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8-K - FORM 8-K - Virtu KCG Holdings LLCd38400d8k.htm
EX-99.2 - EX-99.2 - Virtu KCG Holdings LLCd38400dex992.htm

Exhibit 99.1

 

LOGO

  

KCG Holdings, Inc.

545 Washington Boulevard

Jersey City, New Jersey 07310

1 201 222 9400 tel

1 800 544 7508 toll free

 

www.kcg.com

KCG ANNOUNCES CONSOLIDATED EARNINGS OF $0.24 PER DILUTED

SHARE FOR THE THIRD QUARTER OF 2015

KCG reports consolidated revenues of $377.0 million

and pre-tax earnings of $35.4 million for the quarter

JERSEY CITY, New Jersey – October 30, 2015 – KCG Holdings, Inc. (NYSE: KCG) today reported consolidated earnings of $21.9 million, or $0.24 per diluted share, for the third quarter of 2015. Included in the $35.4 million of pre-tax income are asset writedowns and other real estate related charges of $34.0 million. Excluding these items, on a non-GAAP basis, third quarter 2015 pre-tax income was $69.4 million. A reconciliation of GAAP to non-GAAP results is included in Exhibit 4.

 

Select Financial Results

   ($ in thousands, except EPS)  

From Continuing Operations

   3Q15      2Q15      3Q14  

GAAP Revenues

     377,036         261,882         272,302   

Non-GAAP revenues*

     377,036         261,882         257,197   

Trading revenues, net

     277,677         170,750         150,865   

Commissions and fees

     95,027         87,370         102,663   

GAAP pre-tax income (loss)

     35,419         (57,114      (15,235

GAAP EPS

     0.24         (0.18      (0.09

Non-GAAP pre-tax income (loss)*

     69,448         3,068         (19,518

 

* See Exhibit 4 for a reconciliation of GAAP to non-GAAP results

Third Quarter Highlights

 

    Market making set a new quarterly high for exchange-listed U.S. equity share volume and gained approximately two percentage points in market share of retail SEC Rule 605 U.S. equity share volume from the second quarter 2015

 

    Average daily algorithmic execution U.S. equity share volume attributable to institutional clients grew quarter over quarter and year over year

 

    Consolidated legacy direct-to-client market making brands Knight Link (U.S. equities), Get Direct (U.S. Treasuries) and FXMM (currencies) under the KCG Acknowledge brand

 

    Repurchased 1.2 million shares of KCG Class A Common Stock for $12.2 million

 

    Non-GAAP pre-tax income rose 76 percent year to date compared to the first nine months of 2014 while total shares outstanding declined by approximately 21 percent

Daniel Coleman, Chief Executive Officer of KCG, said, “KCG generated strong financial results in the third quarter of 2015 amid an upturn in market conditions in the U.S. equity market. The performance was driven by KCG market making in U.S. equities as well as agency-based trading on behalf of institutional clients. The results for the quarter were lowered due to writedowns for the consolidation of current real estate as well as expenses attributable to the corporate relocation. Notwithstanding, we produced significant growth in non-GAAP pre-tax income while continuing to reduce our total shares outstanding.”


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 third quarter of 2015, the segment generated total revenues of $299.8 million and pre-tax income of $85.4 million. Excluding expenses related to asset writedowns of $4.4 million, the segment generated pre-tax income of $89.8 million.

During the third quarter of 2015, consolidated U.S. equity dollar volume and realized volatility for the S&P 500 rose sharply. KCG market making set a new quarterly high for exchange-listed share volume and gained approximately two percentage points in market share of retail SEC Rule 605-eligible U.S. equity share volume in spite of continued strong competition. Spreads in U.S. equities widened during August as a result of the market volatility. The results for the segment were negatively impacted by the modest deterioration in market volumes of Asian and European equities.

