JERSEY CITY, N.J., July 31, 2015 /PRNewswire/ -- KCG
Holdings, Inc. (NYSE: KCG) today reported a GAAP net loss of
$19.2 million, or $0.18 per share, for the second quarter of 2015.
Included in the $57.1 million pre-tax
loss is an accelerated compensation expense of $28.8 million as a result of stockholder-approved
changes made to the vesting provisions of outstanding annual equity
awards; debt extinguishment charges comprising a debt "make-whole"
premium and a writedown of capitalized debt costs of
$16.5 million and $8.5 million, respectively, as a result of the
early redemption of the $305 million
8.25% Senior Secured Notes; and other real estate related charges
of $6.3 million. Excluding these
items, on a non-GAAP basis, second quarter 2015 pre-tax income from
continuing operations was $3.1
million. A reconciliation of GAAP to non-GAAP results is
included in Exhibit 4.
Select Financial
Results
|
($ in thousands,
except EPS)
|
From Continuing
Operations
|
2Q15
|
|
1Q15
|
|
2Q14
|
GAAP
Revenues
|
261,882
|
|
696,156
|
|
314,133
|
Non-GAAP
revenues*
|
261,882
|
|
311,130
|
|
314,133
|
Trading
revenues, net
|
170,750
|
|
208,795
|
|
206,780
|
Commissions and fees
|
87,370
|
|
99,961
|
|
104,776
|
GAAP pre-tax (loss)
income
|
(57,114)
|
|
406,128
|
|
14,507
|
GAAP EPS
|
(0.18)
|
|
2.19
|
|
0.08
|
Non-GAAP pre-tax
income*
|
3,068
|
|
32,427
|
|
21,512
|
* See Exhibit 4 for a reconciliation of GAAP to non-GAAP
results.
Second Quarter Highlights
- KCG market making's share of retail SEC Rule 605 U.S. equity
share volume increased more than one full percentage point from
first quarter 2015
- The percentage of algorithmic trading and order routing net
revenue attributable to institutional clients grew for the third
straight quarter
- Repurchased 23.6 million shares of KCG Class A Common Stock for
$330 million through a "modified
Dutch auction" tender offer
- Completed the refinancing of the $305
million 8.25% Senior Secured Notes due in 2018
- Subsequent to the quarter, KCG entered into an agreement to
relocate its global headquarters to New
York City
Daniel Coleman, Chief Executive
Officer of KCG, said, "During the second quarter, KCG continued to
focus on strategic clients, completed a tender offer for 22 percent
of shares outstanding, excluding restricted stock units, and
developed plans to consolidate global headquarters in New York City. The financial results, however,
were negatively affected by the deterioration in market-wide
volumes and volatility in U.S. equities from the first quarter,
heightened competition for retail order flow, and several
non-operating items. While we believe KCG is steadily developing
into a major multi-asset class liquidity provider, the results do
not meet our expectations. As a firm, we cannot assume that the
market environment will improve. To generate the right returns for
our shareholders, we will continuously review, adjust, and improve
how we run our business."
Market Making
The Market Making segment encompasses
direct-to-client and non-client, exchange-based market making
across multiple asset classes and is an active participant in all
major cash, options and futures markets in the U.S., Europe and Asia. During the second quarter of 2015, the
segment generated total revenues of $192.3
million and pre-tax income of $4.4
million. Excluding expenses related to accelerated
stock-based compensation of $19.8
million, the segment generated pre-tax income of
$24.2 million.
During the second quarter of 2015, consolidated U.S. equity
share and dollar volume continued to decline quarter over quarter
along with realized volatility for the S&P 500. In particular,
retail trading activity declined approximately 10 percent
market-wide amid continued strong competition and a narrowing of
spreads. KCG's results were augmented by solid contributions from
Asian equities, U.S. commodities and European fixed income,
partially offset by U.S. fixed income.
Mr. Coleman commented, "Although direct-to-client market making
in U.S. equities increased market share and our models performed
well, the current competitive environment remains a challenge in
terms of revenue realization. We are committed to improving returns
irrespective of an improvement in the competitive or macro
environment. Outside of U.S. equities, we continued to diversify in
select asset classes, add strategies and build scale."
In the first quarter of 2015, the segment generated total
revenues of $224.5 million and
pre-tax income of $39.3
million. In the second quarter of 2014, the segment
generated total revenues of $218.4
million and pre-tax income of $36.0
million.
