EX-99.1 2 d425406dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

KNIGHT CAPITAL GROUP ANNOUNCES CONSOLIDATED NET LOSS OF $389.9 MILLION FOR THE THIRD QUARTER 2012

Consolidated pre-tax results for the third quarter of 2012 negatively impacted by $461.1 million of pre-tax losses related to August 1, 2012 technology issue

Third quarter pre-tax results also include $143.0 million non-cash write-down of assets due to impairment

As of September 30, 2012, Knight had $420.8 million in cash and cash equivalents as well as more than $250.0 million in excess regulatory capital

JERSEY CITY, New Jersey (October 17, 2012) – Knight Capital Group, Inc. (NYSE Euronext: KCG) today reported a consolidated net loss for the third quarter of 2012 of $389.9 million, or $602.9 million before income tax benefits. The results included pre-tax losses of $461.1 million related to the technology issue that occurred on August 1, 2012 and subsequent related costs, as well as a $143.0 million non-cash pre-tax charge due to the write-down of goodwill and intangible assets.

The third quarter 2012 GAAP net loss attributable to common stockholders was $764.3 million, or $6.30 per share, which includes a $373.4 million, or $3.08 per share, non-cash deemed dividend resulting from a beneficial conversion feature related to our August 6, 2012 $400.0 million convertible preferred share issuance as well as losses related to the technology issue of $2.46 per share, and the asset impairment charges of $0.76 per share. On a non-GAAP basis, the third quarter 2012 net income attributable to common shareholders was $817,000 or $0.01 per share. A reconciliation of GAAP to non-GAAP results is included below.

For the third quarter of 2011, the company reported consolidated earnings of $26.9 million, or $0.29 per diluted share, which included a pre-tax restructuring charge for severance, write-down of assets and related costs of $28.6 million, equivalent to $0.19 per diluted share.

Net negative revenues for the third quarter of 2012 were $189.8 million, inclusive of $457.6 million in trading losses related to August 1st, compared to revenues of $397.4 million for the third quarter of 2011.

As of September 30, 2012, the company had $420.8 million in cash and cash equivalents. The company had $1.5 billion in aggregate stockholders’ equity and preferred shares as of September 30, 2012, equivalent to a book value of $4.05 per share (which includes preferred shares on an as-converted basis). The company had $1.4 billion in stockholders’ equity as of September 30, 2011, equivalent to a book value of $14.64 per share. Tangible book value as of September 30, 2012 was $3.26 per share (which includes preferred shares on an as-converted basis) as compared to $10.24 at September 30, 2011.

“In the aftermath of the technology issue that occurred on August 1, 2012, Knight began the process of effecting a recovery,” said Tom Joyce, Chairman and Chief Executive Officer, Knight Capital Group. “The recapitalization restored the firm’s liquidity and capital, Knight’s market share in U.S. equities substantially rebounded, and we’ve undertaken measures to enhance processes and controls. Obviously, consolidated financial results were negatively impacted by the trading losses, related expenses and subsequent non-cash write-downs. We are gratified though that, if one backs


out these items, we made a small profit on an operating basis. Overall, I believe the recovery to date speaks to the strength of our offering, the dedication of Knight’s client teams, and deep client relationships we enjoy.”

As described more fully in a Form 8-K filing on August 6, 2012, the company raised $400.0 million in equity financing through a convertible preferred share offering. Under the terms of the transaction, Knight issued two percent preferred shares that may be converted into Knight Class A Common Stock at $1.50 per share. The $1.50 conversion price was lower than the market value of Knight’s shares on August 6, 2012 which, under GAAP, results in a beneficial conversion feature which is treated as a deemed dividend to the preferred shareholders for purposes of calculating earnings per share attributable to common shareholders.

“Continuing operations” includes the company’s Market Making, Institutional Sales and Trading, Electronic Execution Services, and Corporate and Other segments. Market Making consists of all global market making across equities, fixed income, foreign exchange, futures and options as well as the company’s activities as a Designated Market Maker at the NYSE. Institutional Sales and Trading includes full-service institutional research, sales and trading as well as equity and debt capital markets, reverse mortgage origination and securitization, and asset management. Electronic Execution Services includes Knight Direct, Knight Hotspot FX and Knight BondPoint. Corporate and Other includes strategic investments primarily in financial services-related ventures, futures execution and custody services, clearing and settlement activity, corporate overhead expenses and all other income and expenses that are not attributable to the other reporting segments.


