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

12 Months Ended

Dec. 31, 2016

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,
	2016		2015
	(in thousands)
Assets
Cash and cash equivalents	$	369,882	$	333,982
Receivable from subsidiaries	—		212,336
Investments in subsidiaries	1,509,526		1,039,250
Fixed assets and leasehold improvements, at cost, less accumulated depreciation and amortization	88,822		2,755
Goodwill and intangible assets, less accumulated amortization	—		218
Deferred tax asset, net	87,847		76,747
Subordinated loans to subsidiaries	300,000		280,000
Other assets	13,181		41,178
Total assets	$	2,369,258	$	1,986,466
Liabilities and equity
Liabilities
Accrued compensation expense	$	13,812	$	21,775
Payable to subsidiaries	405,414		—
Accrued expenses and other liabilities	64,279		35,604
Income taxes payable	74,117		—
Debt	454,353		484,989
Total liabilities	1,011,975		542,368
Total equity	1,357,283		1,444,098
Total liabilities and equity	$	2,369,258	$	1,986,466

Statements of Operations and Comprehensive Income (parent only)

Statements of Operations and Comprehensive Income

KCG Holdings, Inc. (parent only)

	For the years ended December 31,
	2016			2015			2014
	(in thousands)
Revenues
Investment income and other, net	$	9,469		$	7,341		$	3,415
Total revenues	9,469			7,341			3,415
Expenses
Employee compensation and benefits	32,660			48,863			50,256
Debt interest expense	19,823			39,419			15,604
Depreciation and amortization	633			—			—
Professional fees	10,188			15,728			9,211
Business development	964			2,759			3,625
Occupancy and equipment rentals	12,904			2,059			—
Communications and data processing	2,008			—			—
Other	17,898			27,795			21,795
Total expenses	97,078			136,623			100,491
Loss before income taxes and equity in earnings of subsidiaries	(87,609		)	(129,282		)	(97,076		)
Income tax expense (benefit)	69,654			(75,784		)	(35,972		)
Loss before equity in earnings of subsidiaries	(157,263		)	(53,498		)	(61,104		)
Equity in earnings of subsidiaries	412,960			302,602			122,206
Net income	255,697			249,104			61,102
Other comprehensive income (loss)	1,897			(1,783		)	732
Comprehensive income	$	257,594		$	247,321		$	61,834

Statements of Cash Flows (parent only)

Statements of Cash Flows

KCG Holdings, Inc. (parent only)

	For the years ended December 31,
	2016			2015			2014
	(In thousands)
Cash flows from operating activities
Net income	$	255,697		$	249,104		$	61,102
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries, net of tax	(412,960		)	(302,602		)	(122,206		)
Deferred taxes	17,322			—			—
Stock-based compensation	3,729			14,942			16,997
Debt discount accretion and other debt related expenses	3,327			12,103			12,548
Realized gain on repurchase of debt	(3,676		)	—			—
Other	464			—			—
Dividends received from subsidiaries	95,000			85,323			224,524
Decrease (increase) in operating assets
Subordinated loan receivable	(20,000		)	—			(30,000		)
Deferred tax asset	(11,100		)	60,262			6,019
Other assets	15,392			(17,255		)	(25,897		)
(Decrease) increase in operating liabilities
Income taxes payable	87,475			—			—
Accrued compensation expense	(1,930		)	5,050			13,208
Accrued expenses and other liabilities	14,020			20,063			3,178
Net cash provided by operating activities	42,760			126,990			159,473
Cash flows from investing activities
Purchases of investments	(583		)	—			—
Purchase of fixed assets and leasehold improvements	(75,579		)	(2,972		)	—
Capital contributions to subsidiaries	(11,466		)	—			—
Net cash used in investing activities	(87,628		)	(2,972		)	—
Cash flows from financing activities
Repurchase of 6.875% Senior Secured Notes	(30,288		)	—			—
Borrowings under capital lease obligations	7,497			—			—
Partial payment of Credit Agreement	—			—			(235,000		)
Proceeds from issuance of 6.875% Senior Secured Notes, net	—			494,810			—
Repayment of 8.25% Senior Secured Notes	—			(305,000		)	—
Payment of debt issuance costs	—			(12,645		)	—
Cost of common stock repurchased - Tender Offer	—			(330,000		)	—
Cost of common stock repurchased	(91,240		)	(63,194		)	(111,585		)
Cash funding transactions with subsidiaries	208,943			123,308			236,795
Stock options exercised	353			1,247			—
Warrants exercised	—			532			—
Cost of warrants repurchased	(15,909		)	(4,441		)	—
Income tax provision on stock awards exercised	1,412			2,647			—
Net cash provided by (used in) financing activities	80,768			(92,736		)	(109,790		)
Increase in cash and cash equivalents	35,900			31,282			49,683
Cash and cash equivalents at beginning of period	333,982			302,700			253,017
Cash and cash equivalents at end of period	$	369,882		$	333,982		$	302,700
Supplemental disclosure of cash flow information:
Cash paid for interest	$	34,554		$	33,878		$	28,426
Cash paid for income taxes	$	16,200		$	124,461		$	15,456
Non-cash investing activities - Purchases of fixed assets and leasehold improvements that were paid for subsequent to year end	$	10,272		$	—		$	—
Non-cash investing activities - Compensation capitalized for internal use software that was paid subsequent to year end	$	632		$	—		$	—
Non-cash net funding financing activities with subsidiaries	$	318,731		$	54,510		$	131,840