SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2012

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

21. SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”) and based on the nature of the Company’s operations, products and services in each geographic region, the Company determined that it has five operating segments: (i) Americas Brokerage, (ii) Europe, Middle East and Africa (“EMEA”) Brokerage, (iii) Asia Brokerage, (iv) Clearing and Backed Trading and (v) All Other. The Company’s brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. The Clearing and Backed Trading segment encompasses the Company’s clearing, risk management, settlement and other back-office services, as well as the capital we provide to start-up trading groups, small hedge funds, market-makers and individual traders. The All Other segment captures revenues and costs that are not directly assignable to one of the brokerage or clearing and backed trading operating segments, primarily consisting of the Company’s corporate business activities and operations from software, analytics and market data.

The accounting policies of the segments are the same as those described above in Note 2—Summary of Significant Accounting Policies. The Company evaluates performance of the operating segments based on income (loss) before income taxes, which it defines as revenues less direct expenses. Revenues within each brokerage segment include revenues that are directly related to providing brokerage services along with interest and other income (loss) directly attributable to the operating segment. Revenues within the Clearing and Backed Trading segment primarily include revenues that are directly related to providing clearing services along with the Company’s share of profit (loss) on trading activity from capital investments. The Company’s Clearing and Backed Trading segment incurs exchanges fees on behalf of its clients, which are reflected within Interest and transaction-based expenses. The reimbursement of these fees from the Company’s clients is reflected within Total Revenues. Therefore, the Company evaluates the top-line performance of its Clearing and Backed Trading segment using Revenues, net of interest and transaction-based expenses. Direct expenses of the operating segments are those expenses that are directly related to providing the brokerage or clearing services and trading activities of the operating segments and include compensation expense related to the segment management and staff, communication and market data, travel and promotion, and certain professional fees and other expenses that are directly incurred by the operating segments. However, the Company does not allocate to its brokerage operating segments certain expenses which it manages separately at the corporate level. The unallocated costs include rent and occupancy, depreciation and amortization, professional fees, interest on borrowings and other expenses and are included in the All Other operating segment. Management generally does not consider the unallocated costs in its performance measurement of (i) Americas Brokerage, (ii) Europe, Middle East and Africa (“EMEA”) Brokerage, (iii) Asia Brokerage, and (iv) Clearing and Backed Trading.

Selected financial information for the Company’s reportable segments is presented below for periods indicated:

	For the Year Ended December 31, 2012
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	276,350	$	338,504	$	71,927	$	159,877		$	77,929		$	924,587
Revenues, net of interest and transaction-based expenses	262,560		328,722		71,813		44,597			79,353			787,045
Income (loss) before income taxes	69,648		83,334		15,075		6,688			(176,002		)	(1,257		)
	For the Year Ended December 31, 2011
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	313,483	$	386,012	$	82,903	$	164,882		$	68,193		$	1,015,473
Revenues, net of interest and transaction-based expenses	299,590		374,802		82,839		54,104			69,436			880,771
Income (loss) before income taxes	81,308		88,122		15,533		9,196			(194,077		)	82
	For the Year Ended December 31, 2010
	Americas Brokerage		EMEA Brokerage		Asia Brokerage		Clearing and Backed Trading			All Other			Total
Total revenues	$	294,910	$	379,033	$	74,945	$	53,129		$	60,585		$	862,602
Revenues, net of interest and transaction-based expenses	278,553		367,494		74,875		12,140			61,982			795,044
Income (loss) before income taxes	66,399		115,037		15,814		(3,041		)	(162,406		)	31,803

In addition, with the exception for goodwill, the Company does not identify or allocate assets by operating segment, nor does its chief operating decision maker evaluate operating segments using discrete asset information. See Note 6 for goodwill by reportable segment.

For the years ended December 31, 2012, 2011, and 2010, the U.K. is the only individual foreign country that accounts for 10% or more of the total sales and total long-lived assets. Information regarding revenue for the years ended December 31, 2012, 2011, and 2010, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software inventory) in geographic areas as of December 31, 2012 and 2011 are as follows:

	For the year ended December 31,
	2012		2011		2010
Revenues:
United States	$	271,038	$	303,508	$	290,053
United Kingdom	456,801		492,204		398,020
Other	196,748		219,761		174,529
Total	$	924,587	$	1,015,473	$	862,602
	For the year ended December 31,
	2012		2011		2010
Revenues, net of interest and transaction-based expenses:
United States	$	262,962	$	295,212	$	278,686
United Kingdom	337,440		376,809		348,895
Other	186,643		208,750		167,463
Total	$	787,045	$	880,771	$	795,044

	As of December 31,
	2012		2011
Long-lived Assets, as defined:
United States	$	47,675	$	50,993
United Kingdom	10,536		12,018
Other	5,239		5,846
Total	$	63,450	$	68,857

Revenues are attributed to geographic areas based on the location of the particular subsidiary of the Company which generated the revenues.