     Q3 2012     Q3 2011  

Revenues ($ thousands)

     (189,838     397,442   

Net (loss) income ($ thousands)

     (389,921     26,936   

Diluted EPS GAAP basis($)

     (6.30     0.29   

Diluted EPS Non-GAAP basis($)

     0.01        0.29   

U.S. equity Market Making statistics:

    

Average daily dollar value traded ($ billions)

     16.7        29.3   

Average daily trades (thousands)

     2,507.5        4,189.6   

Nasdaq and Listed shares traded (billions)

     37.9        60.6   

FINRA OTC Bulletin Board and Other shares traded (billions)

     151.2        174.6   

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

     (3.29     1.04   

Average revenue capture per U.S. equity dollar value traded, excluding impact of August 1st technology issue (bps) *

     1.04        1.04   

Average daily Knight Direct equity shares (millions)

     174.8        196.7   

Average daily Knight Hotspot FX notional dollar value traded ($ billions)**

     24.1        32.2   
     YTD 2012     YTD 2011  

Revenues ($ thousands)

     448,441        1,063,200   

Net (loss) income ($ thousands)

     (353,525     74,999   

Diluted EPS GAAP basis($)

     (7.20     0.79   

Diluted EPS Non-GAAP basis($)

     0.55        0.79   

U.S. equity Market Making statistics:

    

Average daily dollar value traded ($ billions)

     19.9        26.0   

Average daily trades (thousands)

     3,050.6        3,632.7   

Nasdaq and Listed shares traded (billions)

     130.9        165.5   

FINRA OTC Bulletin Board and Other shares traded (billions)

     489.3        757.2   

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

     (0.27     1.00   

Average revenue capture per U.S. equity dollar value traded, excluding impact of Facebook IPO and August 1st technology issue (bps) *

     1.02        1.00   

Average daily Knight Direct equity shares (millions)

     203.1        174.9   

Average daily Knight Hotspot FX notional dollar value traded ($ billions)**

     26.7        30.4   

 

* Statistic excludes $26.0 million in trading losses related to the Facebook IPO for YTD 2012 and $456.6 million in trading losses related to the August 1st technology issue for Q3 and YTD 2012.
** In the second quarter of 2012, Knight modified the reporting of Knight Hotspot FX notional dollar value traded volume to count one side of the transaction. The company previously counted total client volume to include both sides of the transaction. The company posts Knight Hotspot FX volume statistics each month to its web site, which has been updated to show one-sided volume statistics dating back to the beginning of 2010.

Market Making

During the third quarter of 2012, the Market Making segment generated total net negative revenues of $341.2 million and a pre-tax loss of $452.0 million. The revenue and pre-tax results include trading losses related to the August 1st technology issue of $457.6 million. Also included in the pre-tax results is a charge of $11.9 million related to the write-down of intangible assets. In the third quarter of 2011, Market Making reported total revenues of $204.9 million and pre-tax income of $69.2 million, which included a restructuring charge of $547,000.

“The Market Making segment bore the near full financial impact of the trading loss incurred as a result of the technology issue,” said Mr. Joyce. “Contributing to the poor results was a continued decline in retail trading activity and muted market volatility as well as a non-cash write-down of intangibles associated with Knight’s designated market making unit. Nevertheless, Knight’s work to


minimize the client impact caused by the August 1st technology issue was largely successful. Clients of Market Making were among the first to resume trading with Knight following the technology issue which drove the substantial recovery in market share over the ensuing weeks. And we’re pleased that revenue capture remained strong at 1.04 basis points, when you exclude the impact of the trading losses, which is a testament to Knight’s capabilities.”

Institutional Sales and Trading

During the third quarter of 2012, the Institutional Sales and Trading segment generated total revenues of $101.7 million and a pre-tax loss of $140.8 million, which included a charge of $131.1 million primarily related to the write-down of goodwill within our fixed income and Astor businesses. In the third quarter of 2011, Institutional Sales and Trading reported total revenues of $145.4 million and a pre-tax loss of $15.6 million, which included a restructuring charge of $23.9 million.

