KCG Announces Second Quarter 2015 Results

KCG reports GAAP net loss of $19.2 million; Pre-tax loss from continuing operations of $57.1 million includes charges of $60.2 million from items unrelated to core operations

During the quarter, KCG repurchased 23.6 million shares for $330 million as a result of its "modified Dutch auction" tender offer

KCG's tangible book value rose to $14.05 per share, book value increased to $15.58 per share

KCG announces planned relocation of global headquarters to New York City

Jul 31, 2015, 07:00 ET from KCG Holdings, Inc.

JERSEY CITY, N.J., July 31, 2015 /PRNewswire/ -- KCG Holdings, Inc. (NYSE: KCG) today reported a GAAP net loss of $19.2 million, or $0.18 per share, for the second quarter of 2015. Included in the $57.1 million pre-tax loss is an accelerated compensation expense of $28.8 million as a result of stockholder-approved changes made to the vesting provisions of outstanding annual equity awards; debt extinguishment charges comprising a debt "make-whole" premium and  a writedown of capitalized debt costs of $16.5 million and $8.5 million, respectively, as a result of the early redemption of the $305 million 8.25% Senior Secured Notes; and other real estate related charges of $6.3 million. Excluding these items, on a non-GAAP basis, second quarter 2015 pre-tax income from continuing operations was $3.1 million. A reconciliation of GAAP to non-GAAP results is included in Exhibit 4.

Select Financial Results

($ in thousands, except EPS)

From Continuing Operations

2Q15

1Q15

2Q14

GAAP Revenues

261,882

696,156

314,133

Non-GAAP revenues*

261,882

311,130

314,133

   Trading revenues, net

170,750

208,795

206,780

   Commissions and fees

87,370

99,961

104,776

GAAP pre-tax (loss) income

(57,114)

406,128

14,507

GAAP EPS

(0.18)

2.19

0.08

Non-GAAP pre-tax income*

3,068

32,427

21,512

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

Second Quarter Highlights

  • KCG market making's share of retail SEC Rule 605 U.S. equity share volume increased more than one full percentage point from first quarter 2015
  • The percentage of algorithmic trading and order routing net revenue attributable to institutional clients grew for the third straight quarter
  • Repurchased 23.6 million shares of KCG Class A Common Stock for $330 million through a "modified Dutch auction" tender offer
  • Completed the refinancing of the $305 million 8.25% Senior Secured Notes due in 2018
  • Subsequent to the quarter, KCG entered into an agreement to relocate its global headquarters to New York City

Daniel Coleman, Chief Executive Officer of KCG, said, "During the second quarter, KCG continued to focus on strategic clients, completed a tender offer for 22 percent of shares outstanding, excluding restricted stock units, and developed plans to consolidate global headquarters in New York City. The financial results, however, were negatively affected by the deterioration in market-wide volumes and volatility in U.S. equities from the first quarter, heightened competition for retail order flow, and several non-operating items. While we believe KCG is steadily developing into a major multi-asset class liquidity provider, the results do not meet our expectations. As a firm, we cannot assume that the market environment will improve. To generate the right returns for our shareholders, we will continuously review, adjust, and improve how we run our business."

Market Making The Market Making segment encompasses direct-to-client and non-client, exchange-based market making across multiple asset classes and is an active participant in all major cash, options and futures markets in the U.S., Europe and Asia. During the second quarter of 2015, the segment generated total revenues of $192.3 million and pre-tax income of $4.4 million. Excluding expenses related to accelerated stock-based compensation of $19.8 million, the segment generated pre-tax income of $24.2 million.

During the second quarter of 2015, consolidated U.S. equity share and dollar volume continued to decline quarter over quarter along with realized volatility for the S&P 500. In particular, retail trading activity declined approximately 10 percent market-wide amid continued strong competition and a narrowing of spreads. KCG's results were augmented by solid contributions from Asian equities, U.S. commodities and European fixed income, partially offset by U.S. fixed income.

Mr. Coleman commented, "Although direct-to-client market making in U.S. equities increased market share and our models performed well, the current competitive environment remains a challenge in terms of revenue realization. We are committed to improving returns irrespective of an improvement in the competitive or macro environment. Outside of U.S. equities, we continued to diversify in select asset classes, add strategies and build scale."