Select Trade
Statistics: U.S. Equity Market Making
|
|
2Q15
|
|
1Q15
|
|
2Q14
|
Average daily dollar
volume traded ($ millions)
|
27,883
|
|
31,025
|
|
25,143
|
Average daily trades
(thousands)
|
3,550
|
|
3,947
|
|
3,620
|
Average daily shares
traded (millions)
|
5,785
|
|
5,048
|
|
10,820
|
NYSE and
NASDAQ shares traded
|
885
|
|
933
|
|
758
|
OTC
Bulletin Board and OTC Market shares traded
|
4,900
|
|
4,115
|
|
10,061
|
Average revenue
capture per U.S. equity dollar value traded (bps)
|
0.80
|
|
0.92
|
|
1.07
|
Global Execution Services
The Global Execution
Services segment comprises agency execution services and trading
venues. During the second quarter of 2015, the segment generated
total revenues of $63.5 million and a
pre-tax loss of $9.9 million.
Excluding expenses related to accelerated stock-based compensation
of $8.2 million, the segment
generated a pre-tax loss of $1.7
million.
During the second quarter of 2015, in addition to the decline in
consolidated U.S. equity share volume quarter over quarter, ETF
trading activity decreased approximately 13 percent market-wide.
Also, during the quarter, institutional investors in the U.S.
experienced an acceleration in domestic mutual fund outflows. All
periods prior to the second quarter include the results of KCG
Hotspot up through the date of its sale on March 13, 2015.
Mr. Coleman commented, "Despite the market-wide decline in U.S.
equity trading activity quarter over quarter, KCG's algorithmic
trading and sales and trading teams were little affected. During
the second quarter, 18 asset managers began using KCG algorithms
and we onboarded an additional 10 new asset management clients. The
results in ETFs, however, were affected by the market-wide decline
in trading activity."
In the first quarter of 2015, excluding the gain on the sale of
KCG Hotspot FX and related professional and compensation expenses,
the segment generated total revenues of $79.2 million and pre-tax income of $7.2 million. In the second quarter of 2014,
the segment generated total revenues of $85.9 million and pre-tax income of $0.7 million. Excluding $1.9 million in compensation related to a
reduction in workforce, pre-tax income was $2.6 million.
Select Trade
Statistics: Agency Execution and Trading Venues
|
|
2Q15
|
|
1Q15
|
|
2Q14
|
Average daily KCG
algorithmic trading and order routing
U.S. equities shares
traded (millions)
|
287.0
|
|
299.0
|
|
265.3
|
Average daily KCG
BondPoint fixed income par value
traded ($
millions)
|
138.3
|
|
145.8
|
|
133.7
|
Corporate and Other
The Corporate and Other segment
includes strategic investments and corporate overhead expenses.
During the second quarter of 2015, the segment generated total
revenues of $6.0 million and a
pre-tax loss of $51.6 million.
Excluding expenses related to accelerated stock-based compensation
of $0.8 million, a debt make-whole
premium of $16.5 million, writedown
of capitalized debt costs of $8.5
million, and other real estate related charges of
$6.3 million, the segment generated a
pre-tax loss of $19.4 million.
In the first quarter of 2015, the segment generated total
revenues of $7.3 million and a
pre-tax loss of $14.3
million. In the second quarter of 2014, the segment
generated total revenues of $9.8
million and a pre-tax loss of $22.2
million. Excluding a $2.0
million writedown of capitalized debt costs related to the
principal repayment of debt, $0.8
million in compensation related to a reduction in workforce,
and a lease loss accrual of $1.5
million, the pre-tax loss was $17.9
million.
During the second quarter of 2015 KCG effected a change in tax
status of one of its subsidiaries and as a result reversed a
valuation allowance on certain state tax net operating losses and
other deferred tax assets. This resulted in a one-time deferred tax
benefit of $16.2 million and a
corresponding increase to KCG's deferred tax asset.
Financial Condition
As of June
30, 2015, KCG had $541.3
million in cash and cash equivalents. Total outstanding debt
was $495.1 million. The Company had
$1.47 billion in stockholders'
equity, equivalent to a book value of $15.58 per share and tangible book value of
$14.05 per share based on total
shares outstanding of 94.4 million, including restricted stock
units.