“The Institutional Sales and Trading segment felt a subsequent impact from the technology issue,” said Mr. Joyce. “A pullback by clients of Institutional Sales and Trading in the immediate aftermath compounded pressure on secondary volumes due to the continued weakness in institutional trading activity. A non-cash write-down for goodwill and intangibles associated with institutional fixed income and asset management further hampered results. We’re pleased with the strong return of clients in the intervening period through the determined efforts of the client teams. Also, among the positive developments, Urban rose to second in industry rankings of reverse mortgage origination.”

Electronic Execution Services

During the third quarter of 2012, the Electronic Execution Services segment generated total revenues of $34.8 million and pre-tax income of $6.3 million. In the third quarter of 2011, Electronic Execution Services reported total revenues of $45.1 million and pre-tax income of $13.8 million, which included a restructuring charge of $392,000.

“The Electronic Execution Services segment demonstrated incredible resilience amid the adversity,” said Mr. Joyce. “Despite the technology issue and a temporary decline in client activity, trade volumes not only held steady for the quarter but outperformed their respective markets. Knight Direct, Knight Hotspot FX and Knight BondPoint all posted market share gains year over year. The respective sales efforts and pace of new account openings continued to demonstrate strong acceptance of the electronic trading products.”

Corporate and Other

During the third quarter of 2012, the Corporate and Other segment reported a pre-tax loss of $16.4 million, which included $3.5 million in professional fees related to the events surrounding the August 1st technology issue. In the third quarter of 2011, the Corporate and Other segment reported a pre-tax loss of $23.0 million, which included a restructuring charge of $3.8 million.

“During the third quarter of 2012, Knight made tremendous progress toward a recovery,” said Mr. Joyce. “Client teams are continuously engaged in getting clients back up to trading at previous levels as well as developing greater opportunities. We’re undertaking a simultaneous process to further strengthen controls and processes. And we look forward to reestablishing a clean base of earnings in the quarters to come from which to help rebuild both Knight’s valuation and reputation.”

Headcount at September 30, 2012 was 1,545 full-time employees, compared to 1,391 full-time employees at September 30, 2011.

During the third quarter of 2012, the company did not repurchase any shares under the company’s existing stock repurchase program. To date, the company has repurchased 76.7 million shares for $879.1 million. The company has approximately $120.9 million available to repurchase shares under the program. The company cautions that there are no assurances that any further repurchases may actually occur.


Non-GAAP financial presentations

The company believes that certain non-GAAP financial presentations, when taken into consideration with the corresponding GAAP financial presentations, are important in understanding the company’s operating results. Selected financial information is included in the company’s non-GAAP financial presentations for the three and nine months ended September 30, 2012. This information includes the effects due to the August 1, 2012 technology issue and subsequent related costs, the write-down of goodwill and intangible assets, trading losses related to the Facebook IPO and a gain resulting from a change in the tax status of a strategic investment. We believe these presentations provide meaningful information to shareholders and investors as it provides comparability for our results of operations for the three and nine months ended September 30, 2012 with the results for the periods ended September 30, 2011. See schedules below for a full reconciliation of GAAP to non-GAAP financial presentations.

* * *

Copies of this earnings release and other company information can be obtained on Knight’s website, http://www.knight.com. The company will conduct its third quarter 2012 earnings conference call for analysts, investors and the media at 9:00 a.m. Eastern Time (ET) today, October 17, 2012. To access Knight’s earnings conference call, please dial 800-723-6498 for domestic callers or 785-830-7989 for international callers. When prompted, please enter passcode 8976848. A replay of the third quarter 2012 earnings conference call will be available by dialing 888-203-1112 for domestic callers or 719-457-0820 for international callers. When prompted, please enter passcode 8976848. The conference call will be webcast live at 9:00 a.m. ET for all investors and interested parties on Knight’s website. In addition, the company will release its monthly volume statistics for September 2012 on its website at http://www.knight.com/ourfirm/volumestats.asp before the start of trading today.

* * *

About Knight

Knight Capital Group (NYSE Euronext: KCG) is a global financial services firm that provides access to the capital markets across multiple asset classes to a broad network of clients, including broker-dealers, institutions and corporations. Knight is headquartered in Jersey City, N.J. with a global presence across the Americas, Europe, and the Asia Pacific regions. For further information about Knight, please visit www.knight.com.

Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These “forward-looking statements” are not historical facts and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. 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 the August 1, 2012 technology issue that resulted in the Company sending numerous erroneous orders in NYSE-listed and NYSE Arca securities into the market and the impact to the Company’s capital structure and business as well as actions taken in response thereto and consequences thereof, risks associated with the Company’s ability to recover all or a portion of the damages that are attributable to the manner in which NASDAQ OMX handled the Facebook IPO, risks associated with changes in market structure, legislative, regulatory or financial reporting rules, risks associated with the Company’s changes to its organizational structure and management and the costs, integration, performance and operation of businesses previously acquired or developed organically, or that may be acquired or developed organically in the future. Readers should carefully review the risks and uncertainties disclosed in the Company’s reports with the U.S. Securities and Exchange Commission (SEC), including, without limitation, those detailed under “Certain Factors Affecting


Results of Operations” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2011 and in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and in other reports or documents the Company files with, or furnishes to, the SEC from time to time. This information should also be read in conjunction with the Company’s Consolidated Financial Statements and the Notes thereto contained in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2011 and in the Company’s Quarterly Report on Form 10-Q for the quarter-ended June 30, 2012, and in other reports or documents the Company files with, or furnishes to, the SEC from time to time.

CONTACTS

 

Kara Fitzsimmons    Jonathan Mairs
Managing Director,    Director,
Media Relations    Corporate Communications
201-356-1523 or    & Investor Relations
kfitzsimmons@knight.com    201-356-1529 or
   jmairs@knight.com


KNIGHT CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     For the three months ended September 30,     For the nine months ended September 30,  
     2012     2011     2012     2011  
     (In thousands, except per share amounts)  

Revenues

        

Commissions and fees

   $ 144,217      $ 207,252      $ 501,920      $ 585,324   

Net trading revenue

     (343,618     185,981        (90,396     463,578   

Interest, net

     4,812        (1,201     17,874        4,205   

Investment income and other, net

     4,751        5,410        19,043        10,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     (189,838     397,442        448,441        1,063,200   
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

        

Employee compensation and benefits

     124,638        157,201        402,770        446,290   

Execution and clearance fees

     46,731        63,589        153,179        175,775   

Communications and data processing

     25,788        23,137        72,545        65,552   

Payments for order flow

     20,099        22,985        61,942        66,031   

Interest

     12,330        10,822        39,769        30,242   

Depreciation and amortization

     11,924        13,747        38,713        40,480   

Professional fees

     8,066        5,530        18,933        15,398   

Occupancy and equipment rentals

     7,127        7,026        20,007        21,526   

Business development

     4,983        5,909        16,040        16,870   

Restructuring

     —          28,624        —          28,624   

Writedown of assets and lease loss accrual

     143,034        1,333        143,034        2,278   

Other

     8,302        13,095        25,014        30,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     413,022        352,998        991,946        939,218   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income from continuing operations before income taxes

     (602,860     44,444        (543,505     123,982   

Income tax (benefit) expense

     (212,939     17,449        (189,980     48,605   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income from continuing operations, net of tax

     (389,921     26,995        (353,525     75,377   

Loss from discontinued operations, net of tax

     —          (59     —          (378
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (389,921   $ 26,936      $ (353,525   $ 74,999   

Dividend on convertible preferred shares

     (1,051     —          (1,051     —     

Deemed dividend related to beneficial conversion feature of convertible preferred shares

     (373,364     —          (373,364     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to common stockholders

   $ (764,336   $ 26,936      $ (727,940   $ 74,999   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share from continuing operations

   $ (6.30   $ 0.29      $ (7.20   $ 0.82   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share from continuing operations

   $ (6.30   $ 0.29      $ (7.20   $ 0.80   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ (6.30   $ 0.29      $ (7.20   $ 0.82   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ (6.30   $ 0.29      $ (7.20   $ 0.79   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computation of basic earnings per share

     121,246        91,564        101,044        91,877   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computation of diluted earnings per share

     121,246        93,840        101,044        94,803   
  

 

 

   

 

 

   

 

 

   

 

 

 