In the first quarter of 2015, the segment generated total revenues of $224.5 million and pre-tax income of $39.3 million. In the second quarter of 2014, the segment generated total revenues of $218.4 million and pre-tax income of $36.0 million.

 

Select Trade Statistics: U.S. Equity Market Making

2Q15

1Q15

2Q14

Average daily dollar volume traded ($ millions)

27,883

31,025

25,143

Average daily trades (thousands)

3,550

3,947

3,620

Average daily shares traded (millions)

5,785

5,048

10,820

   NYSE and NASDAQ shares traded

885

933

758

   OTC Bulletin Board and OTC Market shares traded

4,900

4,115

10,061

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

0.80

0.92

1.07

 

Global Execution Services The Global Execution Services segment comprises agency execution services and trading venues. During the second quarter of 2015, the segment generated total revenues of $63.5 million and a pre-tax loss of $9.9 million. Excluding expenses related to accelerated stock-based compensation of $8.2 million, the segment generated a pre-tax loss of $1.7 million.

During the second quarter of 2015, in addition to the decline in consolidated U.S. equity share volume quarter over quarter, ETF trading activity decreased approximately 13 percent market-wide. Also, during the quarter, institutional investors in the U.S. experienced an acceleration in domestic mutual fund outflows. All periods prior to the second quarter include the results of KCG Hotspot up through the date of its sale on March 13, 2015.

Mr. Coleman commented, "Despite the market-wide decline in U.S. equity trading activity quarter over quarter, KCG's algorithmic trading and sales and trading teams were little affected. During the second quarter, 18 asset managers began using KCG algorithms and we onboarded an additional 10 new asset management clients. The results in ETFs, however, were affected by the market-wide decline in trading activity."

In the first quarter of 2015, excluding the gain on the sale of KCG Hotspot FX and related professional and compensation expenses, the segment generated total revenues of $79.2 million and pre-tax income of $7.2 million. In the second quarter of 2014, the segment generated total revenues of $85.9 million and pre-tax income of $0.7 million. Excluding $1.9 million in compensation related to a reduction in workforce, pre-tax income was $2.6 million.

 

Select Trade Statistics: Agency Execution and Trading Venues

2Q15

1Q15

2Q14

Average daily KCG algorithmic trading and order routing

U.S. equities shares traded (millions)

287.0

299.0

265.3

Average daily KCG BondPoint fixed income par value

traded ($ millions)

138.3

145.8

133.7

 

Corporate and Other The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the second quarter of 2015, the segment generated total revenues of $6.0 million and a pre-tax loss of $51.6 million. Excluding expenses related to accelerated stock-based compensation of $0.8 million, a debt make-whole premium of $16.5 million, writedown of capitalized debt costs of $8.5 million, and other real estate related charges of $6.3 million, the segment generated a pre-tax loss of $19.4 million.

In the first quarter of 2015, the segment generated total revenues of $7.3 million and a pre-tax loss of $14.3 million. In the second quarter of 2014, the segment generated total revenues of $9.8 million and a pre-tax loss of $22.2 million. Excluding a $2.0 million writedown of capitalized debt costs related to the principal repayment of debt, $0.8 million in compensation related to a reduction in workforce, and a lease loss accrual of $1.5 million, the pre-tax loss was $17.9 million.

During the second quarter of 2015 KCG effected a change in tax status of one of its subsidiaries and as a result reversed a valuation allowance on certain state tax net operating losses and other deferred tax assets. This resulted in a one-time deferred tax benefit of $16.2 million and a corresponding increase to KCG's deferred tax asset.

Financial Condition As of June 30, 2015, KCG had $541.3 million in cash and cash equivalents. Total outstanding debt was $495.1 million. The Company had $1.47 billion in stockholders' equity, equivalent to a book value of $15.58 per share and tangible book value of $14.05 per share based on total shares outstanding of 94.4 million, including restricted stock units.

KCG's headcount was 1,045 full-time employees at June 30, 2015 compared to 1,038 full-time employees at March 31, 2015.