KCG's headcount was 1,045 full-time employees at June 30, 2015 compared to 1,038 full-time
employees at March 31, 2015.
During the second quarter of 2015, KCG completed a "modified
Dutch auction" tender offer and repurchased 23.6 million shares of
KCG's Class A Common Stock at a purchase price of $14.00 per share, for a cost of $330 million, excluding expenses related to the
tender offer. The repurchased shares represented approximately 22%
of KCG's Class A Common Stock outstanding excluding restricted
stock units as of May 7, 2015.
Relocation of Global Headquarters
Subsequent to the
second quarter, KCG entered into an agreement to relocate its
global headquarters from Jersey City,
NJ to New York City. Under
a plan authorized by the Board of Directors, KCG will reduce
occupied space and consolidate legacy metro area offices in
Jersey City, NJ and New York, NY. KCG's new headquarters will
encompass 169,000 square feet at 300 Vesey Street, in lower
Manhattan. The relocation is
expected to be substantially completed at the end of 2016.
As a result of the planned relocation and consolidation of metro
New York area offices and a
reduction of occupied space in Chicago, KCG expects to incur additional
expenses through fiscal year 2016. KCG will record non-recurring,
real estate charges of $25 to $30
million in the 3rd quarter of 2015 related to the early
termination of leases at 545 Washington Boulevard in Jersey City, NJ and 165 Broadway in
New York, NY as well as a
consolidation of space at 350 N. Orleans Street in Chicago, IL. Further, the Company will record
added depreciation and amortization expenses of approximately
$4.5 to $5.0 million per quarter
beginning in the 3rd quarter of 2015 and running through the 4th
quarter of 2016 as well as added occupancy costs of approximately
$1.5 million per quarter beginning in
the 4th quarter of 2015 and running through the 4th quarter of
2016.
Conference Call
KCG will hold a conference call to
discuss second quarter 2015 financial results starting at
9:00 a.m. Eastern Time today,
July 31, 2015. To access the call,
dial 800-401-3551 (domestic) or 913-312-0726 (international) and
enter passcode 3586698. In addition, the call will be webcast at
http://investors.kcg.com/phoenix.zhtml?p=irol-eventDetails&c=105070&eventID=5196957.
Following the conclusion of the call, a replay will be available by
selecting a number based on country of origin from a list posted
at:
https://replaynumbers.conferencinghub.com/index.aspx?confid=7898269&passcode=7898269 and
entering passcode 3586698.
Additional information for investors, including a presentation
of the second quarter financial results, can be found at
http://investors.kcg.com.
Non-GAAP Financial Presentations
KCG believes that
certain non-GAAP financial presentations, when taken into
consideration with the corresponding GAAP financial presentations,
are important in understanding operating results. Selected
financial information is included in the non-GAAP financial
presentations for the three months ended June 30, 2015, March 31,
2015 and June 30, 2014 and for
the six months ended June 30, 2015
and June 30, 2014. KCG believes the
presentations provide a meaningful summary of revenues and results
of operations for each of the three and six month periods.
Reconciliations of GAAP to non-GAAP results are included in the
schedules in Exhibit 4.
About KCG
KCG is a leading independent securities firm
offering investors and clients a range of services designed to
address trading needs across asset classes, product types and time
zones. The firm combines advanced technology with exceptional
client service across market making, agency execution and venues.
KCG has multiple access points to trade global equities, fixed
income, currencies and commodities via voice or automated
execution. www.kcg.com
Certain statements contained herein may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by words
such as "believe," "expect," "anticipate," "intend," "target,"
"estimate," "continue," "positions," "prospects" or "potential," by
future conditional verbs such as "will," "would," "should," "could"
or "may," or by variations of such words or by similar expressions.
These "forward-looking statements" are not historical facts and are
based on current expectations, estimates and projections about
KCG's industry, management's beliefs and certain assumptions made
by management, many of which, by their nature, are inherently
uncertain and beyond our control. Any forward-looking statement
contained herein speaks only as of the date on which it is made.