KNIGHT CAPITAL GROUP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

     September 30,
2012
    December 31,
2011
 
     (In thousands)  

ASSETS

    

Cash and cash equivalents

   $ 420,808      $ 467,633   

Cash and securities segregated under federal and other regulations

     137,794        11,010   

Financial instruments owned, at fair value:

    

Equities

     1,170,813        1,416,090   

Debt securities

     248,916        134,631   

Listed equity options

     132,379        280,384   

Loan inventory

     151,772        206,572   

Other financial instruments

     109        21,483   

Securitized HECM loan inventory

     3,410,607        1,722,631   
  

 

 

   

 

 

 

Total financial instruments owned, at fair value

     5,114,596        3,781,791   

Collateralized agreements:

    

Securities borrowed

     1,060,049        1,494,647   

Receivable from brokers, dealers and clearing organizations

     944,239        623,897   

Fixed assets and leasehold improvements, at cost, less accumulated depreciation and amortization

     107,947        111,464   

Investments

     97,620        83,231   

Goodwill

     218,600        337,843   

Intangible assets, less accumulated amortization

     68,170        92,889   

Tax receivable

     173,638        9,788   

Other assets

     242,393        138,758   
  

 

 

   

 

 

 

Total assets

   $ 8,585,854      $ 7,152,951   
  

 

 

   

 

 

 

LIABILITIES & EQUITY

    

Liabilities

    

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

    

Equities

   $ 1,080,339      $ 1,369,750   

Listed equity options

     111,691        254,506   

Debt securities

     99,679        63,073   

Other financial instruments

     4,431        34,563   
  

 

 

   

 

 

 

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

     1,296,140        1,721,892   

Collateralized financings:

    

Securities loaned

     353,953        697,998   

Financial instruments sold under agreements to repurchase

     471,349        420,320   

Other secured financings

     115,311        59,405   

Liability to GNMA trusts, at fair value

     3,383,240        1,710,627   
  

 

 

   

 

 

 

Total collateralized financings

     4,323,853        2,888,350   

Payable to brokers, dealers and clearing organizations

     303,277        322,660   

Payable to customers

     460,826        23,664   

Accrued compensation expense

     131,970        188,939   

Accrued expenses and other liabilities

     183,611        121,083   

Long-term debt

     410,089        424,338   
  

 

 

   

 

 

 

Total liabilities

     7,109,766        5,690,926   
  

 

 

   

 

 

 

Convertible preferred shares

     259,278        —     

Equity

    

Class A common stock

     2,542        1,664   

Additional paid-in capital

     1,367,625        850,837   

Retained earnings

     705,380        1,433,320   

Treasury stock, at cost

     (859,109     (823,023

Accumulated other comprehensive income (loss)

     372        (773
  

 

 

   

 

 

 

Total equity

     1,216,810        1,462,025   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 8,585,854      $ 7,152,951   
  

 

 

   

 

 

 


KNIGHT CAPITAL GROUP, INC.

PRE-TAX EARNINGS BY BUSINESS SEGMENT*

(In thousands)

(Unaudited)

 

     For the three months ended
September 30,
    For the nine months ended
September 30,
 
     2012     2011     2012     2011 (1)  

Market Making

        

Revenues (2) (4)

   $ (341,154   $ 204,879      $ (75,499   $ 517,105   

Expenses (3) (6)

     110,810        135,691        325,402        345,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax (loss) earnings

     (451,964     69,188        (400,901     171,729   
  

 

 

   

 

 

   

 

 

   

 

 

 

Institutional Sales and Trading

        

Revenues (4)

     101,719        145,440        353,654        407,697   

Expenses (3) (6)

     242,526        160,992        487,293        434,908   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax loss

     (140,807     (15,552     (133,639     (27,211
  

 

 

   

 

 

   

 

 

   

 

 

 

Electronic Execution Services

        

Revenues

     34,778        45,088        122,287        127,347   

Expenses (6)

     28,511        31,251        92,405        90,340   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax earnings

     6,267        13,838        29,882        37,007   
  

 

 

   

 

 

   

 

 

   

 

 

 

Corporate and Other

        

Revenues (5)

     14,819        2,034        47,999        11,051   

Expenses (3) (6)

     31,176        25,064        86,846        68,595   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax loss

