JERSEY CITY, N.J., Aug. 1, 2014 /PRNewswire/ -- KCG
Holdings, Inc. (NYSE: KCG) today reported consolidated earnings
of $8.9 million, or $0.08 per diluted share, for the second quarter
of 2014.
Net income for the second quarter of 2014 included income from
continuing operations, net of tax, of $9.0
million, or $0.08 per diluted
share. Pre-tax income from continuing operations for the quarter of
$14.5 million included $3.1 million in compensation related to a
reduction in workforce, a $2.0
million write down of capitalized debt costs related to the
principal repayment of debt, and lease loss accruals of
$1.9 million. Excluding these items,
pre-tax income from continuing operations for the second quarter
was $21.5 million. A reconciliation
of GAAP to non-GAAP results is included in Exhibit 4.
KCG was formed July 1, 2013 as a
result of the merger between Knight Capital Group, Inc. and GETCO
Holding Company, LLC. Financial results for the periods prior to
the third quarter of 2013 contained herein solely represent the
results of GETCO Holding Company, LLC as the accounting
acquirer.
Select Financial
Results
|
|
|
|
From Continuing
Operations ($ in thousands, except EPS)
|
2Q14
|
|
1Q14
|
Revenues
|
314,133
|
|
383,657
|
Trading
revenues, net
|
206,780
|
|
258,297
|
Commissions and fees
|
104,776
|
|
112,257
|
GAAP pre-tax
income
|
14,507
|
|
59,384
|
GAAP EPS
|
0.08
|
|
0.30
|
Non-GAAP pre-tax
income
|
21,512
|
|
57,563
|
Second Quarter Highlights
- Posted strong revenue capture per U.S. equity dollar value
traded in market making despite the deterioration in market
conditions
- Modest market share gains in market making, agency execution
and trading venues
- Added quantitative-based trading strategy and analysis to the
client offering
- Combined the primary U.K. broker dealers into KCG Europe
Limited
- Completed a $50 million principal
repayment on the Company's $535
million first lien term loan and terminated the facility
ahead of its December 5, 2017
maturity date
- Repurchased 4.5 million shares for approximately $52.9 million under the Company's initial
$150 million stock repurchase
program
Daniel Coleman, Chief Executive
Officer of KCG, said, "During the second quarter, KCG made further
progress in strengthening the firm's operations, technology and
finances. We grew market share in an environment marked by
contracting trade volumes and declining volatility across asset
classes. We made further headway in rationalizing the client
offering as well as reducing headcount from select teams and
support functions. In addition, we reached our target debt level
and began to return capital to stockholders through share
repurchases."
He added, "While KCG is still in a period of transformation, our
financial standing is considerably improved. In the first full year
of operation, KCG released $200
million in excess capital from the integration of the
predecessor firms and sale of assets. Amid the demands of
integration, we generated over $185
million in free cash flow from operating income since the
merger close and reduced corporate debt by $793 million."
Starting in the first quarter of 2014, the Company began to
charge the Market Making and Global Execution Services segments for
the cost of aggregate debt interest. The interest amount charged to
each of the segments is determined based on capital limits and
requirements. Historically, debt interest was included within
the Corporate and Other segment. This change in the measurement of
segment profitability has no impact to the consolidated results,
will only be reported prospectively and, therefore, will not be
reflected in the financial results for any period prior to
January 1, 2014.
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. and Europe. During the second quarter of 2014, the
segment generated total revenues of $218.4
million and pre-tax income of $36.0
million, which included a debt interest charge of
$5.9 million. In the first quarter of
2014, the segment reported total revenues of $277.3 million and pre-tax income of $76.0 million, which included a debt interest
charge of $7.2 million.
The decline in segment revenues was primarily due to a 13
percent decrease in consolidated U.S. equity share volume quarter
on quarter and an approximate 20 percent decrease market wide in
retail U.S. equity share volume. In addition, realized volatility
for the S&P 500 averaged just 9.2 during the quarter.