Mr. Coleman commented, “The market conditions in U.S. equities drove the performance of KCG direct-to-client and non-client market making. In particular, we witnessed a period of elevated, broad-based, intraday volatility in August, which served as a reminder of the significant operational leverage this firm possesses in active markets. We continue to work to diversify and attain scale in strategic asset classes.”

In 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.

In the third quarter of 2014, the segment generated total revenues of $166.6 million and a pre-tax loss of $8.0 million. Excluding expenses related to a reduction in workforce and other employee separations of $2.8 million, the segment generated a pre-tax loss of $5.2 million.

Select Trade Statistics: U.S. Equity Market Making

 

     3Q15      2Q15      3Q14  

Average daily dollar volume traded ($ millions)

     31,517         27,883         24,726   

Average daily trades (thousands)

     4,025         3,550         3,326   

Average daily shares traded (millions)

     4,823         5,785         5,787   

NYSE and NASDAQ shares traded

     985         885         727   

OTC Bulletin Board and OTC Market shares traded

     3,838         4,900         5,060   

Average revenue capture per U.S. equity dollar value traded (bps)

     1.27         0.80         0.75   

Global Execution Services

The Global Execution Services segment comprises agency execution services and trading venues. During the third quarter of 2015, the segment generated total revenues of $69.7 million and a pre-tax loss of $1.1 million.

During the third quarter of 2015, institutional trading activity in U.S. equities increased market-wide. Quarter over quarter, KCG grew algorithmic execution and sales trading volume from institutional clients as well as KCG MatchIt ATS volume.

Mr. Coleman commented, “Algorithmic execution on behalf of clients as well as high-touch sales trading performed well given the heightened institutional trading activity in U.S. equities. Algorithmic execution continued to onboard new institutional clients and generate additive trade volumes and revenues. During the quarter, 13 institutional clients began using KCG algorithms and we onboarded an additional 12 new institutional investors as clients. Algorithmic execution volume from institutional clients rose 7 percent quarter over quarter and 30 percent year over year.”


In 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.

In the third quarter of 2014, the segment generated total revenues of $79.2 million and a pre-tax loss of $1.7 million. Excluding expenses related to a reduction in workforce and other employee separations of $3.6 million, the segment generated pre-tax income of $1.9 million.

Select Trade Statistics: Agency Execution and Trading Venues

 

     3Q15      2Q15      3Q14  

Average daily KCG algorithmic trading and order routing U.S. equities shares traded (millions)

     316.8         287.0         248.2   

Average daily KCG BondPoint fixed income par value traded ($ millions)

     130.5         138.3         126.0   

Corporate and Other

The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the third quarter of 2015, the segment generated total revenues of $7.6 million and a pre-tax loss of $49.0 million. Excluding writedown of assets and other real estate related charges of $29.7 million, the segment generated a pre-tax loss of $19.3 million.

In 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 third quarter of 2014, the segment generated total revenues of $26.5 million and a pre-tax loss of $5.5 million. Excluding a net gain related to the tradeMONSTER combination with OptionsHouse of $15.1 million and expenses related to a reduction in workforce and other employee separations of $4.2 million and a lease loss accrual of $0.3 million, the segment generated a pre-tax loss of $16.2 million.

Financial Condition

As of September 30, 2015, KCG had $628.2 million in cash and cash equivalents. Total outstanding debt was $495.4 million. The Company had $1.48 billion in stockholders’ equity, equivalent to a book value of $15.95 per share and tangible book value of $14.40 per share based on total shares outstanding of 92.5 million, including restricted stock units.

KCG’s headcount was 1,033 full-time employees at September 30, 2015 compared to 1,045 at June 30, 2015.

During the third quarter of 2015, KCG repurchased 1.2 million shares for approximately $12.2 million under the Company’s stock repurchase program.

Conference Call

KCG will hold a conference call to discuss third quarter 2015 financial results starting at 9:00 a.m. Eastern Time today, October 30, 2015. To access the call, dial 888-801-6507 (domestic) or 913-312-1424 (international) and enter passcode 202677. In addition, the call will be webcast at http://edge.media-server.com/m/p/9d4qz3ey/lan/en. 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=202677&passcode=202677 and entering passcode 202677.