Accordingly, readers are cautioned that any such forward-looking
statements are not guarantees of future performance and are subject
to certain risks, uncertainties and assumptions that are difficult
to predict including, without limitation, risks associated with:
(i) the strategic business combination (the "Mergers")
of Knight Capital Group, Inc. ("Knight")
and GETCO Holding Company, LLC ("GETCO"); (ii)
difficulties and delays in fully realizing cost savings and other
benefits of the Mergers and the inability to manage revenue capture
and sustain revenue and earnings growth; (iii) the sale of KCG
Hotspot; (iv) changes in market structure, legislative, regulatory
or financial reporting rules, including the increased focus by
regulators, the New York Attorney
General, Congress and the media on market structure issues, and in
particular, the scrutiny of high frequency trading, alternative
trading systems, market fragmentation, colocation, access to market
data feeds, and remuneration arrangements such as payment for order
flow and exchange fee structures; (v) past or future changes to
KCG's organizational structure and management; (vi) KCG's ability
to develop competitive new products and services in a timely manner
and the acceptance of such products and services by KCG's customers
and potential customers; (vii) KCG's ability to keep up with
technological changes; (viii) KCG's ability to effectively identify
and manage market risk, operational and technology risk (such as
the events that affected Knight on August 1,
2012), legal risk, liquidity risk, reputational risk,
counterparty and credit risk, international risk, regulatory risk,
and compliance risk; (ix) the cost and other effects of material
contingencies, including litigation contingencies, and any adverse
judicial, administrative or arbitral rulings or proceedings; (x)
the effects of increased competition and KCG's ability to maintain
and expand market share; and (xi) the announced plan to relocate
KCG's global headquarters from Jersey
City, NJ to New York,
NY. The list above is not exhaustive. Readers should carefully
review the risks and uncertainties disclosed in KCG's reports with
the SEC, including, without limitation, those detailed under "Risk
Factors" in KCG's Annual Report on Form 10-K for the year-ended
December 31, 2014, Quarterly Report
on Form 10-Q for the quarter-ended March 31,
2015, and other reports or documents KCG files with, or
furnishes to, the SEC from time to time.
KCG HOLDINGS,
INC.
|
|
|
|
|
|
|
|
Exhibit
1
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
|
|
June 30,
2015
|
|
|
March 31,
2015
|
|
|
June 30,
2014
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Trading revenues,
net
|
$
|
170,750
|
|
$
|
208,795
|
|
$
|
206,780
|
|
Commissions and
fees
|
|
87,370
|
|
|
99,961
|
|
|
104,776
|
|
Interest,
net
|
|
(596)
|
|
|
(23)
|
|
|
(289)
|
|
Investment income and
other, net
|
|
4,358
|
|
|
387,423
|
|
|
2,866
|
|
|
Total
revenues
|
|
261,882
|
|
|
696,156
|
|
|
314,133
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
109,471
|
|
|
106,718
|
|
|
103,430
|
|
Execution and
clearance fees
|
|
62,598
|
|
|
68,473
|
|
|
73,242
|
|
Communications and
data processing
|
|
34,240
|
|
|
33,764
|
|
|
38,279
|
|
Depreciation and
amortization
|
|
20,726
|
|
|
20,615
|
|
|
19,823
|
|
Payments for order
flow
|
|
14,935
|
|
|
15,221
|
|
|
18,076
|
|
Debt interest
expense
|
|
9,989
|
|
|
8,463
|
|
|
7,497
|
|
Collateralized
financing interest
|
|
8,859
|
|
|
8,456
|
|
|
6,395
|
|
Occupancy and
equipment rentals
|
|
7,474
|
|
|
7,340
|
|
|
8,235
|
|
Professional
fees
|
|
5,694
|
|
|
11,181
|
|
|
7,337
|
|
Business
development
|
|
3,025
|
|
|
1,857
|
|
|
2,609
|
|
Debt extinguishment
charges
|
|
25,006
|
|
|
-
|
|
|
1,995
|
|
Other real estate
related charges
|
|
6,327
|
|
|
132
|
|
|
1,941
|
|
Other
|
|
10,652
|
|
|
7,808
|
|
|
10,767
|
|
|
Total
expenses
|
|
318,996
|
|
|
290,028
|
|
|
299,626
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from
continuing operations before income taxes
|
|
(57,114)
|
|
|
406,128
|
|
|
14,507
|
Income tax (benefit)
expense
|
|
(37,952)
|
|
|
156,827
|
|
|
5,520
|
(Loss) Income from
continuing operations, net of tax
|
|
(19,162)
|
|
|
249,301
|
|
|
8,987
|
Loss from
discontinued operations, net of tax
|
|
-
|
|
|
-
|
|
|
(67)
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
$
|
(19,162)
|
|
$
|
249,301
|
|
$
|
8,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share from continuing operations
|
$
|
(0.18)
|
|
$
|
2.25
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share from continuing operations
|
$
|
(0.18)
|
|
$
|
2.19
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
from discontinued operations
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share from discontinued operations
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share
|
$
|
(0.18)
|
|
$
|
2.25
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share
|
$
|
(0.18)
|
|
$
|
2.19
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic (loss) earnings per share
|
|
108,588
|
|
|
110,782
|
|
|
114,859
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted (loss) earnings per share
|
|
108,588
|
|
|
113,615
|
|
|
117,601
|
KCG HOLDINGS,
INC.