Nonetheless, KCG recorded strong revenue capture and grew market
share of both consolidated and retail volume during the quarter.
Revenues from market making in global equities, fixed income,
currencies and commodities were impacted by broad declines in
market volumes and related volatility benchmarks.
Select Trade Statistics: U.S. Equity Market Making
|
2Q14
|
|
1Q14
|
Average daily dollar
volume traded ($ millions)
|
25,143
|
|
27,321
|
Average daily trades
(thousands)
|
3,620
|
|
3,958
|
Average daily shares
traded (millions)
|
10,820
|
|
14,907
|
NYSE and
NASDAQ shares traded
|
758
|
|
862
|
OTC
Bulletin Board and OTC Market shares traded
|
10,061
|
|
14,045
|
Average revenue
capture per U.S. equity dollar value traded (bps)
|
1.07
|
|
1.26
|
Global Execution Services
The Global Execution Services segment comprises agency execution
services and trading venues. During the second quarter of 2014, the
segment generated total revenues of $85.9
million and pre-tax income of $0.7
million, which included a debt interest charge of
$1.8 million. The results also
included compensation related to a reduction in workforce of
$1.9 million. Excluding this item,
Global Execution Services generated pre-tax income of $2.6 million in the second quarter. In the first
quarter of 2014, the segment reported total revenues of
$87.2 million and pre-tax income of
$2.0 million, which included a debt
interest charge of $2.4 million.
The segment revenues largely withstood the deterioration in
market conditions due to the more effective alignment of
institutional equities sales and improved performance of the global
ETF team. KCG algorithmic services gained market share in both U.S
and European equities quarter on quarter. KCG BondPoint continued
to steadily gain market share in corporate and municipal bonds.
Select Trade Statistics: Agency Execution and Trading
Venues
|
2Q14
|
|
1Q14
|
Average daily KCG
algorithmic services and EMS U.S. equity shares traded
(millions)
|
265.3
|
|
281.0
|
Average daily KCG
Hotspot notional foreign exchange dollar value traded ($
billions)
|
26.2
|
|
32.2
|
Average daily KCG
BondPoint fixed income par value traded
($
millions)
|
133.7
|
|
144.2
|
Corporate and Other
The Corporate and Other segment includes strategic investments
and corporate overhead expenses. During the second quarter of 2014,
the segment recorded total revenues of $9.8
million and a pre-tax loss of $22.2
million. Included in the results was 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. Excluding these items, the
Corporate and Other segment's pre-tax loss for the second quarter
was $17.9 million. In the first
quarter of 2014, the segment recorded total revenues of
$19.1 million and a pre-tax loss of
$18.7 million. Included in the
results was revenue of $9.6 million
resulting from the merger of BATS and Direct Edge, a $7.6 million write down of capitalized debt costs
related to the principal repayment of debt and a lease loss
accrual. Excluding these items, the Corporate and Other segment's
pre-tax loss for the first quarter was $20.8
million.
Financial Condition
As of June 30, 2014, KCG had
approximately $600.9 million in cash
and cash equivalents. Total outstanding debt was approximately
$422.3 million, of which $117.3 million is due in March 2015. The Company had $1.5 billion in stockholders' equity equivalent
to a book value of $12.66 per share
and tangible book value of $11.04 per
share.
KCG's headcount at June 30, 2014
was 1,207 full-time employees as compared to 1,230 full-time
employees at March 31, 2014.
During the second quarter of 2014, KCG repurchased 4.5 million
shares for approximately $52.9
million under the Company's initial $150.0 million stock repurchase program. As of
June 30, 2014, KCG had approximately
$97.1 million available to repurchase
additional shares under the program. The Company cautions that
there are no assurances that any further repurchases may actually
occur.
Conference Call
KCG will hold a conference call to discuss second quarter 2014
financial results starting at 9:00 a.m.