During the second quarter of 2015, KCG completed a "modified Dutch auction" tender offer and repurchased 23.6 million shares of KCG's Class A Common Stock at a purchase price of $14.00 per share, for a cost of $330 million, excluding expenses related to the tender offer. The repurchased shares represented approximately 22% of KCG's Class A Common Stock outstanding excluding restricted stock units as of May 7, 2015.

Relocation of Global Headquarters Subsequent to the second quarter, KCG entered into an agreement to relocate its global headquarters from Jersey City, NJ to New York City. Under a plan authorized by the Board of Directors, KCG will reduce occupied space and consolidate legacy metro area offices in Jersey City, NJ and New York, NY. KCG's new headquarters will encompass 169,000 square feet at 300 Vesey Street, in lower Manhattan. The relocation is expected to be substantially completed at the end of 2016.

As a result of the planned relocation and consolidation of metro New York area offices and a reduction of occupied space in Chicago, KCG expects to incur additional expenses through fiscal year 2016. KCG will record non-recurring, real estate charges of $25 to $30 million in the 3rd quarter of 2015 related to the early termination of leases at 545 Washington Boulevard in Jersey City, NJ and 165 Broadway in New York, NY as well as a consolidation of space at 350 N. Orleans Street in Chicago, IL. Further, the Company will record added depreciation and amortization expenses of approximately $4.5 to $5.0 million per quarter beginning in the 3rd quarter of 2015 and running through the 4th quarter of 2016 as well as added occupancy costs of approximately $1.5 million per quarter beginning in the 4th quarter of 2015 and running through the 4th quarter of 2016.

Conference Call KCG will hold a conference call to discuss second quarter 2015 financial results starting at 9:00 a.m. Eastern Time today, July 31, 2015. To access the call, dial 800-401-3551 (domestic) or 913-312-0726 (international) and enter passcode 3586698. In addition, the call will be webcast at http://investors.kcg.com/phoenix.zhtml?p=irol-eventDetails&c=105070&eventID=5196957. Following the conclusion of the call, a replay will be available by selecting a number based on country of origin from a list posted at: https://replaynumbers.conferencinghub.com/index.aspx?confid=7898269&passcode=7898269 and entering passcode 3586698.

Additional information for investors, including a presentation of the second quarter financial results, can be found at http://investors.kcg.com.

Non-GAAP Financial Presentations KCG believes that certain non-GAAP financial presentations, when taken into consideration with the corresponding GAAP financial presentations, are important in understanding operating results. Selected financial information is included in the non-GAAP financial presentations for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014 and for the six months ended June 30, 2015 and June 30, 2014. KCG believes the presentations provide a meaningful summary of revenues and results of operations for each of the three and six month periods. Reconciliations of GAAP to non-GAAP results are included in the schedules in Exhibit 4.

About KCG KCG is a leading independent securities firm offering investors and clients a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with exceptional client service across market making, agency execution and venues. KCG has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. www.kcg.com

Certain statements contained herein may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "prospects" or "potential," by future conditional verbs such as "will," "would," "should," "could" or "may," or by variations of such words or by similar expressions. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the strategic business combination (the "Mergers") of Knight Capital Group, Inc. ("Knight") and GETCO Holding Company, LLC ("GETCO"); (ii) difficulties and delays in fully realizing cost savings and other benefits of the Mergers and the inability to manage revenue capture and sustain revenue and earnings growth; (iii) the sale of KCG Hotspot; (iv) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by regulators, the New York Attorney General, Congress and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (v) past or future changes to KCG's organizational structure and management; (vi) KCG's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG's customers and potential customers; (vii) KCG's ability to keep up with technological changes; (viii) KCG's ability to effectively identify and manage market risk, operational and technology risk (such as the events that affected Knight on August 1, 2012), legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (ix) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (x) the effects of increased competition and KCG's ability to maintain and expand market share; and (xi) the announced plan to relocate KCG's global headquarters from Jersey City, NJ to New York, NY. The list above is not exhaustive. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the SEC, including, without limitation, those detailed under "Risk Factors" in KCG's Annual Report on Form 10-K for the year-ended December 31, 2014, Quarterly Report on Form 10-Q for the quarter-ended March 31, 2015, and other reports or documents KCG files with, or furnishes to, the SEC from time to time.