|
|
|
|
|
Exhibit
1
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
(Continued)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
For the six months
ended
|
|
|
|
|
June 30,
2015
|
|
|
June 30,
2014
|
|
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Trading revenues,
net
|
$
|
379,545
|
|
$
|
465,077
|
|
Commissions and
fees
|
|
187,331
|
|
|
217,033
|
|
Interest,
net
|
|
(619)
|
|
|
659
|
|
Investment income and
other, net
|
|
391,781
|
|
|
15,021
|
|
|
Total
revenues
|
|
958,038
|
|
|
697,790
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
216,189
|
|
|
225,749
|
|
Execution and
clearance fees
|
|
131,071
|
|
|
148,743
|
|
Communications and
data processing
|
|
68,004
|
|
|
75,075
|
|
Depreciation and
amortization
|
|
41,341
|
|
|
39,926
|
|
Payments for order
flow
|
|
30,156
|
|
|
40,108
|
|
Debt interest
expense
|
|
18,452
|
|
|
17,021
|
|
Collateralized
financing interest
|
|
17,315
|
|
|
12,557
|
|
Occupancy and
equipment rentals
|
|
14,814
|
|
|
16,520
|
|
Professional
fees
|
|
16,875
|
|
|
12,739
|
|
Business
development
|
|
4,882
|
|
|
4,292
|
|
Debt extinguishment
charges
|
|
25,006
|
|
|
9,552
|
|
Other real estate
related charges
|
|
6,459
|
|
|
2,207
|
|
Other
|
|
18,460
|
|
|
19,410
|
|
|
Total
expenses
|
|
609,024
|
|
|
623,899
|
|
|
|
|
|
|
|
|
(Loss) Income from
continuing operations before income taxes
|
|
349,014
|
|
|
73,891
|
Income tax (benefit)
expense
|
|
118,875
|
|
|
27,987
|
(Loss) Income from
continuing operations, net of tax
|
|
230,139
|
|
|
45,904
|
Loss from
discontinued operations, net of tax
|
|
-
|
|
|
(1,320)
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
$
|
230,139
|
|
$
|
44,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share from continuing operations
|
$
|
2.08
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share from continuing operations
|
$
|
2.02
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
Basic loss per share
from discontinued operations
|
$
|
-
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
Diluted loss per
share from discontinued operations
|
$
|
-
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share
|
$
|
2.08
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share
|
$
|
2.02
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic (loss) earnings per share
|
|
110,890
|
|
|
115,282
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted (loss) earnings per share
|
|
113,809
|
|
|
118,170
|
KCG HOLDINGS,
INC.