Additional information for investors, including a presentation of the third 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 September 30, 2015, June 30, 2015 and September 30, 2014 and for the nine months ended September 30, 2015 and September 30, 2014. KCG believes the presentations provide a meaningful summary of revenues and results of operations for each of the three and nine 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 trading strategy performance 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 Congress, federal and state regulators, the SRO’s 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. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in KCG’s reports with the U.S. Securities and Exchange Commission (“SEC”), including those detailed under “Certain Factors Affecting Results of Operations” in the MD&A and in “Risk Factors” in Part I, Item 1A of KCG’s Annual Report on Form 10-K for the year ended December 31, 2014, and in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG’s Consolidated Financial Statements and the Notes thereto contained in the Quarterly Report on Form 10-Q for the quarter-ended June 30, 2015, and in 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.    Exhibit 1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)   

 

     For the three months ended  
     September 30, 2015     June 30, 2015     September 30, 2014  
     (In thousands, except per share amounts)  

Revenues

      

Trading revenues, net

   $ 277,677      $ 170,750      $ 150,865   

Commissions and fees

     95,027        87,370        102,663   

Interest, net

     (1,080     (596     139   

Investment income and other, net

     5,412        4,358        18,635   
  

 

 

   

 

 

   

 

 

 

Total revenues

     377,036        261,882        272,302   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Employee compensation and benefits

     121,597        109,471        95,307   

Execution and clearance fees

     67,502        62,598        74,058   

Communications and data processing

     35,256        34,240        38,576   

Depreciation and amortization

     23,813        20,726        20,298   

Payments for order flow

     17,121        14,935        15,377   

Debt interest expense

     9,117        9,989        7,714   

Collateralized financing interest

     8,617        8,859        7,330   

Occupancy and equipment rentals

     7,472        7,474        7,672   

Professional fees

     4,406        5,694        7,161   

Business development

     1,846        3,025        3,163   

Debt extinguishment charges

     —          25,006        —     

Writedown of assets and other real estate related charges

     34,029        6,327        301   

Other

     10,841        10,652        10,580   
  

 

 

   

 

 

   

 

 

 

Total expenses

     341,617        318,996        287,537   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     35,419        (57,114     (15,235

Income tax expense (benefit)

     13,482        (37,952     (5,796
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations, net of tax

     21,937        (19,162     (9,439

Loss from discontinued operations, net of tax

     —          —          (177
  

 

 

   

 

 

   

 

 

 

Net Income (Loss)

   $ 21,937      $ (19,162   $ (9,616
  

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share from continuing operations

   $ 0.24      $ (0.18   $ (0.09
  

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share from continuing operations

   $ 0.24      $ (0.18   $ (0.09
  

 

 

   

 

 

   

 

 

 

Basic loss per share from discontinued operations

   $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

 

Diluted loss per share from discontinued operations

   $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share

   $ 0.24      $ (0.18   $ (0.09
  

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share

   $ 0.24      $ (0.18   $ (0.09
  

 

 

   

 

 

   

 

 

 

Shares used in computation of basic earnings (loss) per share

     91,134        108,588        110,376   
  

 

 

   

 

 

   

 

 

 

Shares used in computation of diluted earnings (loss) per share

     92,079        108,588        110,376   
  

 

 

   

 

 

   

 

 

 


KCG HOLDINGS, INC.      Exhibit 1   
CONSOLIDATED STATEMENTS OF OPERATIONS      (Continued
(Unaudited)   

 

     For the nine months ended  
     September 30, 2015     September 30, 2014  
     (In thousands, except per share amounts)  

Revenues

    

Trading revenues, net

   $ 657,222      $ 615,942   

Commissions and fees

     282,358        319,696   

Interest, net

     (1,699     798   

Investment income and other, net

     397,193        33,656   
  

 