 

KCG HOLDINGS, INC.

Exhibit 1 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended 

June 30, 2015

March 31, 2015

June 30, 2014

(In thousands, except per share amounts)

Revenues

Trading revenues, net

$

170,750

$

208,795

$

206,780

Commissions and fees

87,370

99,961

104,776

Interest, net

(596)

(23)

(289)

Investment income and other, net

4,358

387,423

2,866

Total revenues

261,882

696,156

314,133

Expenses

Employee compensation and benefits

109,471

106,718

103,430

Execution and clearance fees

62,598

68,473

73,242

Communications and data processing

34,240

33,764

38,279

Depreciation and amortization

20,726

20,615

19,823

Payments for order flow

14,935

15,221

18,076

Debt interest expense 

9,989

8,463

7,497

Collateralized financing interest 

8,859

8,456

6,395

Occupancy and equipment rentals

7,474

7,340

8,235

Professional fees

5,694

11,181

7,337

Business development

3,025

1,857

2,609

Debt extinguishment charges

25,006

-

1,995

Other real estate related charges

6,327

132

1,941

Other

10,652

7,808

10,767

Total expenses

318,996

290,028

299,626

(Loss) Income from continuing operations before income taxes

(57,114)

406,128

14,507

Income tax (benefit) expense

(37,952)

156,827

5,520

(Loss) Income from continuing operations, net of tax

(19,162)

249,301

8,987

Loss from discontinued operations, net of tax

-

-

(67)

Net (Loss) Income

$

(19,162)

$

249,301

$

8,920

Basic (loss) earnings per share from continuing operations

$

(0.18)

$

2.25

$

0.08

Diluted (loss) earnings per share from continuing operations

$

(0.18)

$

2.19

$

0.08

Basic loss per share from discontinued operations

$

-

$

-

$

-

Diluted loss per share from discontinued operations

$

-

$

-

$

-

Basic (loss) earnings per share

$

(0.18)

$

2.25

$

0.08

Diluted (loss) earnings per share

$

(0.18)

$

2.19

$

0.08

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

108,588

110,782

114,859

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

108,588

113,615

117,601

 

 

KCG HOLDINGS, INC.

Exhibit 1 

CONSOLIDATED STATEMENTS OF OPERATIONS

   (Continued)

(Unaudited)

For the six months ended 

June 30, 2015

June 30, 2014

(In thousands, except per share amounts)

Revenues

Trading revenues, net

$

379,545

$

465,077

Commissions and fees

187,331

217,033

Interest, net

(619)

659

Investment income and other, net

391,781

15,021

Total revenues

958,038

697,790

Expenses

Employee compensation and benefits

216,189

225,749

Execution and clearance fees

131,071

148,743

Communications and data processing

68,004

75,075

Depreciation and amortization

41,341

39,926

Payments for order flow

30,156

40,108

Debt interest expense 

18,452

17,021

Collateralized financing interest 

17,315

12,557

Occupancy and equipment rentals

14,814

16,520

Professional fees

16,875

12,739

Business development

4,882

4,292

Debt extinguishment charges

25,006

9,552

Other real estate related charges

6,459

2,207

Other

18,460

19,410

Total expenses

609,024

623,899

(Loss) Income from continuing operations before income taxes

349,014

73,891

Income tax (benefit) expense

118,875

27,987

(Loss) Income from continuing operations, net of tax

230,139

45,904

Loss from discontinued operations, net of tax

-

(1,320)

Net (Loss) Income

$

230,139

$

44,584

Basic (loss) earnings per share from continuing operations

$

2.08

$

0.40

Diluted (loss) earnings per share from continuing operations

$

2.02

$

0.39

Basic loss per share from discontinued operations

$

-

$

(0.01)

Diluted loss per share from discontinued operations

$

-

$

(0.01)

Basic (loss) earnings per share

$

2.08

$

0.39

Diluted (loss) earnings per share

$

2.02

$

0.38

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

110,890

115,282

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

113,809

118,170

 

 

KCG HOLDINGS, INC.

