EX-99.1 2 d625930dex991.htm EX-99.1 EX-99.1

EXHIBIT 99.1

KCG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS(1)

(Unaudited)

 

     For the three months
ended September 30,		     For the nine months
ended September 30,		  
     2013     2012     2013     2012  
     (In thousands, except per share amounts)  

Revenues

         

Trading revenues, net

    $ 230,471      $ 92,556      $ 415,495      $ 333,737   

Commissions and fees

      109,079        25,542        164,391        79,487   

Interest, net

      (177 )      (781 )      (970 )      (1,998 ) 

Investment income and other, net

      128,446        13,285        119,207        14,015   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      467,819        130,602        698,123        425,241   
  

 

 

    

 

 

    

 

 

    

 

 

  

Expenses

         

Employee compensation and benefits

      129,631        31,875        236,983        111,395   

Execution and clearance fees

      81,023        42,267        167,931        144,656   

Communications and data processing

      44,046        21,681        86,040        67,380   

Interest

      23,870        706        26,515        2,002   

Depreciation and amortization

      20,091        7,574        36,004        27,180   

Payments for order flow

      16,431        717        17,468        2,128   

Professional fees

      9,077        2,575        38,928        7,690   

Occupancy and equipment rentals

      8,898        3,240        15,454        8,865   

Business development

      2,644        6        2,686        19   

Writedown of assets and lease loss accrual

      936        —          4,248        —     

Other

      11,318        5,349        30,028        19,002   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses

      347,965        115,990        662,285        390,317   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes

      119,854        14,612        35,838        34,924   

Income tax (benefit) expense

      (107,767 )      4,805        (102,478 )      10,368   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations, net of tax

      227,621        9,807        138,316        24,556   

Loss from discontinued operations, net of tax

      (784 )      —          (784 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 226,837      $ 9,807      $ 137,532      $ 24,556   
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic earnings per share from continuing operations

    $ 1.99      $ 0.21      $ 2.02      $ 0.49   
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted earnings per share from continuing operations

    $ 1.98      $ 0.21      $ 2.01      $ 0.49   
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic loss per share from discontinued operations

    $ (0.01 )      —        $ (0.01 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted loss per share from discontinued operations

    $ (0.01 )      —        $ (0.01 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic earnings per share

    $ 1.99      $ 0.21      $ 2.00      $ 0.49   
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted earnings per share

    $ 1.98      $ 0.21      $ 2.00      $ 0.49   
  

 

 

    

 

 

    

 

 

    

 

 

  

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

      114,113        46,411        68,632        49,619   
  

 

 

    

 

 

    

 

 

    

 

 

  

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

      114,773        46,411        68,855        49,619   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC. Certain reclassifications have been made to the prior periods Consolidated Statements of Operations to conform to current presentation.

 

1

KCG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

     September 30,
2013		     December  31,
2012(1)		  
           (Restated)  
     (In thousands)  

ASSETS

     

Cash and cash equivalents

    $ 798,712      $ 427,631   

Cash and securities segregated under federal and other regulations

      216,442        —     

Financial instruments owned, at fair value:

     

Equities

      2,156,466        378,933   

Listed options

      288,227        92,305   

Debt securities

      79,284        183,637   
  

 

 

    

 

 

  

Total financial instruments owned, at fair value

      2,523,977        654,875   

Collateralized agreements:

     

Securities borrowed

      1,370,921        52,261   

Receivable from brokers, dealers and clearing organizations

      1,330,113        142,969   

Fixed assets and leasehold improvements, less accumulated depreciation and amortization

      161,865        83,341   

Investments

      125,889        248,438   

Goodwill

      18,398        4,645   

Intangible assets, less accumulated amortization

      192,045        46,123   

Deferred tax asset

      169,619        4,180   

Assets within discontinued operations

      6,098,299        —     

Other assets

      287,015        23,073   
  

 

 

    

 

 

  

Total assets

    $ 13,293,295      $ 1,687,536   
  

 

 

    

 

 

  

LIABILITIES, REDEEMABLE PREFERRED MEMBER’S EQUITY AND EQUITY

     

Liabilities

     

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

     

Equities

    $ 1,848,728      $ 423,740   

Listed options

      229,722        69,757   

Debt securities

      79,057        19,056   

Other financial instruments

      5,431        —     
  

 

 

    

 

 

  

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

      2,162,938        512,553   

Collateralized financings:

     

Securities loaned

      543,451        —     

Financial instruments sold under agreements to repurchase

      595,029        —     
  

 

 

    

 

 

  

Total collateralized financings

      1,138,480        —     

Payable to brokers, dealers and clearing organizations

      666,178        24,185   

Payable to customers

      486,136        —     

Accrued compensation expense

      130,158        27,728   

Accrued expenses and other liabilities

      220,648        118,068   

Capital lease obligations

      12,453        24,191   

Liabilities within discontinued operations

      6,006,024        —     

Short-term debt

      235,000        —     

Long-term debt

      722,259        15,000   
  

 

 

    