 

   

 

 

 

Total revenues

     1,335,074        970,092   
  

 

 

   

 

 

 

Expenses

    

Employee compensation and benefits

     337,786        321,056   

Execution and clearance fees

     198,573        222,801   

Communications and data processing

     103,260        113,651   

Depreciation and amortization

     65,154        60,224   

Payments for order flow

     47,277        55,485   

Debt interest expense

     27,569        24,735   

Collateralized financing interest

     25,932        19,887   

Occupancy and equipment rentals

     22,286        24,192   

Professional fees

     21,281        19,900   

Business development

     6,728        7,455   

Debt extinguishment charges

     25,006        9,552   

Writedown of assets and other real estate related charges

     40,488        2,508   

Other

     29,301        29,990   
  

 

 

   

 

 

 

Total expenses

     950,641        911,436   
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     384,433        58,656   

Income tax expense

     132,357        22,191   
  

 

 

   

 

 

 

Income from continuing operations, net of tax

     252,076        36,465   

Loss from discontinued operations, net of tax

     —          (1,497
  

 

 

   

 

 

 

Net Income

   $ 252,076      $ 34,968   
  

 

 

   

 

 

 

Basic earnings per share from continuing operations

   $ 2.42      $ 0.32   
  

 

 

   

 

 

 

Diluted earnings per share from continuing operations

   $ 2.36      $ 0.31   
  

 

 

   

 

 

 

Basic loss per share from discontinued operations

   $ —        $ (0.01
  

 

 

   

 

 

 

Diluted loss per share from discontinued operations

   $ —        $ (0.01
  

 

 

   

 

 

 

Basic earnings per share

   $ 2.42      $ 0.31   
  

 

 

   

 

 

 

Diluted earnings per share

   $ 2.36      $ 0.30   
  

 

 

   

 

 

 

Shares used in computation of basic earnings (loss) per share

     104,244        113,680   
  

 

 

   

 

 

 

Shares used in computation of diluted earnings (loss) per share

     106,816        117,127   
  

 

 

   

 

 

 


KCG HOLDINGS, INC.      Exhibit 2   
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION   
(In thousands)   
(Unaudited)   

 

     September 30, 2015     December 31, 2014  

ASSETS

    

Cash and cash equivalents

   $ 628,150      $ 578,768   

Cash and cash equivalents segregated under federal and other regulations

     8,400        3,361   

Financial instruments owned, at fair value:

    

Equities

     2,440,852        2,479,910   

Listed options

     194,068        144,586   

Debt securities

     214,695        82,815   

Other financial instruments

     284        60   
  

 

 

   

 

 

 

Total financial instruments owned, at fair value

     2,849,899        2,707,371   

Collateralized agreements:

    

Securities borrowed

     1,619,512        1,632,062   

Receivable from brokers, dealers and clearing organizations

     1,010,725        1,188,833   

Fixed assets and leasehold improvements, less accumulated depreciation and amortization

     99,085        134,051   

Investments

     111,733        100,726   

Goodwill and Intangible assets, less accumulated amortization

     142,807        152,594   

Deferred tax asset, net

     180,558        154,759   

Assets of business held for sale

     —          40,484   

Other assets

     199,301        137,645   
  

 

 

   

 

 

 

Total assets

   $ 6,850,170      $ 6,830,654   
  

 

 

   

 

 

 

LIABILITIES & EQUITY

    

Liabilities

    

Financial instruments sold, not yet purchased, at fair value:

    

Equities

   $ 1,948,136      $ 2,069,342   

Listed options

     143,610        115,362   

Debt securities

     228,277        101,003   
  

 

 

   

 

 

 

Total financial instruments sold, not yet purchased, at fair value

     2,320,023        2,285,707   

Collateralized financings:

    