     (16,356     (23,030     (38,847     (57,544
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

        

Revenues

     (189,838     397,442        448,441        1,063,200   

Expenses

     413,022        352,998        991,946        939,218   
  

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax (loss) earnings

   $ (602,860   $ 44,444      $ (543,505   $ 123,982   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Totals may not add due to rounding.
(1) -   Prior period amounts have been recast to conform with current period segment presentation.
  Such recast had no effect on previously reported Consolidated Pre-tax earnings.
(2) -   Included in revenues for the three and nine months ended September 30, 2012 is a trading loss of $457.6 million related to the August 1st technolgy issue.
(3) -   Included in expenses for the three and nine months ended September 30, 2012 is a writedown of assets of $143.0 million which includes $11.9 million for Market Making and $131.1 million for Institutional Sales and Trading. Additionally, the Corporate and Other segment includes $3.5 million in professional fees related to the August 1st technology issue.
(4) -   Included in revenues for the nine months ended September 30, 2012 is a Facebook IPO trading loss of $35.4 million which includes $26.0 million for Market Making and $9.4 million for Institutional Sales and Trading.
(5) -   Included in revenues for the nine months ended September 30, 2012 is a gain on a strategic investment of $10.0 million.
(6) -   Included in expenses for the three and nine months ended September 30, 2011 is a Restructuring charge of $28.6 million which includes $0.5 million for Market Making, $23.9 million for Institutional Sales and Trading, $0.4 million for Electronic Execution Services, and $3.8 million for Corporate and Other.


KNIGHT CAPITAL GROUP, INC.

Regulation G Reconciliation of Non-GAAP financial measures

(in thousands)

 

Three months ended September 30, 2012    Market
Making
    Institutional
Sales and
Trading
    Electronic
Execution
Services
     Corporate
and Other
    Consolidated  

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

           

GAAP Pre-Tax (Loss) Income

   $ (451,964   $ (140,807   $ 6,267       $ (16,356   $ (602,860

August 1st trading loss and related costs

     457,570        —          —           3,520        461,090   

Writedown of assets

     11,917        131,117        —           —          143,034   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP Pre-Tax Income (Loss)

   $ 17,522      $ (9,690   $ 6,267       $ (12,836   $ 1,263   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

* Totals may not add due to rounding

 

Nine months ended September 30, 2012    Market
Making
    Institutional
Sales and
Trading
    Electronic
Execution
Services
     Corporate
and Other
    Consolidated  

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

           

GAAP Pre-Tax (Loss) Income

   $ (400,901   $ (133,639   $ 29,882       $ (38,847   $ (543,505

August 1st trading loss and related costs

     457,570        —          —           3,520        461,090   

Writedown of assets

     11,917        131,117        —           —          143,034   

Facebook IPO trading losses

     25,975        9,385        78         —          35,438   

Investment gain

     —          —          —           (9,992     (9,992
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Non-GAAP Pre-Tax Income (Loss)

   $ 94,561      $ 6,863      $ 29,960       $ (45,319   $ 86,064   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

* Totals may not add due to rounding


KNIGHT CAPITAL GROUP, INC.

Regulation G Reconciliation of Non-GAAP financial measures

(in thousands, except per share amounts)

 

     Three Months Ended September 30, 2012     Nine Months Ended September 30, 2012  
     $     EPS     $     EPS  

Reconciliation of GAAP Net Loss to Non - GAAP Net Income :

        

Net loss attributable to common stockholders - GAAP

   $ (764,336   $ (6.30   $ (727,940   $ (7.20

Add back:

        

Deemed dividend related to beneficial conversion feature of convertible preferred shares

     373,364        3.08        373,364        3.70   

Dividend on convertible preferred shares

     1,051        0.01        1,051        0.01   

August 1st trading loss and related costs

     298,226        2.46        299,917        2.97   

Writedown of assets

     92,512        0.76        93,037        0.92   

Facebook IPO trading losses

     —          —          23,051        0.23   

Investment gain

     —          —          (6,499     (0.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders - Non-GAAP

   $ 817      $ 0.01      $ 55,981      $ 0.55   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computation of earnings per share

       121,246          101,044   
    

 

 

     

 

 

 

 

* Totals may not add due to rounding