Eastern Time today, August 1,
2014. To access the call, dial 888-778-8861 (domestic) or
913-312-1450 (international) and enter passcode 7106907. In
addition, the call will be webcast at
http://www.media-server.com/m/acs/41fae90442d481b1589c479d3013dbef.
Following the conclusion of the call, a replay will be available by
dialing 888-203-1112 (domestic) or 719-457-0820 (international) and
entering passcode 7106907.
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, 2014, March 31,
2014 and June 30, 2013 and for
the six months ended June 30, 2014
and 2013. KCG believes the presentations provide a meaningful
summary of 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"), including, among other things, (a) difficulties and
delays in integrating the Knight and GETCO businesses or fully
realizing cost savings and other benefits, (b) the inability to
sustain revenue and earnings growth, and (c) customer and client
reactions to the Mergers; (ii) the August 1, 2012 technology issue
that resulted in Knight's broker-dealer subsidiary sending numerous
erroneous orders in NYSE-listed and NYSE Arca securities into the
market and the impact to Knight's capital structure and business as
well as actions taken in response thereto and consequences thereof;
(iii) the sale of KCG's reverse mortgage origination and
securitization business and the departure of the managers of KCG's
listed derivatives group; (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
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, 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; and (x) the
effects of increased competition and KCG's ability to maintain and
expand market share. 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, 2013, under "Certain Factors
Affecting Results of Operations" in KCG's Quarterly Report on Form
10-Q for the period ended March 31, 2014, 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(1)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
|
|
June 30,
2014
|
|
|
March 31,
2014
|
|
|
June 30,
2013
|
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Trading revenues,
net
|
$
|
206,780
|
|
$
|
258,297
|
|
$
|
98,260
|
|
Commissions and
fees
|
|
104,776
|
|
|
112,257
|
|
|
29,813
|
|
Interest,
net
|
|
(289)
|
|
|
948
|
|
|
(672)
|
|
Investment income
(loss) and other, net
|
|
2,866
|
|
|
12,155
|
|
|
(7,768)
|
|
|
Total
revenues
|
|
314,133
|
|
|
383,657
|
|
|
119,633
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
103,430
|
|
|
122,319
|
|
|
75,143
|
|
Execution and
clearance fees
|
|
73,242
|
|
|
75,501
|
|
|
45,951
|
|
Communications and
data processing
|
|
38,279
|
|
|
36,796
|
|
|
21,301
|
|
Depreciation and
amortization
|
|
19,823
|
|
|
20,103
|
|
|
7,746
|
|
Payments for order
flow
|
|
18,076
|
|
|
22,032
|
|
|
448
|
|
Occupancy and
equipment rentals
|
|
8,235
|
|
|
8,285
|
|
|
3,259
|
|
Debt interest
expense
|
|
7,497
|
|
|
9,524
|
|
|
2,172
|
|
Professional
fees
|
|
7,337
|
|
|
5,402
|
|
|
23,125
|
|
Collateralized
financing interest
|
|
6,395
|
|
|
6,162
|
|
|
-
|
|
Business
development
|
|
2,609
|
|
|
1,683
|
|
|
16
|
|
Writedown of
capitalized debt costs
|
|
1,995
|
|
|
7,557
|
|
|
-
|
|
Writedown of assets
and lease loss accrual, net
|
|
1,941
|
|
|
266
|
|
|
1,074
|
|
Other
|
|
10,767
|
|
|
8,643
|
|
|
14,234
|
|
|
Total
expenses
|
|
299,626
|
|
|
324,273
|
|
|
194,469
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes
|
|
14,507
|
|
|
59,384
|
|
|
(74,836)
|
Income tax
expense
|
|
5,520
|
|
|
22,467
|
|
|
3,315
|
Income (loss) from
continuing operations, net of tax
|
|
8,987
|
|
|
36,917
|
|
|
(78,151)
|
Loss from
discontinued operations, net of tax
|
|
(67)
|
|
|
(1,253)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
8,920
|
|
$
|
35,664
|
|
$
|
(78,151)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss allocated to
preferred and participating units
|
$
|
-
|
|
$
|
-
|
|
$
|
(21,535)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common shareholders
