Condensed Financial Statements of KCG Holdings, Inc. (parent only) (Tables)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Statements of Financial Condition (parent only)

Statements of Financial Condition

KCG Holdings, Inc. (parent only)

	December 31,
	2015		2014
	(in thousands)
Assets
Cash and cash equivalents	$	333,982	$	302,700
Receivable from subsidiaries	212,336		21,851
Investments in subsidiaries	1,039,250		1,122,254
Fixed assets and leasehold improvements, at cost, less accumulated depreciation and amortization	2,755		—
Goodwill and intangible assets, less accumulated amortization	218		—
Deferred tax asset, net	76,747		137,009
Subordinated loans to subsidiaries	280,000		280,000
Other assets	51,821		33,396
Total assets	$	1,997,109	$	1,897,210
Liabilities and equity
Liabilities
Accrued compensation expense	$	21,775	$	13,208
Payable to subsidiaries	—		42,478
Accrued expenses and other liabilities	35,604		13,947
Debt	495,632		305,000
Total liabilities	553,011		374,633
Total equity	1,444,098		1,522,577
Total liabilities and equity	$	1,997,109	$	1,897,210

Statements of Operations and Comprehensive Income (parent only)

Statements of Operations and Comprehensive Income

KCG Holdings, Inc. (parent only)

	For the year ended December 31,
	2015			2014			2013
	(in thousands)
Revenues
Investment income and other, net	$	7,341		$	3,415		$	3,717
Total revenues	7,341			3,415			3,717
Expenses
Employee compensation and benefits	48,863			50,256			31,970
Debt interest expense	35,883			11,939			28,476
Depreciation and amortization	—			—			698
Professional fees	15,728			9,211			30,488
Business development	2,759			3,625			—
Occupancy and equipment rentals	2,059			—			—
Other	31,331			25,460			29,829
Total expenses	136,623			100,491			121,461
Loss before income taxes and equity in earnings of subsidiaries	(129,282		)	(97,076		)	(117,744		)
Income tax benefit	(75,784		)	(35,972		)	(120,761		)
(Loss) income before equity in earnings of subsidiaries	(53,498		)	(61,104		)	3,017
Equity in earnings of subsidiaries	302,602			122,206			123,155
Net income	249,104			61,102			126,172
Other comprehensive income (loss)	(1,783		)	732			(112,918		)
Comprehensive income	$	247,321		$	61,834		$	13,254

Statements of Cash Flows (parent only)

Statements of Cash Flows

KCG Holdings, Inc. (parent only)

	For the year ended December 31,
	2015			2014			2013
	(In thousands)
Cash flows from operating activities
Net income	$	249,104		$	61,102		$	126,172
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries, net of tax	(302,602		)	(122,206		)	(123,155		)
Stock-based compensation	14,942			16,997			—
Debt discount accretion and other debt related expenses	12,103			12,548			16,931
Amortization of intangibles	—			—			698
Dividends received from subsidiaries	85,323			224,524			396,425
Decrease (increase) in operating assets
Subordinated loan receivable	—			(30,000		)	(250,000		)
Deferred tax asset	60,262			6,019			(144,109		)
Other assets	(17,255		)	(25,897		)	5,568
(Decrease) increase in operating liabilities
Accrued compensation expense	5,050			13,208			—
Accrued expenses and other liabilities	20,063			3,178			64,571
Net cash provided by operating activities	126,990			159,473			93,101
Cash flows from investing activities
Cash acquired upon acquisition of Knight Capital Group, Inc.	—			—			509,133
Cash received from sale of Urban Financial of America, LLC	—			—			85,406
Purchase of fixed assets and leasehold improvements	(2,972		)	—			—
Capital contributions to subsidiaries	—			—			(164,975		)
Net cash (used in) provided by investing activities	(2,972		)	—			429,564
Cash flows from financing activities
Proceeds from issuance of Credit Agreement	—			—			535,000
Partial payment of Credit Agreement	—			(235,000		)	(300,000		)
Proceeds from issuance of 6.875% Senior Secured Notes, net	494,810			—			—
Proceeds from issuance of 8.25% Senior Secured Notes	—			—			305,000
Repayment of 8.25% Senior Secured Notes	(305,000		)	—			—
Repayment of notes payable	—			—			(15,000		)
Payment of debt issuance costs	(12,645		)	—			(34,592		)
Cost of common stock repurchased - Tender Offer	(330,000		)	—			—
Cost of common stock repurchased	(63,194		)	(111,585		)	(11,324		)
Issuance of equity to General Atlantic	—			—			55,000
Payment to former Knight Capital Group, Inc. stockholders	—			—			(720,000		)
Repayment of Knight Convertible Notes	—			—			(257,741		)
Funding of collateral account for Knight Convertible Notes	—			—			(117,259		)
Payment out of collateral account for Knight Convertible Notes	—			—			117,259
Members distributions	—			—			(21,002		)
Cash funding transactions with subsidiaries	123,308			236,795			80,500
Stock options exercised	1,247			—			—
Warrants exercised	532			—			—
Cost of warrants repurchased	(4,441		)	—			—
Income tax (provision) benefit related to stock-based compensation	2,647			—			—
Net cash used in financing activities	(92,736		)	(109,790		)	(384,159		)
Increase in cash and cash equivalents	31,282			49,683			138,506
Cash and cash equivalents at beginning of period	302,700			253,017			114,511
Cash and cash equivalents at end of period	$	333,982		$	302,700		$	253,017
Supplemental disclosure of cash flow information:
Cash paid for interest	$	33,878		$	28,426		$	26,239
Cash paid for income taxes	$	124,461		$	15,456		$	365
Non-cash net funding financing activities with subsidiaries	$	54,510		$	131,840		$	1,082,031

Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements

The impact of the errors on the subtotals within the statement are shown in the following table:

	For the year ended December 31,
	2014			2013
	(in thousands)
Net cash used in operating activities - as reported	$	(14,358	)	$	(398,890	)
Net cash provided by operating activities - as revised	159,473			93,101
Net cash provided by investing activities - as reported	410,626			1,002,055
Net cash provided by investing activities - as revised	—			429,564
Net cash used in financing activities - as reported	(346,585		)	(464,659		)
Net cash used in by financing activities - as revised	(109,790		)	(384,159		)