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8-K - FORM 8-K - Virtu KCG Holdings LLCd769138d8k.htm
EX-99.2 - EX-99.2 - Virtu KCG Holdings LLCd769138dex992.htm

Exhibit 99.1

KCG ANNOUNCES CONSOLIDATED EARNINGS OF $0.08

PER DILUTED SHARE FOR THE SECOND QUARTER OF 2014

Consolidated revenues of $314.1 million and pre-tax earnings

from continuing operations of $14.5 million during the quarter

Pre-tax earnings includes expenses of $7.0 million unrelated to core operations,

comprising reduction in workforce, writedown of capitalized debt costs

and lease loss accruals

KCG paid $102.9 million for debt reduction and share repurchases during the quarter

JERSEY CITY, New Jersey – August 1, 2014 – 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.

CONTACTS

 

Sophie Sohn    Jonathan Mairs
Communications & Marketing    Investor Relations
312-931-2299    201-356-1529
media@kcg.com    jmairs@kcg.com


KCG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS(1)

(Unaudited)

   Exhibit 1

 

     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.

CONSOLIDATED STATEMENTS OF OPERATIONS(1)

(Unaudited)

 

Exhibit 1

(Continued)

 

     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.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

   Exhibit 2

 

     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.

PRE-TAX EARNINGS (LOSS) FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*

(In thousands)

(Unaudited)

   Exhibit 3

 

     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.

Regulation G Reconciliation of Non-GAAP financial measures (Continuing operations)(1)

(in thousands)

 

Exhibit 4

(Continued)

 

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.