Securities loaned

     769,140        707,744   

Financial instruments sold under agreements to repurchase

     1,113,751        933,576   
  

 

 

   

 

 

 

Total collateralized financings

     1,882,891        1,641,320   

Payable to brokers, dealers and clearing organizations

     315,078        676,089   

Payable to customers

     20,793        22,110   

Accrued compensation expense

     132,057        114,559   

Accrued expenses and other liabilities

     143,300        136,977   

Income taxes payable

     62,062        —     

Capital lease obligations

     3,221        6,700   

Liabilities of business held for sale

     —          2,356   

Debt

     495,372        422,259   
  

 

 

   

 

 

 

Total liabilities

     5,374,797        5,308,077   
  

 

 

   

 

 

 

Equity

    

Class A Common Stock

     1,061        1,275   

Additional paid-in capital

     1,435,073        1,369,298   

Retained earnings

     195,091        272,780   

Treasury stock, at cost

     (156,159     (122,909

Accumulated other comprehensive income

     307        2,133   
  

 

 

   

 

 

 

Total equity

     1,475,373        1,522,577   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 6,850,170      $ 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  
     September 30, 2015     June 30, 2015     September 30, 2014  

Market Making

      

Revenues

   $ 299,755      $ 192,328      $ 166,620   

Expenses

     214,336        187,926        174,653   
  

 

 

   

 

 

   

 

 

 

Pre-tax earnings (loss)

     85,419        4,402        (8,033
  

 

 

   

 

 

   

 

 

 

Global Execution Services

      

Revenues

     69,713        63,522        79,218   

Expenses

     70,763        73,459        80,882   
  

 

 

   

 

 

   

 

 

 

Pre-tax loss

     (1,050     (9,937     (1,664
  

 

 

   

 

 

   

 

 

 

Corporate and Other

      

Revenues

     7,568        6,032        26,464   

Expenses

     56,519        57,611        32,002   
  

 

 

   

 

 

   

 

 

 

Pre-tax loss

     (48,951     (51,579     (5,538
  

 

 

   

 

 

   

 

 

 

Consolidated

      

Revenues

     377,036        261,882        272,302   

Expenses

     341,617        318,996        287,537   
  

 

 

   

 

 

   

 

 

 

Pre-tax earnings (loss)

   $ 35,419      $ (57,114   $ (15,235
  

 

 

   

 

 

   

 

 

 

 

* Totals may not add due to rounding.


KCG HOLDINGS, INC.    Exhibit 3 (Continued)
PRE-TAX EARNINGS (LOSS) FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*
(In thousands)   
(Unaudited)   

 

     For the nine months ended  
     September 30, 2015     September 30, 2014  

Market Making

    

Revenues

   $ 716,631      $ 662,412   

Expenses

     587,471        558,409   
  

 

 

   

 

 

 

Pre-tax earnings

     129,160        104,003   
  

 

 

   

 

 

 

Global Execution Services

    

Revenues

     597,502        252,341   

Expenses

     227,430        251,253   
  

 

 

   

 

 

 

Pre-tax earnings

     370,072        1,088   
  

 

 

   

 

 

 

Corporate and Other

    

Revenues

     20,941        55,339   

Expenses

     135,740        101,774   
  

 

 

   

 

 

 

Pre-tax loss

     (114,799     (46,435
  

 

 

   

 

 

 

Consolidated

    

Revenues

     1,335,074        970,092   

Expenses

     950,641        911,436   
  

 

 

   

 

 

 

Pre-tax earnings

   $ 384,433      $ 58,656   
  

 

 

   

 

 

 

 

* 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 September 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

   $ 85,419      $ (1,050   $ (48,951   $ 35,419   

Other real estate related charges

     —          —          28,825        28,825   

Writedown of assets

     4,379        —          825        5,204   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income (loss) from continuing operations before income taxes

   $ 89,798      $ (1,050   $ (19,301   $ 69,448   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 September 30, 2014