|
|
|
Exhibit
2
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
541,292
|
|
$
|
578,768
|
|
Cash and cash
equivalents segregated under federal and other
regulations
|
|
|
3,600
|
|
|
3,361
|
|
Financial instruments
owned, at fair value:
|
|
|
|
|
|
|
|
Equities
|
|
|
|
2,391,499
|
|
|
2,479,910
|
|
Listed
options
|
|
|
|
117,934
|
|
|
144,586
|
|
Debt
securities
|
|
|
|
185,938
|
|
|
82,815
|
|
Other financial
instruments
|
|
|
|
355
|
|
|
60
|
|
Total financial
instruments owned, at fair value
|
|
|
2,695,726
|
|
|
2,707,371
|
|
Collateralized
agreements:
|
|
|
|
|
|
|
|
Securities
borrowed
|
|
|
|
1,871,312
|
|
|
1,632,062
|
|
Receivable from
brokers, dealers and clearing organizations
|
|
|
690,291
|
|
|
1,188,833
|
|
Fixed
assets and leasehold improvements,
|
|
|
|
|
|
|
|
less
accumulated depreciation and amortization
|
|
|
116,849
|
|
|
134,051
|
|
Investments
|
|
|
107,348
|
|
|
100,726
|
|
Goodwill and
Intangible assets, less accumulated amortization
|
|
|
144,798
|
|
|
152,594
|
|
Deferred tax asset,
net
|
|
|
180,673
|
|
|
154,759
|
|
Assets of business
held for sale
|
|
|
-
|
|
|
40,484
|
|
Other
assets
|
|
|
234,459
|
|
|
137,645
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
6,586,348
|
|
$
|
6,830,654
|
|
|
|
|
|
|
|
|
|
LIABILITIES &
EQUITY
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Financial instruments
sold, not yet purchased, at fair value:
|
|
|
|
|
|
|
|
Equities
|
|
|
$
|
1,785,493
|
|
$
|
2,069,342
|
|
Listed
options
|
|
|
|
93,113
|
|
|
115,362
|
|
Debt
securities
|
|
|
|
159,551
|
|
|
101,003
|
|
Total financial
instruments sold, not yet purchased, at fair value
|
|
|
2,038,157
|
|
|
2,285,707
|
|
Collateralized
financings:
|
|
|
|
|
|
|
|
Securities loaned
|
|
|
|
741,732
|
|
|
707,744
|
|
Financial instruments sold under agreements to
repurchase
|
|
|
|
995,667
|
|
|
933,576
|
|
Total collateralized
financings
|
|
|
1,737,399
|
|
|
1,641,320
|
|
|
|
|
|
|
|
|
|
|
Payable to brokers,
dealers and clearing organizations
|
|
|
529,748
|
|
|
676,089
|
|
Payable to
customers
|
|
|
38,282
|
|
|
22,110
|
|
Accrued compensation
expense
|
|
|
64,040
|
|
|
114,559
|
|
Accrued expenses and
other liabilities
|
|
|
144,390
|
|
|
136,977
|
|
Income taxes
payable
|
|
|
64,107
|
|
|
-
|
|
Capital lease
obligations
|
|
|
|
3,877
|
|
|
6,700
|
|
Liabilities of
business held for sale
|
|
|
-
|
|
|
2,356
|
|
Debt
|
|
|
495,113
|
|
|
422,259
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
5,115,113
|
|
|
5,308,077
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Class A Common
Stock
|
|
|
|
1,059
|
|
|
1,275
|
|
Additional paid-in
capital
|
|
|
|
1,429,368
|
|
|
1,369,298
|
|
Retained
earnings
|
|
|
|
173,155
|
|
|
272,780
|
|
Treasury stock, at
cost
|
|
|
|
(133,562)
|
|
|
(122,909)
|
|
Accumulated other
comprehensive income
|
|
|
|
1,214
|
|
|
2,133
|
Total
equity
|
|
|
1,471,234
|
|
|
1,522,577
|
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
6,586,348
|
|
$
|
6,830,654
|
KCG HOLDINGS,
INC.
|
|
|
|
|
|
|
|
|
Exhibit
3
|
PRE-TAX EARNINGS
(LOSS) FROM CONTINUING OPERATIONS BY BUSINESS
SEGMENT*
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
|
June 30,
2015
|
|
|
March 31,
2015
|
|
|
June 30,
2014
|
Market
Making
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
192,328
|
|
$
|
224,548
|
|
$
|
218,446
|
Expenses
|
|
|
187,926
|
|
|
185,208
|
|
|
182,442
|
Pre-tax
earnings
|
|
|
4,402
|
|
|
39,340
|
|
|
36,004
|
|
|
|
|
|
|
|
|
|
|
Global Execution
Services
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
63,522
|
|
|
464,266
|
|
|
85,903
|
Expenses
|
|
|
73,459
|
|
|
83,208
|
|
|
85,167
|
Pre-tax (loss)
earnings
|
|
|
(9,937)
|
|
|
381,058
|
|
|
736
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
6,032
|
|
|
7,342
|
|
|
9,784
|
Expenses
|
|
|
57,611
|
|
|
21,612
|
|
|
32,017
|
Pre-tax
loss
|
|
|
(51,579)
|
|
|
(14,270)
|
|
|
(22,233)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
261,882
|
|
|
696,156
|
|
|
314,133
|
Expenses
|
|
|
318,996
|
|
|
290,028
|
|
|
299,626
|
Pre-tax (loss)
earnings
|
|
$
|
(57,114)
|
|
$
|
406,128
|
|
$
|
14,507
|
|
|
|
|
|
|
|
|
|
|
* Totals may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
KCG HOLDINGS,
INC.