|
$
|
8,920
|
|
$
|
35,664
|
|
$
|
(56,616)
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share from continuing operations
|
$
|
0.08
|
|
$
|
0.32
|
|
$
|
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
$
|
0.08
|
|
$
|
0.31
|
|
$
|
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share from discontinued operations
|
$
|
-
|
|
$
|
(0.01)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from discontinued operations
|
$
|
-
|
|
$
|
(0.01)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
|
0.08
|
|
$
|
0.31
|
|
$
|
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.08
|
|
$
|
0.30
|
|
$
|
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic earnings (loss) per share
|
|
114,859
|
|
|
115,569
|
|
|
45,576
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted earnings (loss) per share
|
|
117,601
|
|
|
117,898
|
|
|
45,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Three
months ended June 30, 2014 and March 31, 2014 includes the
results of KCG Holdings, Inc.
|
|
|
|
Three months ended June 30, 2013 reflects solely the results of
GETCO Holding Company, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCG HOLDINGS,
INC.
|
|
|
|
|
Exhibit
1
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS(1)
|
|
|
(Continued)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Trading revenues,
net
|
$
|
465,077
|
|
$
|
185,025
|
|
|
|
|
Commissions and
fees
|
|
217,033
|
|
|
55,312
|
|
|
|
|
Interest,
net
|
|
659
|
|
|
(793)
|
|
|
|
|
Investment income
(loss) and other, net
|
|
15,021
|
|
|
(4,919)
|
|
|
|
|
|
Total
revenues
|
|
697,790
|
|
|
234,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
|
225,749
|
|
|
107,352
|
|
|
|
|
Execution and
clearance fees
|
|
148,743
|
|
|
86,908
|
|
|
|
|
Communications and
data processing
|
|
75,075
|
|
|
41,995
|
|
|
|
|
Depreciation and
amortization
|
|
39,926
|
|
|
15,913
|
|
|
|
|
Payments for order
flow
|
|
40,108
|
|
|
1,037
|
|
|
|
|
Occupancy and
equipment rentals
|
|
16,520
|
|
|
6,555
|
|
|
|
|
Debt interest
expense
|
|
17,021
|
|
|
2,645
|
|
|
|
|
Professional
fees
|
|
12,739
|
|
|
29,850
|
|
|
|
|
Collateralized
financing interest
|
|
12,557
|
|
|
-
|
|
|
|
|
Business
development
|
|
4,292
|
|
|
41
|
|
|
|
|
Writedown of
capitalized debt costs
|
|
9,552
|
|
|
-
|
|
|
|
|
Writedown of assets
and lease loss accrual, net
|
|
2,207
|
|
|
3,312
|
|
|
|
|
Other
|
|
19,410
|
|
|
18,711
|
|
|
|
|
|
Total
expenses
|
|
623,899
|
|
|
314,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes
|
|
73,891
|
|
|
(79,694)
|
|
|
|
Income tax
expense
|
|
27,987
|
|
|
5,289
|
|
|
|
Income (loss) from
continuing operations, net of tax
|
|
45,904
|
|
|
(84,983)
|
|
|
|
Loss from
discontinued operations, net of tax
|
|
(1,320)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
44,584
|
|
$
|
(84,983)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss allocated to
preferred and participating units
|
$
|
-
|
|
$
|
(21,535)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common shareholders
|
$
|
44,584
|
|
$
|
(63,448)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share from continuing operations
|
$
|
0.40
|
|
$
|
(1.39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
$
|
0.39
|
|
$
|
(1.39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
from discontinued operations
|
$
|
(0.01)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share from discontinued operations
|
$
|
(0.01)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
|
0.39
|
|
$
|
(1.39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.38
|
|
$
|
(1.39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic earnings (loss) per share
|
|
115,282
|
|
|
45,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted earnings (loss) per share
|
|
118,170
|
|
|
45,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Six months ended
June 30, 2014 includes the results of KCG Holdings,
Inc.
