany Credit Agreement on the same day. All borrowings outstanding under the Intercompany Credit Agreement were repaid as of November 7, 2018. The interest expense for the three months ended March 31, 2018 related to the $150.0 million borrowed under the BGC Credit Agreement was $0.3 million and was allocated to discontinued operations in the table above.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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