Exhibit 2

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands)

(Unaudited)

June 30, 2015

December 31, 2014

ASSETS

Cash and cash equivalents

$

541,292

$

578,768

Cash and cash equivalents segregated under federal and other regulations

3,600

3,361

Financial instruments owned, at fair value:

Equities

2,391,499

2,479,910

Listed options

117,934

144,586

Debt securities

185,938

82,815

Other financial instruments

355

60

Total financial instruments owned, at fair value

2,695,726

2,707,371

Collateralized agreements:

     Securities borrowed

1,871,312

1,632,062

Receivable from brokers, dealers and clearing organizations

690,291

1,188,833

Fixed assets and leasehold improvements,

less accumulated depreciation and amortization

116,849

134,051

Investments

107,348

100,726

Goodwill and Intangible assets, less accumulated amortization

144,798

152,594

Deferred tax asset, net

180,673

154,759

Assets of business held for sale

-

40,484

Other assets

234,459

137,645

Total assets

$

6,586,348

$

6,830,654

LIABILITIES & EQUITY 

Liabilities

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

Equities

$

1,785,493

$

2,069,342

Listed options

93,113

115,362

Debt securities

159,551

101,003

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

2,038,157

2,285,707

       Collateralized financings:

Securities loaned

741,732

707,744

                  Financial instruments sold under agreements to repurchase

995,667

933,576

Total collateralized financings 

1,737,399

1,641,320

Payable to brokers, dealers and clearing organizations

529,748

676,089

Payable to customers

38,282

22,110

Accrued compensation expense

64,040

114,559

Accrued expenses and other liabilities

144,390

136,977

Income taxes payable

64,107

-

Capital lease obligations 

3,877

6,700

Liabilities of business held for sale 

-

2,356

Debt

495,113

422,259

Total liabilities

5,115,113

5,308,077

Equity

Class A Common Stock

1,059

1,275

Additional paid-in capital

1,429,368

1,369,298

Retained earnings

173,155

272,780

Treasury stock, at cost

(133,562)

(122,909)

Accumulated other comprehensive income

1,214

2,133

Total equity

1,471,234

1,522,577

Total liabilities and equity

$

6,586,348

$

6,830,654

 

 

KCG HOLDINGS, INC.

Exhibit 3

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

(In thousands)

(Unaudited)

For the three months ended  

June 30, 2015

March 31, 2015

June 30, 2014

Market Making

Revenues

$

192,328

$

224,548

$

218,446

Expenses

187,926

185,208

182,442

Pre-tax earnings

4,402

39,340

36,004

Global Execution Services

Revenues

63,522

464,266

85,903

Expenses

73,459

83,208

85,167

Pre-tax (loss) earnings

(9,937)

381,058

736

Corporate and Other

Revenues

6,032

7,342

9,784

Expenses

57,611

21,612

32,017

Pre-tax loss

(51,579)

(14,270)

(22,233)

Consolidated

Revenues

261,882

696,156

314,133

Expenses

318,996

290,028

299,626

Pre-tax (loss) earnings

$

(57,114)

$

406,128

$

14,507

* Totals may not add due to rounding.

 

 

KCG HOLDINGS, INC.

Exhibit 3

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

   (Continued)

(In thousands)

(Unaudited)

For the six months ended  

June 30, 2015

June 30, 2014

Market Making

Revenues

$

416,876

$

495,792

Expenses

373,134

383,756

Pre-tax earnings

43,742

112,036

Global Execution Services

Revenues

527,788

173,123

Expenses

156,667

170,371

Pre-tax earnings

371,121

2,752

Corporate and Other

Revenues

13,374

28,875

Expenses

79,223

69,772

Pre-tax loss

(65,849)

(40,897)

Consolidated

Revenues

958,038

697,790

Expenses

609,024

623,899

Pre-tax earnings

$

349,014

$

73,891

* Totals may not add due to rounding.

 

KCG HOLDINGS, INC.