|
|
|
|
|
|
|
Six months ended June 30, 2013 reflects solely the results of GETCO
Holding Company, LLC.
|
|
|
|
KCG HOLDINGS,
INC.
|
Exhibit 2
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
|
(In
thousands)
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
600,865
|
|
$
|
674,281
|
|
Cash and cash
equivalents segregated under federal and other
regulations
|
|
|
234,350
|
|
|
183,082
|
|
Financial instruments
owned, at fair value:
|
|
|
|
|
|
|
|
|
Equities
|
|
|
2,620,427
|
|
|
2,298,785
|
|
|
Listed
options
|
|
|
178,598
|
|
|
339,798
|
|
|
Debt
securities
|
|
|
90,782
|
|
|
83,256
|
|
Total financial
instruments owned, at fair value
|
|
|
2,889,807
|
|
|
2,721,839
|
|
Collateralized
agreements:
|
|
|
|
|
|
|
|
|
Securities
borrowed
|
|
|
1,602,467
|
|
|
1,357,387
|
|
Receivable from
brokers, dealers and clearing organizations
|
|
|
1,588,926
|
|
|
1,257,251
|
|
Fixed assets and
leasehold improvements,
|
|
|
|
|
|
|
|
|
less accumulated
depreciation and amortization
|
|
|
138,546
|
|
|
146,668
|
|
Investments
|
|
|
92,143
|
|
|
125,413
|
|
Goodwill and
Intangible assets, less accumulated amortization
|
|
|
196,642
|
|
|
208,806
|
|
Deferred tax asset,
net
|
|
|
175,363
|
|
|
175,639
|
|
Other
assets
|
|
|
143,365
|
|
|
146,638
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
7,662,474
|
|
$
|
6,997,004
|
|
|
|
|
|
|
|
|
LIABILITIES &
EQUITY
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Financial instruments
sold, not yet purchased, at fair value:
|
|
|
|
|
|
|
|
|
Equities
|
|
$
|
2,011,591
|
|
$
|
1,851,006
|
|
|
Listed
options
|
|
|
158,942
|
|
|
252,282
|
|
|
Debt
securities
|
|
|
230,821
|
|
|
57,198
|
|
|
Other financial
instruments
|
|
|
758
|
|
|
5,014
|
|
Total financial
instruments sold, not yet purchased, at fair value
|
|
|
2,402,112
|
|
|
2,165,500
|
|
Collateralized
financings:
|
|
|
|
|
|
|
|
|
Securities
loaned
|
|
|
824,663
|
|
|
733,230
|
|
|
Financial instruments
sold under agreements to repurchase
|
|
|
950,110
|
|
|
640,950
|
|
Total collateralized
financings
|
|
|
1,774,773
|
|
|
1,374,180
|
|
|
|
|
|
|
|
|
|
Payable to brokers,
dealers and clearing organizations
|
|
|
647,120
|
|
|
474,108
|
|
Payable to
customers
|
|
|
622,364
|
|
|
481,041
|
|
Accrued compensation
expense
|
|
|
84,060
|
|
|
149,430
|
|
Accrued expenses and
other liabilities
|
|
|
166,850
|
|
|
175,910
|
|
Capital lease
obligations
|
|
|
9,222
|
|
|
10,039
|
|
Debt
|
|
|
422,259
|
|
|
657,259
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
6,128,760
|
|
|
5,487,467
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Class A Common
Stock
|
|
|
1,257
|
|
|
1,233
|
|
|
Additional paid-in
capital
|
|
|
1,328,105
|
|
|
1,306,549
|
|
|
Retained