   Market
Making
    Global
Execution
Services
    Corporate and
Other
    Consolidated  

Reconciliation of GAAP Revenues to Non-GAAP Revenues:

        

GAAP Revenues

   $ 166,620      $ 79,218      $ 26,464      $ 272,302   

Net gain related to tradeMONSTER combination with OptionsHouse

     —          —          (15,105     (15,105
  

 

 

   

 

 

   

 

 

   

 

 

 

Non- GAAP Revenues

   $ 166,620      $ 79,218      $ 11,359      $ 257,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

Three months ended September 30, 2014

   Market
Making
    Global
Execution
Services
    Corporate and
Other
    Consolidated  

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:

        

GAAP Loss from continuing operations before income taxes

   $ (8,033   $ (1,664   $ (5,538   $ (15,235

Net gain related to tradeMONSTER combination with OptionsHouse

     —          —          (15,105     (15,105

Compensation related to reduction in workforce and other employee separations

     2,786        3,577        4,158        10,521   

Other real estate related charges

     —          —          301        301   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non GAAP (Loss) Income from continuing operations before income taxes

   $ (5,247   $ 1,913      $ (16,184   $ (19,518
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Totals may not add due to rounding


KCG HOLDINGS, INC.

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

(in thousands)

(Unaudited)

  

Exhibit 4

(Continued)

 

Nine months ended September 30, 2015

   Market Making      Global
Execution
Services
    Corporate and
Other
    Consolidated  

Reconciliation of GAAP Revenues to Non-GAAP Revenues:

         

GAAP Revenues

   $ 716,631       $ 597,502      $ 20,941      $ 1,335,074   

Gain on sale of KCG Hotspot

     —           (385,026     —          (385,026
  

 

 

    

 

 

   

 

 

   

 

 

 

Non- GAAP Revenues

   $ 716,631       $ 212,476      $ 20,941      $ 950,048   
  

 

 

    

 

 

   

 

 

   

 

 

 

Nine months ended September 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

   $ 129,160       $ 370,072      $ (114,799   $ 384,433   

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

     —           —          35,284        35,284   

Writedown of assets

     4,379         —          825        5,204   

Compensation expense related to the sale of KCG Hotspot

     —           4,457        —          4,457   
  

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP Income (loss) from continuing operations before income taxes

   $ 153,383       $ 4,441      $ (52,881   $ 104,943   
  

 

 

    

 

 

   

 

 

   

 

 

 

Nine months ended September 30, 2014

   Market Making      Global
Execution
Services
    Corporate and
Other
    Consolidated  

Reconciliation of GAAP Revenues to Non-GAAP Revenues:

         

GAAP Revenues

   $ 662,412       $ 252,341      $ 55,339      $ 970,092   

Net gain related to tradeMONSTER combination with OptionsHouse

     —           —          (15,105     (15,105

Income resulting from the merger of BATS and Direct Edge, net

     —           —          (9,644     (9,644
  

 

 

    

 

 

   

 

 

   

 

 

 

Non- GAAP Revenues

   $ 662,412       $ 252,341      $ 30,590      $ 945,343   
  

 

 

    

 

 

   

 

 

   

 

 

 

Nine months ended September 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

   $ 104,003       $ 1,088      $ (46,435   $ 58,656   

Net gain related to tradeMONSTER combination with OptionsHouse

     —           —          (15,105     (15,105

Income resulting from the merger of BATS and Direct Edge, net

     —           —          (9,644     (9,644

Compensation related to reduction in workforce and other employee separations

     3,169         5,463        4,958        13,590   

Writedown of capitalized debt costs

     —           —          9,552        9,552   

Other real estate related charges

     811         —          1,697        2,508   
  

 

 

    

 

 

   

 

 

   

 

 

 

Non GAAP Income (Loss) from continuing operations before income taxes

   $ 107,983       $ 6,551      $ (54,977   $ 59,557   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

* Totals may not add due to rounding