Exhibit 4

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

(in thousands)

(Unaudited)

Three months ended June 30, 2015

Market Making

Global Execution Services

Corporate and Other

Consolidated

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

GAAP Income (loss) from continuing operations before income taxes

$                4,402

$              (9,937)

$            (51,579)

$            (57,114)

Accelerated stock-based compensation

19,844

8,202

803

28,849

Debt make-whole premium

-

-

16,500

16,500

Writedown of capitalized debt costs

-

-

8,506

8,506

Other real estate related charges

-

-

6,327

6,327

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

$              24,246

$              (1,735)

$            (19,443)

$                3,068

Three months ended March 31, 2015

Market Making

Global Execution Services

Corporate and Other

Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           

GAAP Revenues 

$            224,548

$            464,266

$                7,342

$            696,156

Gain on sale of KCG Hotspot

-

(385,026)

-

(385,026)

Non- GAAP Revenues 

$            224,548

$              79,240

$                7,342

$            311,130

Three months ended March 31, 2015

Market Making

Global Execution Services

Corporate and Other

Consolidated

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

GAAP Income (loss) from continuing operations before income taxes

$              39,340

$            381,058

$            (14,270)

$            406,128

Gain on sale of KCG Hotspot

-

(385,026)

-

(385,026)

Professional fees related to the sale of KCG Hotspot

-

6,736

-

6,736

Compensation expense related to the sale of KCG Hotspot

-

4,457

-

4,457

Other real estate related charges

-

-

132

132

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

$              39,340

$                7,225

$            (14,138)

$              32,427

Three months ended June 30, 2014

Market Making

Global Execution Services

Corporate and Other

Consolidated

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

GAAP Income (loss) from continuing operations before income taxes

$              36,004

$                   736

$            (22,233)

$              14,507

Compensation related to reduction in workforce

383

1,886

800

3,069

Writedown of capitalized debt costs

-

-

1,995

1,995

Other real estate related charges

452

-

1,489

1,941

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

$              36,839

$                2,622

$            (17,949)

$              21,512

* Totals may not add due to rounding

 

 

KCG HOLDINGS, INC.

Exhibit 4

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

(Continued)

(in thousands)

Six months ended June 30, 2015

Market Making

Global Execution Services

Corporate and Other

Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           

GAAP Revenues 

$            416,876

$            527,788

$              13,374

$            958,038

Gain on sale of KCG Hotspot

-

(385,026)

-

(385,026)

Non- GAAP Revenues 

$            416,876

$            142,762

$              13,374

$            573,012

Six months ended June 30, 2015

Market Making

Global Execution Services

Corporate and Other

Consolidated

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

GAAP Income (loss) from continuing operations before income taxes

$              43,742

$            371,121

$            (65,849)

$            349,014

Gain on sale of KCG Hotspot

-

(385,026)

-

(385,026)

Accelerated stock-based compensation

19,844

8,202

803

28,849

Debt make-whole premium

-

-

16,500

16,500

Writedown of capitalized debt costs

-

-

8,506

8,506

Professional fees related to the sale of KCG Hotspot

-

6,736

-

6,736

Other real estate related charges

-

-

6,459

6,459

Compensation expense related to the sale of KCG Hotspot

-

4,457

-

4,457

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

$              63,586

$                5,490

$            (33,581)

$              35,495

Six months ended June 30, 2014

Market Making

Global Execution Services

Corporate and Other

Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           

GAAP Revenues 

$            495,792

$            173,123

$              28,875

$            697,790

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

-

-

(9,644)

(9,644)

Non- GAAP Revenues 

$            495,792

$            173,123

$              19,231

$            688,146

Six months ended June 30, 2014

Market Making

Global Execution Services

Corporate and Other

Consolidated

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

GAAP Income (loss) from continuing operations before income taxes

$            112,036

$                2,752

$            (40,897)

$              73,891

Writedown of capitalized debt costs

-

-

9,552

9,552

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

-

-

(9,644)

(9,644)

Compensation related to reduction in workforce

383

1,886

800

3,069

Other real estate related charges

811

-

1,396

2,207

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

$            113,230

$                4,638

$            (38,793)

$              79,075

* Totals may not add due to rounding

 

SOURCE KCG Holdings, Inc.



RELATED LINKS

http://www.kcg.com