earnings
|
|
|
256,262
|
|
|
211,678
|
|
|
Treasury stock, at
cost
|
|
|
(53,570)
|
|
|
(11,324)
|
|
|
Accumulated other
comprehensive income
|
|
|
1,660
|
|
|
1,401
|
|
Total
equity
|
|
|
1,533,714
|
|
|
1,509,537
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
7,662,474
|
|
$
|
6,997,004
|
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,
2014
|
|
|
March 31,
2014
|
|
|
June 30,
2013
|
Market
Making
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
218,446
|
|
$
|
277,346
|
|
$
|
113,501
|
Expenses
|
|
|
182,442
|
|
|
201,314
|
|
|
111,579
|
Pre-tax
earnings
|
|
|
36,004
|
|
|
76,032
|
|
|
1,922
|
|
|
|
|
|
|
|
|
|
|
Global Execution
Services
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
85,903
|
|
|
87,220
|
|
|
13,060
|
Expenses
|
|
|
85,167
|
|
|
85,204
|
|
|
16,181
|
Pre-tax earnings
(loss)
|
|
|
736
|
|
|
2,016
|
|
|
(3,121)
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
9,784
|
|
|
19,091
|
|
|
(6,928)
|
Expenses
|
|
|
32,017
|
|
|
37,755
|
|
|
66,709
|
Pre-tax
loss
|
|
|
(22,233)
|
|
|
(18,664)
|
|
|
(73,637)
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
314,133
|
|
|
383,657
|
|
|
119,633
|
Expenses
|
|
|
299,626
|
|
|
324,273
|
|
|
194,469
|
Pre-tax earnings
(loss)
|
|
$
|
14,507
|
|
$
|
59,384
|
|
$
|
(74,836)
|
|
|
|
|
|
|
|
|
|
|
* Totals may not add
due to rounding.
|
Three months ended
June 30, 2014 and March 31, 2014 includes the results of KCG
Holdings, Inc.
|
Three months ended
June 30, 2013 reflects solely the results of GETCO Holding Company,
LLC.
|
|
|
|
|
|
|
|
|
|
|
|
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,
2014
|
|
|
June 30,
2013
|
|
|
|
Market
Making
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
495,792
|
|
$
|
215,568
|
|
|
|
Expenses
|
|
|
383,756
|
|
|
207,759
|
|
|
|
Pre-tax
earnings
|
|
|
112,036
|
|
|
7,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Execution
Services
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
173,123
|
|
|
22,334
|
|
|
|
Expenses
|
|
|
170,371
|
|
|
27,282
|
|
|
|
Pre-tax earnings
(loss)
|
|
|
2,752
|
|
|
(4,948)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
28,875
|
|
|
(3,277)
|
|
|
|
Expenses
|
|
|
69,772
|
|
|
79,278
|
|
|
|
Pre-tax
loss
|
|
|
(40,897)
|
|
|
(82,555)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
697,790
|
|
|
234,625
|
|
|
|
Expenses
|
|
|
623,899
|
|
|
314,319
|
|
|
|
Pre-tax earnings
(loss)
|
|
$
|
73,891
|
|
$
|
(79,694)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Totals may not add
due to rounding.
|
Six months ended June
30, 2014 includes the results of KCG Holdings,
Inc.
|
Six months ended June
30, 2013 reflects solely the results of GETCO Holding Company,
LLC.
|
KCG HOLDINGS,
INC.