|
|
|
|
|
|
|
|
|
Exhibit
3
|
PRE-TAX EARNINGS
(LOSS) FROM CONTINUING OPERATIONS BY BUSINESS
SEGMENT*
|
(Continued)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended
|
|
|
|
|
|
|
June 30,
2015
|
|
|
June 30,
2014
|
|
|
|
Market
Making
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
416,876
|
|
$
|
495,792
|
|
|
|
Expenses
|
|
|
373,134
|
|
|
383,756
|
|
|
|
Pre-tax
earnings
|
|
|
43,742
|
|
|
112,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Execution
Services
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
527,788
|
|
|
173,123
|
|
|
|
Expenses
|
|
|
156,667
|
|
|
170,371
|
|
|
|
Pre-tax
earnings
|
|
|
371,121
|
|
|
2,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
13,374
|
|
|
28,875
|
|
|
|
Expenses
|
|
|
79,223
|
|
|
69,772
|
|
|
|
Pre-tax
loss
|
|
|
(65,849)
|
|
|
(40,897)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
958,038
|
|
|
697,790
|
|
|
|
Expenses
|
|
|
609,024
|
|
|
623,899
|
|
|
|
Pre-tax
earnings
|
|
$
|
349,014
|
|
$
|
73,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Totals may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
KCG HOLDINGS,
INC.
|
|
|
|
|
|
|
|
Exhibit
4
|
Regulation G
Reconciliation of Non-GAAP financial measures (Continuing
operations)*
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2015
|
|
Market
Making
|
|
Global
Execution Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Pre-Tax to Non-GAAP
Pre-Tax:
|
|
|
|
|
|
|
|
|
GAAP Income (loss)
from continuing operations before income taxes
|
|
$
4,402
|
|
$
(9,937)
|
|
$
(51,579)
|
|
$
(57,114)
|
Accelerated
stock-based compensation
|
|
19,844
|
|
8,202
|
|
803
|
|
28,849
|
Debt make-whole
premium
|
|
-
|
|
-
|
|
16,500
|
|
16,500
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
8,506
|
|
8,506
|
Other real estate
related charges
|
|
-
|
|
-
|
|
6,327
|
|
6,327
|
Non-GAAP Income
(loss) from continuing operations before income
taxes
|
|
$
24,246
|
|
$
(1,735)
|
|
$
(19,443)
|
|
$
3,068
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2015
|
|
Market
Making
|
|
Global
Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Revenues to Non-GAAP
Revenues:
|
|
|
|
|
|
|
|
|
GAAP
Revenues
|
|
$
224,548
|
|
$
464,266
|
|
$
7,342
|
|
$
696,156
|
Gain on sale of KCG
Hotspot
|
|
-
|
|
(385,026)
|
|
-
|
|
(385,026)
|
Non- GAAP
Revenues
|
|
$
224,548
|
|
$
79,240
|
|
$
7,342
|
|
$
311,130
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2015
|
|
Market
Making
|
|
Global Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Pre-Tax to Non-GAAP
Pre-Tax:
|
|
|
|
|
|
|
|
|
GAAP Income (loss)
from continuing operations before income taxes
|
|
$
39,340
|
|
$
381,058
|
|
$
(14,270)
|
|
$
406,128
|
Gain on sale of KCG
Hotspot
|
|
-
|
|
(385,026)
|
|
-
|
|
(385,026)
|
Professional fees
related to the sale of KCG Hotspot
|
|
-
|
|
6,736
|
|
-
|
|
6,736
|
Compensation expense
related to the sale of KCG Hotspot
|
|
-
|
|
4,457
|
|
-
|
|
4,457
|
Other real estate
related charges
|
|
-
|
|
-
|
|
132
|
|
132
|
Non-GAAP Income
(loss) from continuing operations before income
taxes
|
|
$
39,340
|
|
$
7,225
|
|
$
(14,138)
|
|
$
32,427
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2014
|
|
Market
Making
|
|
Global Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Pre-Tax to Non-GAAP
Pre-Tax:
|
|
|
|
|
|
|
|
|
GAAP Income (loss)
from continuing operations before income taxes
|
|
$
36,004
|
|
$
736
|
|
$
(22,233)
|
|
$
14,507
|
Compensation related
to reduction in workforce
|
|
383
|
|
1,886
|
|
800
|
|
3,069
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
1,995
|
|
1,995
|
Other real estate
related charges
|
|
452
|
|
-
|
|
1,489
|
|
1,941
|
Non-GAAP Income
(loss) from continuing operations before income
taxes
|
|
$
36,839
|
|
$
2,622
|
|
$
(17,949)
|
|
$
21,512
|
|
|
|
|
|
|
|
|
|
* Totals may not
add due to rounding
|
|
|
|
|
|
|
|
|
KCG HOLDINGS,
INC.