 

 

  

Total liabilities

      11,780,274        721,725   
  

 

 

    

 

 

  

Redeemable preferred member’s equity

      —          311,139   

Equity

     

Members' equity

      —          654,672   

Class A common stock

      1,235        —     

Additional paid-in capital

      1,299,907        —     

Retained earnings

      226,837        —     

Treasury stock, at cost

      (9,811 )      —     

Accumulated other comprehensive loss

      (5,147 )      —     
  

 

 

    

 

 

  

Total equity

      1,513,021        654,672   
  

 

 

    

 

 

  

Total liabilities, redeemable preferred member’s equity and equity

    $ 13,293,295      $ 1,687,536   
  

 

 

    

 

 

  

 

(1) GETCO Holding Company, LLC. Certain reclassifications have been made to the prior period Consolidated Statement of Financial Condition to conform to current presentation.
 
 

 

2

KCG HOLDINGS, INC.

PRE-TAX EARNINGS FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*

(In thousands)

(Unaudited)

 

     For the three months
ended September 30,		     For the nine months
ended September 30,		  
     2013     2012     2013     2012  

Market Making

         

Revenues

    $ 240,110      $ 107,672      $ 455,678      $ 383,203   

Expenses

      192,257        99,458        400,070        345,227   
  

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax earnings

      47,853        8,214        55,608        37,976   
  

 

 

    

 

 

    

 

 

    

 

 

  

Global Execution Services

         

Revenues

      91,366        9,258        113,701        27,248   

Expenses

      107,720        10,378        134,949        31,087   
  

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss

      (16,354 )      (1,120 )      (21,248 )      (3,839 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Corporate and Other

         

Revenues

      136,343        13,672        128,744        14,790   

Expenses

      47,988        6,154        127,266        14,003   
  

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax earnings

     88,355        7,518        1,478        787   
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated

         

Revenues

      467,819        130,602        698,123        425,241   

Expenses

      347,965        115,990        662,285        390,317   
  

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax earnings

    $ 119,854      $ 14,612      $ 35,838      $ 34,924   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

 * Totals may not add due to rounding.

 

     Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC.

 

3

KCG HOLDINGS, INC.

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

(in thousands)

 

Three months ended September 30, 2013

    Market
Making		      Global Execution
Services		     Corporate
and Other		     Consolidated  

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

          

GAAP Income (Loss) from continuing operations before income taxes

    $ 47,853       $ (16,354 )    $ 88,355      $ 119,854   

Gain on investment in Knight Capital Group, Inc.

      —           —          (127,972 )      (127,972 ) 

Compensation and other expenses related to reduction in workforce

      2,309         15,132        —          17,441   

Professional and other fees related to Mergers and August 1st technology issue

      —           —          7,269        7,269   

Writedown of assets and lease loss accrual

      108         —          828        936   
  

 

 

     

 

 

    

 

 

    

 

 

  

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

    $ 50,270       $ (1,222 )    $ (31,520 )    $ 17,528   
  

 

 

     

 

 

    

 

 

    

 

 

  

Nine months ended September 30, 2013

    Market
Making		      Global Execution
Services		     Corporate
and Other		     Consolidated  

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

          

GAAP Income (Loss) from continuing operations before income taxes

    $ 55,608       $ (21,248 )    $ 1,478      $ 35,838   

Gain on investment in Knight Capital Group, Inc.

      —           —          (127,972 )      (127,972 ) 

Professional and other fees related to Mergers and August 1st technology issue

      —           —          44,398        44,398   

Compensation and other expenses related to reduction in workforce

      6,264         15,997        —          22,261   

Unit acceleration due to Mergers

      —           —          22,031        22,031   

Strategic asset impairment

      —           —          9,184        9,184   

Writedown of assets and lease loss accrual

      108         —          4,525        4,633   
  

 

 

     

 

 

    

 

 

    

 

 

  

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

    $ 61,980       $ (5,251 )    $ (46,356 )    $ 10,373   
  

 

 

     

 

 

    

 

 

    

 

 

  

 

 * Totals may not add due to rounding

 

(1) Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC.

 

4

KCG HOLDINGS, INC.

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

(in thousands)

 

Three months ended September 30, 2012

    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

    $ 8,214       $ (1,120 )    $ 7,518      $ 14,612   

Investment gain

      —           —          (11,354 )      (11,354 ) 
  

 

 

     

 

 

    

 

 

    

 

 

  

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

    $ 8,214       $ (1,120 )    $ (3,836 )    $ 3,258   
  

 

 

     

 

 

    

 

 

    

 

 

  

Nine months ended September 30, 2012

    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

    $ 37,976       $ (3,839 )    $ 787      $ 34,924   

Investment gain

      —           —          (11,354 )      (11,354 ) 
  

 

 

     

 

 

    

 

 

    

 

 

  

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

    $ 37,976       $ (3,839 )    $ (10,567 )    $ 23,570   
  

 

 

     

 

 

    

 

 

    

 

 

  

 

 * Totals may not add due to rounding

 

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