|
|
Exhibit
4
|
Regulation G
Reconciliation of Non-GAAP financial measures (Continuing
operations)(1)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
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
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
1,995
|
|
1,995
|
Compensation related
to reduction in workforce
|
|
383
|
|
1,886
|
|
800
|
|
3,069
|
Writedown of assets
and lease loss accrual, net
|
|
452
|
|
-
|
|
1,489
|
|
1,941
|
Non GAAP Income
(Loss) from continuing operations before income
taxes
|
|
$
36,839
|
|
$
2,622
|
|
$
(17,949)
|
|
$
21,512
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 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
|
|
$
76,032
|
|
$
2,016
|
|
$
(18,664)
|
|
$
59,384
|
Writedown of
capitalized debt costs
|
|
-
|
|
-
|
|
7,557
|
|
7,557
|
Income resulting from
the merger of BATS and Direct Edge, net
|
|
-
|
|
-
|
|
(9,644)
|
|
(9,644)
|
Writedown of assets
and lease loss accrual, net
|
|
359
|
|
-
|
|
(93)
|
|
266
|
Non GAAP Income
(Loss) from continuing operations before income
taxes
|
|
$
76,391
|
|
$
2,016
|
|
$
(20,844)
|
|
$
57,563
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2013
|
|
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
|
|
$
1,922
|
|
$
(3,121)
|
|
$
(73,637)
|
|
$
(74,836)
|
Professional and
other fees related to Mergers
|
|
-
|
|
-
|
|
33,299
|
|
33,299
|
Compensation and
other expenses related to Mergers
|
|
-
|
|
-
|
|
22,031
|
|
22,031
|
Compensation and
other expenses related to reduction in workforce
|
|
1,852
|
|
335
|
|
-
|
|
2,187
|
Impairment of
strategic asset
|
|
-
|
|
-
|
|
9,184
|
|
9,184
|
Writedown of assets
and lease loss accrual
|
|
-
|
|
-
|
|
1,074
|
|
1,074
|
Non GAAP Income
(Loss) from continuing operations before income
taxes
|
|
$
3,774
|
|
$
(2,786)
|
|
$
(8,049)
|
|
$
(7,061)
|
|
|
|
|
|
|
|
|
|
* Totals may not
add due to rounding
|
|
|
|
|
|
|
|
|
(1) Three months
ended June 30, 2014 and March 31, 2014 includes the results
of KCG Holdings, Inc.
|
|
|
|
|
|
|
Three months ended
June 30, 2013 reflects solely the results of GETCO Holding Company,
LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCG HOLDINGS,
INC.
|
|
Exhibit
4
|
Regulation G
Reconciliation of Non-GAAP financial measures (Continuing
operations)(1)
|
|
(Continued)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
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
|
Writedown of assets
and lease loss accrual, net
|
|
811
|
|
-
|
|
1,396
|
|
2,207
|
Non GAAP Income
(Loss) from continuing operations before income
taxes
|
|
$
113,230
|
|
$
4,638
|
|
$
(38,793)
|
|
$
79,075
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2013
|
|
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
|
|
$
7,809
|
|
$
(4,948)
|
|
$
(82,555)
|
|
$
(79,694)
|
Professional and
other fees related to Mergers
|
|
-
|
|
-
|
|
38,875
|
|
38,875
|
Compensation and
other expenses related to Mergers
|
|
-
|
|
-
|
|
22,031
|
|
22,031
|
Compensation and
other expenses related to reduction in workforce
|
|
3,963
|
|
865
|
|
378
|
|
5,206
|
Impairment of
strategic asset
|
|
-
|
|
-
|
|
9,184
|
|
9,184
|
Writedown of assets
and lease loss accrual
|
|
-
|
|
-
|
|
3,312
|
|
3,312
|
Non GAAP Income
(Loss) from continuing operations before income
taxes
|
|
$
11,772
|
|
$
(4,083)
|
|
$
(8,775)
|
|
$
(1,086)
|
|
|
|
|
|
|
|
|
|
* Totals may not
add due to rounding
|
(1) Six months ended
June 30, 2014 includes the results of KCG Holdings,
Inc.
|
Six months ended June
30, 2013 reflects solely the results of GETCO Holding Company,
LLC.
|
SOURCE KCG Holdings, Inc.