|
|
|
|
|
|
|
|
Exhibit
4
|
Regulation G
Reconciliation of Non-GAAP financial measures (Continuing
operations)*
|
|
|
|
(Continued)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2015
|
|
Market
Making
|
|
Global
Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Revenues to Non-GAAP
Revenues:
|
|
|
|
|
|
|
|
|
GAAP
Revenues
|
|
$
416,876
|
|
$
527,788
|
|
$
13,374
|
|
$
958,038
|
Gain on sale of KCG
Hotspot
|
|
-
|
|
(385,026)
|
|
-
|
|
(385,026)
|
Non- GAAP
Revenues
|
|
$
416,876
|
|
$
142,762
|
|
$
13,374
|
|
$
573,012
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2015
|
|
Market
Making
|
|
Global Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Pre-Tax to Non-GAAP
Pre-Tax:
|
|
|
|
|
|
|
|
|
GAAP Income (loss)
from continuing operations before income taxes
|
|
$
43,742
|
|
$
371,121
|
|
$
(65,849)
|
|
$
349,014
|
Gain on sale of KCG
Hotspot
|
|
-
|
|
(385,026)
|
|
-
|
|
(385,026)
|
Accelerated
stock-based compensation
|
|
19,844
|
|
8,202
|
|
803
|
|
28,849
|
Debt make-whole
premium
|
|
-
|
|
-
|
|
16,500
|
|
16,500
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
8,506
|
|
8,506
|
Professional fees
related to the sale of KCG Hotspot
|
|
-
|
|
6,736
|
|
-
|
|
6,736
|
Other real estate
related charges
|
|
-
|
|
-
|
|
6,459
|
|
6,459
|
Compensation expense
related to the sale of KCG Hotspot
|
|
-
|
|
4,457
|
|
-
|
|
4,457
|
Non-GAAP Income
(loss) from continuing operations before income
taxes
|
|
$
63,586
|
|
$
5,490
|
|
$
(33,581)
|
|
$
35,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2014
|
|
Market
Making
|
|
Global Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Revenues to Non-GAAP
Revenues:
|
|
|
|
|
|
|
|
|
GAAP
Revenues
|
|
$
495,792
|
|
$
173,123
|
|
$
28,875
|
|
$
697,790
|
Income resulting from
the merger of BATS and Direct Edge, net
|
|
-
|
|
-
|
|
(9,644)
|
|
(9,644)
|
Non- GAAP
Revenues
|
|
$
495,792
|
|
$
173,123
|
|
$
19,231
|
|
$
688,146
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2014
|
|
Market
Making
|
|
Global Execution
Services
|
|
Corporate and
Other
|
|
Consolidated
|
Reconciliation of
GAAP Pre-Tax to Non-GAAP
Pre-Tax:
|
|
|
|
|
|
|
|
|
GAAP Income (loss)
from continuing operations before income taxes
|
|
$
112,036
|
|
$
2,752
|
|
$
(40,897)
|
|
$
73,891
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
9,552
|
|
9,552
|
Income resulting from
the merger of BATS and Direct Edge, net
|
|
-
|
|
-
|
|
(9,644)
|
|
(9,644)
|
Compensation related
to reduction in workforce
|
|
383
|
|
1,886
|
|
800
|
|
3,069
|
Other real estate
related charges
|
|
811
|
|
-
|
|
1,396
|
|
2,207
|
Non-GAAP Income
(loss) from continuing operations before income
taxes
|
|
$
113,230
|
|
$
4,638
|
|
$
(38,793)
|
|
$
79,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Totals may not
add due to rounding
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/kcg-announces-second-quarter-2015-results-300121768.html
SOURCE KCG Holdings, Inc.